Investment questions on ballot

Voters should answer "yes" to a referendum question that will allow broader investment options for the state's health insurance fund for retirees. It would provide the same range of investments, and oversight, as now available for the state pension fund. Passage of Amendment 2 would change the state constitution accordingly.

While markets have been volatile, to say the least, in recent weeks, the pension fund has generally benefited from the broader range of investments, allowed by the voters in a similar constitutional amendment in 1996.

Since then, the level of equity investment in the state pension fund has grown to about 15 percent, with most of the remainder in bonds and interest-bearing cash accounts. Over the last five years, fixed accounts have produced a 4.29 percent return, while equities have generated a 7.45 percent return, according to Comptroller General Richard Eckstrom. (Those figures are through the previous quarter, and don't include recent activity.)

Mr. Eckstrom, the state's fiscal watchdog, recommends approval of the question, noting that the diversification of the state's portfolio has bolstered the pension fund, and can be expected to do the same for the health insurance fund. Better returns ease the necessity of increasing the state's contributions to the fund.

The state pension fund is carefully managed by a board of experts in institutional investments. The same scrutiny would be applied to the health insurance fund.

Mr. Eckstrom points out, however, that the state's investment expertise and safeguards aren't available to the local governments that maintain their own retirement systems.

For that reason, a final question on the ballot to allow equity investments for local governments should be rejected. Vote "no" on Amendment 3.

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