Ineffectual NC Treasurer's Office Compels Scrutiny
By Fergus Hodgson
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Although in the news for her
lawsuit against the Bank of New York Mellon, underperformance from North
Carolina's state treasurer Janet
Cowell merits greater attention. A series of blog posts from one of her
competitors in the upcoming Democratic primary -- a long-time
investment professional -- has zeroed in on a few startling revelations.
Ron Elmer has noted
that, during the past three years, the North Carolina Retirement System has
earned a return 1.2 percent below the national median and failed
to meet its own benchmark. In fact, of 31 states with fiscal years ending on
June 30, North Carolina was next to last for gains, ahead of only Pennsylvania.
With assets of $74.9 billion, this
poor performance equates to a forgone $2.7 billion. And Elmer asserts, with good
evidence, that even a "simple portfolio of index funds would easily
outpace the median pension fund returns... and handily beat the returns
produced by North Carolina's pension investment returns."
The lack of transparency in
this area may well be just as concerning as the performance failures. Since
taking office, Janet Cowell has ceased publishing the amounts paid to external
investment managers. By way of deduction, however, Elmer estimates that amount
to be $337 million in 2011 alone. To put the magnitude of those unnecessarily
high payments into perspective, consider that the North Carolina Treasury
Department's entire annual expenses came to $51 million in 2011 (p.108).
With such money flowing, and an
unwillingness to reveal it, one shouldn't be surprised where Cowell's fundraising dollars have come from. When first running for treasurer
in 2008, more than 40
percent came from out of state. However, for this year's campaign, out of
state funds have comprised 50 percent, and she has held fundraising
events in New York City, Washington, D.C., and Austin, TX. New York has
provided her more money than Charlotte, North Carolina's largest business hub.
Cowell even admitted
that during her 2008 campaign "mostly, I just sat in a room and dialed for
dollars for a year and a half of my life." She mentioned this to promote
taxpayer funding of treasurer campaigns as an alternative. But there is a
superior solution, one that doesn't require forcibly taking people's money to
pay for political campaigns. Simply invest these dollars in low-risk and
indexed funds, as promoted in The Coming Generational Storm, since
these would rule out the pay-to-play politics she has exemplified.
- At the John Locke Foundation's recent candidate
briefing, I gave the fiscal presentation. Click here
to watch the video (10 minutes).
- There will be a Constitutional Candidate Forum,
hosted by Founders' Truth and Constitutionalist Gathering Place, on April
28, from 1 to 5 p.m. at the Lighthouse Convention Center, Raleigh.
Go here for
Click here for the Fiscal
Monday, Apr. 2nd, 2012 at 12:00 pm Noon
A meeting of the Shaftesbury Society
with our special guest Dr. Troy Kickler
The Other Founders: The Anti-Federalists and What They Might Say About Today's Economic and Political Crises
Thursday, Apr. 5th, 2012 at 12:00 p.m.
A Luncheon Forum
with our special guests John O. McGinnis and William (Bill) Marshall
"Why Originalism Reaches Better Results than the Living Constitution"
Monday, Apr. 9th, 2012 at -
No Shaftesbury Meeting
There will not be a shaftesbury luncheon.
Monday, Apr. 16th, 2012 at 12:00 PM, Noon
A meeting of the Shaftesbury Society
with our special guest Patrick J. Michaels
Public Choice and Public Science:
Global Warming and the Government-Scientific Complex
Tuesday, Apr. 17th, 2012 at 6:45pm
A special celebration of NC Spin's 700th show
with special guest Bob Schieffer
NC SPIN 700th Show Celebration featuring CBS' Bob Schieffer