The Stanly News and Press (Albemarle, NC)

Opinion & Letters to the Editor

May 2, 2014

Cowell’s pension fund path

Thursday, May 1, 2014 — RALEIGH — Sometimes even reporters with experience covering state government have trouble getting their minds around the fact that there exists an $86 billion pot of money that is largely controlled by a single elected official.

I spoke to one of those reporters leaving a news conference last week. A state workers group, the State Employees Association of North Carolina, and a consultant that it had hired roundly condemned that control.

The consultant, a fellow named Ted Siedle, referred to State Treasurer Janet Cowell’s decision to put more of the $86 billion state employees pension fund into less traditional investments, like hedge funds, as a “heist.”

When much of the media ignores the pension fund and its operations, perhaps those who want the media’s attention feel compelled to use that kind of hyperbole.

Fortunately for the state pensioners, Cowell has neither heisted nor secreted off with their money.

Unfortunately for those pensioners, it is unclear whether Siedle’s 147-page report will further damage a legitimate debate about whether an investment strategy that moves money from stocks and bonds into the non-traditional investments is a wise move.

The report raises some interesting questions that should be a part of that debate. They include whether investment management fees have been reported as they should be and why a public pension fund, with its many resources, needs to rely on middlemen known as placement agents who in other states have been the subject of kickback schemes.

But the larger issue that remains — one that isn’t so sensational — is whether Cowell’s investment strategy is resulting in the fund getting the best bang for its buck.

The reason that question should be important to the larger public is because taxpayers could be on the hook for meeting a bigger part of pension obligations when investment returns don’t meet predictions.

The issue of fees paid to outside investment managers, as the state’s former Chief Investment Officer Andy Silton has indicated, may be a red herring in some respects. After all, if a private equity firm is given $250 million to manage, beats larger market returns by 10 percent after fees, and collects $10 million for its work, who cares?

But what if you pay those high fees and are not getting that kind of return?

It’s whether the strategy is paying off that ought to be the focus of anyone — state workers groups, pensioners, legislators — with an interest or oversight role in the pension fund.

The complaints about that strategy, legitimate as they might be, may ignore the predicament that Cowell faces.

To keep the pension fund solvent, she needs the returns that those non-traditional money managers promise. The other option is to push legislators for bigger annual contributions, a move that might well lead to the kind of backlash seen in other states that have begun scaling back pension benefits for public employees.

The question then becomes, which path represents real risk?

Scott Mooneyham is a syndicated columnist for Capitol Press Association and covers activities of the N.C. Legislature.


Text Only
Opinion & Letters to the Editor
  • D.G. Martin Read others’ views to be better informed, decide for yourself

    “I don’t read The Washington Post. That is not where I get my ideas.”

    July 30, 2014 1 Photo

  • Patrick Gannon This isn’t medical marijuana

    As state legislators debated allowing the use of an extract from marijuana plants to treat seizure disorders over the past couple of weeks, it was evident that social conservatives – there are many of them in the General Assembly – felt a tinge of unease about it, even as almost every one of them voted yes.

    July 30, 2014 1 Photo

  • Doug Creamer Friends and contentment

    Last week I made my annual trip up the mountain to Sparta. My friends have a secluded home near a babbling brook. Their home and property are a haven for peace. It’s a two-plus hour ride to their home that doesn’t feel that long because I look so forward to my time with this great couple. When I arrive, the conversation seems to pick up right where we left it the last time we saw each other.

    July 29, 2014 1 Photo

  • Thanks for the honest deed

    I would like to thank the person that found my wallet in the parking lot of Harris Teeter on July 23 and turned it in to the Albemarle Police.

    July 29, 2014

  • cleaning supplies Don't judge mothers with messy homes

    I was building shelves in my garage when a neighbor girl, one of my 4-year-old daughter's friends, approached me and said, "I just saw in your house. It's pretty dirty. Norah's mommy needs to clean more."

    July 28, 2014 1 Photo

  • We need your help

    Hurray for the Albemarle City Council. Council plans to battle N.C. Department of Transportation’s ranking of all 13 projects in Stanly County to the bottom of their priority list. Council is setting up petitions in various city buildings for citizens to sign.

    July 28, 2014

  • Council asks veterans to seek office

    The terms of office for the leaders of the Stanly County Veterans Council ended June 30. A call is being sent to veterans council members requesting candidates for the four elective offices of the council. A meeting has been set for 6:30 p.m. Aug. 12 at the DAV building. All council members are urged to attend.

    July 28, 2014

  • Mike Walden The gains and gaps in our economy

    Twice a year, I pull out my cloudy crystal ball and attempt to make some predictions about the direction and pace of the North Carolina economy. I just finished my latest effort and, as usual, the results are a combination of pluses and minuses.

    July 28, 2014 1 Photo

  • Jason O. Boyd Yellow journalism takes on new form, people are dumber for it

    Time to get on the soapbox for a few minutes.
    Let me clear my throat. Eh ... hem!
    People are dumb.

    July 28, 2014 1 Photo

  • Brent Laurenz Special election adds to the mix

    RALEIGH – A busy slate of judicial elections this November got even busier recently when Judge John Martin of the N.C. Court of Appeals announced his retirement.
    A special statewide election to fill Martin’s seat will be added to the general election ballot, joining the four N.C. Supreme Court seats and three N.C. Court of Appeals races already slated for this fall.

    July 25, 2014 1 Photo

House Ads
Seasonal Content