Wednesday, June 4, 2014

Bravo NC Treasurer Cowell! (Yeah, I said it.)

     I was hopeful when the State Employees Association of North Carolina (SEANC) turned up the heat on North Carolina State Treasurer Janet Cowell to make changes to the North Carolina Retirement System (NCRS) pension investment operations and reporting by hiring professional pension investigator Ted Siedle and his firm Benchmark Alert.  I was hopeful when Treasurer Cowell announced the formation of the Investment Fiduciary Governance Commission to evaluate the State Treasurer's management of the NCRS.  I was hopeful when Treasurer Cowell's Governance Commission issued recommended changes that addressed many of Mr. Siedle's concerns and echoed many of my suggestions.  Hopeful, but skeptical.  

     Investigations, studies, and recommendations are all well and good - but, would Treasurer Cowell really implement any of the recommendations?  We got our answer.  YES!  Treasurer Cowell is backing House Bill 1209 (H1209).  I have to give credit where credit is due.  Bravo Treasurer Cowell!  

     H1209 does not fix everything that is wrong with the pension fund.  H1209 does not even implement all of the recommendations from Treasurer Cowell's Governance Commission.  Sure, I would love to add many things to this bill.  But, I see nothing in this bill I would take out.  H1209 is a giant leap in the right direction and I applaud Treasurer Cowell for creating the Governance Commission and asking the North Carolina General Assembly to require her, and future treasurers to implement important changes.  H1209 would require the NC State Treasurer to: 

  1. Prepare financial statements for the NCRS pension fund.
  2. Have said financial statements audited by an independent third party audit firm.
  3. Publish investment performance and fees paid to all investment managers (including placement agent fees and subadvisor fees within fund-of-funds. It even requires publication of dollar-weighted returns for alternative investments instead of time-weighted returns).
  4. All external investment advisor contracts would be made available to the public after a 10-year waiting period (too long a period, but they are not public ever right now - so it's an improvement), but immediately available to members of the NC General Assembly and NC State Auditor.
  5. Requires all placement agents to register as lobbyists.

Bravo Treasurer Cowell for responding to SEANC's concerns!
Now, we just need the General Assembly of North Carolina to do the right thing and pass H1209.

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