A meeting of the South Carolina Budget and Control Board got tense at times Thursday as members discussed oversight problems with the state’s $25 billion pension fund.
Board members voted to hire an outside attorney to see if the South Carolina Retirement System Investment Commission (SCRSIC) is accurately following state laws and to determine if improvements need to be made.
It was the latest forum for State Treasurer Curtis Loftis, who is on both the investment commission and the Budget and Control Board, to go public with his concerns about what he says is a lack of oversight in the state’s pension system. He says the commission does not allow his staff to look over the extremely complicated contracts that the state makes with Wall Street firms.
“I think that’s a holdover from a previous day with previous chief investment officers,” he said Thursday, “But we can’t have the absence of credentialed officials looking at these pieces of papers. It’s a failed business model.”
However, the SCRSIC chairman Reynolds Williams says the contracts are confidential due to the agreements reached with the firms themselves. He said the commission’s staff and attorneys are available to answer any questions or concerns that Loftis may have.
“They obviously have highly-credentialed investment qualifications,” Williams said, “If they are not capable of advising us correctly and properly, why would somebody else be more capable?”
Loftis said that was not enough, as it prevented outside eyes from reviewing the agency’s contracts, “The people of this state ought to know that their $25 billion is being looked at,” he said as his voice rose, “I’ve never seen an association that thinks they’re above a check and a balance… that thinks they shouldn’t have anybody looking over their shoulder.”
Williams said the commission has started amending any new contracts to open them up to Loftis’s staff, but says they can’t make older contracts public for legal reasons.
After an hour of back-and-forth, Loftis even went so far as to accuse his fellow members of the Budget and Control Board of not wanting to hear problems with the pension system. That prompted a short reprimand from Governor Nikki Haley, who told the Treasurer that ”I would respectively ask you not to say that because I think we all came here willing to meet and we are listening to you and trying to do this.”
The five-member Budget and Control Board is responsible for the state’s Retirement System, but designates the SCRSIC to manage the fund’s investments. Other members of the board are State Senate Finance Chair Hugh Leatherman (R-Florence), House Ways & Means Chairman Rep. Brian White (R-Anderson), and Comptroller Gen. Richard Eckstrom.
Haley did seem to side with Loftis, saying afterwards that he has the “right” to hear his staff’s advice before signing any contracts.
Williams and other members of the investment commission said they were okay with having an outside attorney from the Budget & Control Board look over the pension fund.