Every five years the state retirement system must bid the contract to manage its pension investments. The application deadline closed earlier this week in the latest round. The rule no doubt exists to ensure the most competent money managers invest the $38 billion in state employee retirement savings. That is a worthwhile goal. Thankfully, the most recent money manager, Chicago-based Ennis Knupp & Associates, has performed admirably, exceeding the actuarial goals of the fund for the past four years.
Would that the state exercised the same regulatory foresight in how it chooses the board of trustees overseeing it. The 14-member board of the State Retirement System “guides system operations, establishes investment policies, formulates administrative policy, and oversees the management of system assets.”
Those are big responsibilities. One would think they would require financial expertise. Not to mention impartiality.
Too bad for taxpayers the board offers very little of either. In large part, the same people who benefit from the system oversee it.
Who sits on it? The Comptroller of the Treasury, State Treasurer, Secretary of the Department of Budget and Management, the State Superintendent of Schools, Superintendent of the State Police, two members appointed by the governor who supposedly harbor financial knowledge, one member appointed by the governor representing municipal corporations, two elected members of the State Police Retirement System, two elected members of the Employees? Systems and two elected members of the Teachers? Systems.
The only people not represented are those picking up the huge tab: taxpayers.
Businesses need to make money to survive. They don?t have the option of extorting more taxes to provide employee benefits ? which are much more generous in the public sector than in the private sector, to no surprise. Only about 20 percent of employees in the private sector receive the same type of defined benefit plans offered by the government.
A recent article from Government Executive magazine said scrutiny of public sector pensions “means private sector envy is likely to increase, while sympathy for the plight of the beleaguered civil servant declines.” Amen.
What better way for Maryland to set an example for the rest of the country than by asking those who pay the bills to help oversee state pension benefits? At the very least half of the 14-member board must come from the private sector, with the provision that only those who do no or little business with government be eligible for membership. Gov. Martin O?Malley must lobby for the change. Taxpayers, just like state employees, deserve good stewardship of their money.
