State Treasurer Curtis Loftis Requests Special Session of Budget & Control Board on $25 Billion Pension Fund

Treasurer Loftis says South Carolinians expect and deservetransparency and accountability and he will protect public funds withfierce intensity. B&C Board meeting set for Wednesday June 27.
 
COLUMBIA, SC – June 25, 2012 – State Treasurer Curtis Loftis is askingmembers of South Carolina’s Budget and Control Board to meet in aspecial session this coming Wednesday, June 27, to discuss informationvital to their duties as Trustees of the Retirement System InvestmentCommission.
 
As the custodian, Treasurer Loftis is responsible for the safekeeping ofthe state’s funds.  As such, the Treasurer has major concerns with thelack of oversight of the $25 billion public pension funds.
 
“The Investment Commission has fallen short in its accounting, auditing,reporting, contract management, due diligence and fee managementresponsibilities,” Treasurer Loftis said.  “I believe in the old adage,‘trust but verify,’ unfortunately when it comes to our retirement fundit has been all trust with no verifying and I refuse to allow thatpractice to continue.”
 
Treasurer Loftis is requesting his senior staff be allowed to reviewcomplex, specialized documents which can be hundreds of pages long.  Besides Investment Commissioners, the Commission only allows its ownstaff to examine the contracts.  The Investment Commission prohibits theAttorney General from viewing the files, in addition to lawyers orsenior advisors to the Treasurer, Governor, Budget and Control Board andGeneral Assembly.
 
Among Treasurer Loftis’ concerns:

• The Investment Commission is an unelected, appointed body whichpays tens of millions of dollars in expenses without proper explanationof those expenses. FY2011 expenses and fees were approximately $340million.
• The Investment Commission pays five times the average amount ininvestment fees and expenses, but regularly ranks in the bottom 50% ofits peers in rate of return.
• The Investment Commission avoids reporting most expenses to theState Comptroller by allowing investment firms to pay commissionexpenses, then subtracting those expenses from the state’s investmentproceeds.
• The State Treasurer is asked to send millions of dollars toinvestment firms and is prohibited from seeking the informed advice ofhis staff lawyer, chief investment officer or chief banker.
• The pension fund has never had its own independent audit beyondabbreviated “look-through” audits which lack the scrutiny required foraccountability of public dollars.
• A national consulting firm has published similar concerns.

“As the only publicly elected member of the Investment Commission, Isee its inner workings and I believe there is an urgent need for moretransparency and accountability,” Treasurer Loftis said.  “I am hopeful aspecial session of the Budget and Control Board will receiveinformation so they can act to improve the business functions andrestore public confidence to this vital agency of our state government.”