Because the mainstream media in South Carolina (with the possible exception of Renee Dudley of The Charleston Post and Courier) is utterly worthless, S.C. State Treasurer Curtis Loftis was forced to take the debate regarding our state’s underperforming pension fund to a higher energy level.
While S.C. Gov. Nikki Haley and “Republican” lawmakers in Columbia are content to celebrate below average returns – while rewarding the corrupt bureaucracy that’s responsible for producing them with funding increases – Loftis has been focused on holding the S.C. Retirement System Investment Commission (SCRSIC) accountable for its performance.
Unfortunately he’s getting little cooperation on that front, as Haley and S.C. Comptroller General Richard Eckstrom keep winding up on the wrong side of this debate.
For those of you keeping score at home, South Carolina’s pension fund returned 18.6 percent prior to the assessment of fees last year – well behind the 21.4 percent average of large public pension funds. And speaking of fees, the state fund paid out $344 million on them during the most recent fiscal year – an 11 percent increase from the previous year.
“I question whether Wall Street’s interests are being protected or our interests are being protected,” Loftis told reporter Michael Corkery, who did a big piece on South Carolina’s pension fund problems in this week’s editions of The Wall Street Journal.
Actually we don’t question that at all – it’s painfully evident that South Carolina’s interests are not being protected.
Not only that, the SCRSIC – which until recently was under the thumb of corrupt, Lamborghini-driving investment czar Bob Borden – is basically asking the S.C. General Assembly to double its budget for the second year in a row.
To their credit, state lawmakers have finally embraced some of the long-overdue pension fund reforms that this website (and Loftis) have been consistently championing for years. They haven’t passed those measures, mind you, but they’re finally at least discussing them. To their discredit, however, lawmakers are proposing to effectively offset the cost of implementing these reforms with pay raises for state employees.
In other words, South Carolina taxpayers are being asked to subsidize these reforms …
Like everything else it does, South Carolina was late to the game in investing its pension fund in private equities. And when our investment professionals finally started making such investments, they chose poorly – and were rewarded for these poor choices with funding increases from an intellectually incurious legislature.
Par for the course in this state, right?
While we’re not 100 percent sure that Loftis is correct in calling for a reduction in the percentage of equity investments, we agree with him that our state’s pension system is overexposed when it comes to hedge funds. He’s also dead-on when he says that we’re getting ripped off with respect to fees.
Most importantly, though, for once this state finally has someone watching out for its best interests – and challenging the failed status quo that has produced substandard returns and a $13 billion unfunded liability. The administration of Gov. Nikki Haley has talked a big game on pension fund reforms, but she hasn’t lifted a finger on this issue and her appointee to the SCRSIC has been part of the problem, not part of the solution.
Props to Loftis for his vigilance on this front … and let’s hope state lawmakers do their part this year as well by enacting the reforms we’ve been advocating all these years.