S.C. retirement commission wants to spend $9 million more
COLUMBIA — A Senate panel Wednesday recommended an additional $9 million of spending by the commission that oversees South Carolina’s $25 billion investment fund for public workers’ pensions, saying more employees and better technology should boost returns.
A Senate Finance subcommittee unanimously approved the commission’s request to spend $19 million from investment profits next fiscal year on its operations. That’s up from $10 million this year.
Vice chairman Reynolds Williams told the panel the additional money will enable the commission to better evaluate investments, with about 85 percent paying for technology upgrades. The request also would add 12 people, increasing the commission’s employees to 47.
The 12 additional employees are needed for technology support, and to strengthen the commission’s ability to underwrite new investments and monitor existing ones, said Adam Jordan, the commission’s interim chief executive.
“We’re asking for permission to spend trust fund money to protect the assets of the trust fund,” Williams told the panel.
The House’s proposed budget for 2012-13 reduces what the commission’s allowed to spend of those funds by nearly $500,000.
Rep. Jim Merrill, R-Charleston, said the commission needs to hire its executive staff first and get its operations in order. Former chief investment officer Bob Borden resigned in December following clashes with Treasurer Curtis Loftis, the commission’s only elected member.
“I highly disagree” with the additional spending, Merrill said. “I don’t think they’ve done anything to engender enough trust. ... It’s not on solid ground yet.”
Merrill led the subcommittee that crafted the House’s plan for shoring up the pension system, by reducing the projected $14 billion in long-term liabilities for all workers currently in the system. The bill passed by the House would, among other things, require new hires to work two years longer to collect full retirement and increase workers’ contributions.
Sen. Greg Ryberg, co-chairman of the Senate panel weighing pension reform, said the commission needs to spend the money to be able to minimize investment risk and maximize the return.
The commission sought permission last year to spend money on technology but was turned down, Williams said. Commissioners voted unanimously on the budget request presented to senators Wednesday, following recommendations by a financial consulting firm regarding risks to the system.
“If you don’t spend that money to weigh the risk, you may be more in the hole,” Ryberg said.
Legislators created the commission in 2005 to oversee investments. But alternative investments weren’t even possible until 2007, after voters approved a change to the state constitution that allowed for full diversification.
The system’s in its infancy and needs to make sure it has what it needs to adequately manage the money, Ryberg said.
The subcommittee’s recommendation goes to the full Senate Finance Committee, which will debate its version of the state budget next week.
Loftis told senators in January that the system is underperforming, spending too much in fees and investing too heavily in alternative investments such as hedge funds. Jordan said the request is unrelated to Loftis’ complaints, as the commission initially approved the budget request last fall.