It’s Not Getting Any Better: The Treasurer’s Bill Moves Forward
The House Committee on Personnel recently amended and approved H. 1209, the “Retirement Investment Accountability” Act. The bill contains specific requirements for auditing and analyzing the investment performance of the North Carolina pension plans. As I’ve previously written, most of the bill’s requirements shouldn’t be put into the statute. See “Reasonable Goals in a Poorly Constructed Bill: Unnecessary Requirements (June 17, 2014). I’m not surprised that the bill is moving forward because the Treasurer’s bill allows the General Assembly to go into areas where it doesn’t belong and where it can’t possibly have the necessary expertise.
The House Personnel Committee appears to have made one substantive change. Instead of hiding investment-related documents for ten years after an investment fund is terminated, the revised legislation allows disclosure five years after termination. Is this “compromise” a step toward greater transparency? Hardly. Instead of permitting disclosure twenty to twenty-five years after an initial investment, the revised bill makes that disclosure possible fifteen to twenty years after the investment. The current State Treasurer, her successors, and generations of money managers will be able to hide their financial arrangements with the public pension plan for generations to come. See “Reasonable Goals in a Poorly Constructed Bill: Burying Public Records (June 16, 2014) for a more detailed discussion of this provision of H. 1209.
North Carolina is supposed to be one of the few states where a sole fiduciary manages the investments of the state’s public pensions. In reality, we don’t have a sole fiduciary. The State Treasurer has already conceded her authority to one hundred twenty representatives and fifty senators. The General Assembly has been put into the business of determining how much will be invested in each investment category and precisely how performance will be reported. They also seem to be backing the idea that money managers are very privileged people whose documents should be protected until the papers are irrelevant.
Unfortunately, the beneficiaries of the North Carolina pension plans don’t have any credible advocates. The State Employees’ Association of North Carolina (SEANC) has lost its credibility by underwriting the Benchmark Financial report. Instead of investing their members’ fees in studies to counterbalance bad policy proposals, they decided to commission a study that makes wild claims of fraud and abuse. I can understand why the General Assembly is paying little attention to SEANC on this matter. Meanwhile, the State Treasurer, who has real knowledge about pension investments, is ceding her power to 170 legislators and creating a lock-box for documents that deserve public scrutiny.