ALBANY, N.Y. - Control over New York state's $112 billion Common Retirement Fund might shift from a sole trustee to a board of trustees, depending on who takes office as state comptroller following the November general election.
Former New York City Comptroller Alan G. Hevesi, a Democrat, will square off against Republican John Faso for the state office.
Early in the race, Mr. Hevesi is the clear frontrunner, based on name recognition alone. He worked with five separate boards of trustees when he headed the $81.5 billion New York City Retirement Systems, the collection of defined benefit plans covering city employees, teachers, police, firefighters and former board of education employees. Mr. Hevesi said in a recent interview that he prefers boards of trustees to the sole trustee setup, and if elected likely would ask the state Legislature to consider replacing the sole trustee setup with a board of trustees.
"I have a bias toward boards of trustees," Mr. Hevesi said. "The decision-making is collegial, it's subject to full disclosure and lots of independent people join in the decision-making. Having a board of trustees is preferable."
He quickly added, however, that if elected he would happily serve in the sole trustee role. But that won't keep him from asking around Albany with respect to changing the system.
Lots of convincing
By most accounts, Mr. Hevesi will have a lot of convincing to do if he wants to replace the sole-trustee format with a board. In 1988, a task force appointed by former New York Gov. Mario M. Cuomo recommended that then-comptroller Edward V. Regan head a seven-member board of trustees rather than serving as sole trustee. Mr. Regan disagreed with the proposal, and it never got any support among legislators.
Two years later, Mr. Regan's opponent for state comptroller, Carol Bellamy, proposed during the campaign that a seven-member board of trustees oversee the state pension fund. Ms. Bellamy, who lost the campaign, had said eliminating the sole trustee would drive politics out of the pension fund management process. Recently, Comptroller H. Carl McCall, now the Democratic candidate for governor, has been accused of giving money management business to campaign contributors.
Ms. Bellamy's proposal died amid charges that a board of trustees would strip accountability from the system, something Mr. Hevesi's opponent, Mr. Faso, happens to agree with.
With a sole trustee in charge of the plan, Mr. Faso said, "taxpayers and pensioners all know who's responsible for the system."
Mr. Faso said he would not, if elected, seek to change the sole trustee setup.
When Mr. McCall ran for office in 1993 - against Mr. Faso - he said he would be open to sharing oversight of the system with a board of trustees. Even then, Mr. Faso derided the idea, saying a board would open state pension management to political manipulation.
New York probably was closer to getting a board of trustees to oversee the pension system in 1993 than ever before or since. The idea had Mr. McCall's support, and a bill to that effect was introduced in the state Assembly. The state Senate at the time also reportedly was working on its own bill.
For reasons that are not entirely clear, neither the Assembly nor the Senate bill went anywhere. And Mr. McCall has continued to serve as sole trustee.
A similar attempt to convert the sole-trustee system to a board of trustees failed in Connecticut in 1996. Then-treasurer Christopher Burnham had backed a plan to create a five-member board of trustees to oversee the then-$13 billion Connecticut Retirement Plans and Trust Funds, Hartford. Mr. Burnham said at the time that the proposal had become mired in questions about the constitutional status of the board and who would appoint the board members.
Not in North Carolina
In North Carolina, the only other state with a sole-trustee system, Katherine Kirkman, a spokeswoman for state Treasurer Richard Moore, said there has been no recent talk there of changing to a board of trustees to oversee the $52.5 billion North Carolina Retirement System, Raleigh. Nor has there ever been, so far as anyone she spoke with could recall.
To be sure, there hasn't been much talk of anything like that in Albany in recent years, either. Skip Carrier, a spokesman for the Assembly, said Assembly Speaker Sheldon Silver never has advocated a change in the sole trustee setup and does not support such a change now.