Question: When is a public pension fund not a public pension fund? Answer: When the people overseeing it deliberate and make decisions concerning even the most trivial matters behind closed doors; that is, in secret.
That is too often the case with some of the nation's largest funds, even though the trustees and public officials overseeing those funds are making decisions concerning the disposition of public assets.
Often the trustees are flouting, or making a mockery of state, or local, open meeting and disclosure laws.
The New York State and Local Employees Retirement System, for example, which is under the sole trusteeship of State Comptroller Carl McCall, holds no public meetings, issues no agenda, and of course, makes no public announcements of decisions. Yet the comptroller and his staff oversee the investment of almost $60 billion of pension assets and invest more than $250 million in contributions from taxpayers a year.
To be sure, the comptroller's office issues an annual report on the fund, but it comes out months after the end of its fiscal year, far too late to have much value to anyone studying the fund's operations.
The New York City Employees' Retirement System and the New York City Teachers' Retirement System are other examples. These funds, though they purportedly hold open meetings, go into executive session before discussing any investment matters, even the hiring, firing or evaluation of money managers, in apparent contravention of the spirit, if not the letter, of the state open meetings law.
The open meetings law specifies the trustees may go into executive session only for "the proposed acquisition, sale or lease of real property or the proposed acquisition of securities, or sale or exchange of securities held by such public body, but only when publicity would substantially affect the value thereof."
The hiring or termination of money managers is not covered by those words. Nor is a discussion of the fund's general investment direction, or a discussion of the investment performance of its outside managers.
Trustees who operate behind such secrecy should be called "trust me's." But who can trust them when they ignore or wriggle around open meeting and disclosure laws?
Closed meetings give corruption, or the suspicion of corruption, a chance to breed. Over the years, in many state and local government pension funds, there have been suspicions money managers have been hired for their performance as political contributors, rather than their performance as investment managers.
The best antidote to potential corruption is openness. Why not have open discussion of the hiring, evaluation of, or termination of outside investment managers, or general investment direction?
It's done by the state of Connecticut, which also has a sole trustee in charge of its public employee pension fund. There, the state treasurer holds public meetings with his investment staff to discuss investments.
Other state and local government pension funds should open their trustee deliberations to the public - to the taxpayers and employees who are contributing to the huge funds, and on whose behalf they oversee investments.
Only when a specific investment is to be discussed, the price of which could be affected by open discussion, should the trustees move into executive session. Otherwise the public has the right to ask: "What are the trustees hiding?"