A biography of John R. Rombach, Louisiana's legislative fiscal officer, says: "Johnny spends what little leisure time he has studying history, playing tennis and enjoying his three dogs."
One hobby missing from his biography: bashing New York.
As a busy executive reading this column, perhaps you're wondering why you should care about Mr. Rombach and his attitude toward New York.
While his is not a household name, it is a name associated with a highly inflammatory evaluation of the Teachers' Retirement System of Louisiana and the Louisiana State Employees' Retirement System. Together, those funds have about $17 billion in assets.
In an "expenditure analysis" of the two funds, Mr. Rombach recommends Louisiana's public pension funds switch to in-house, passive investment management from largely external, largely active management. He attempts to build a case for reducing costs and improving performance. Most of that he does rationally, except for one part where he pooh-poohs active management, saying there are only two ways to determine which firms provide the highest returns: "heavenly intervention" and "insider trading."
It is in his writings about the evils of external management that he rants and raves, especially about New York. Among his points:
Louisiana "Teachers' exported approx. $233 million to New York, and additionally, exported these high-paying jobs to New York." (The bold here and elsewhere is Mr. Rombach's emphasis, not mine. Ditto for abbreviating the word, "approximately.")
The Louisiana Teachers' fund has a "very expensive, Louisiana funded, New York-based strategy."
Both funds "employ New York citizens earning even greater salaries than Texas (sic)." (He had compared the two Louisiana funds to the Teacher Retirement System of Texas.)
The pension funds are wasting millions of dollars. "The vast majority of these funds are exported to ‘New York' to subsidize swank investment offices and lifestyles."
"Dollars are needlessly flowing to New York by the truckloads each day."
I could go on, but you get the point. Maybe I'm overreacting and nit-picking here because, as a journalist, words are my business. But I have to tell you: This is one of the most unprofessional pension fund-related documents I have ever read.
And if I were a judge or jury, I'd find Mr. Rombach guilty of writing without thinking. My favorite: He forecasts a move to internal management would generate "40 to 60 Louisiana jobs earning between $80,000 and $150,000." Who is he kidding? Does he honestly believe there are 40 to 60 unemployed investment professionals living in Baton Rouge, waiting for his call?
I also reviewed the two Louisiana funds' responses to our most recent Top 200 pension fund questionnaire. Admittedly, they each employed some New York-based money managers as of Sept. 30. But they also had managers in Chicago, Boston, Los Angeles, London, Philadelphia and many other cities. The employees' fund used one New Orleans manager as well —but how many Louisiana-based money managers are there, anyway?
From reading the report, I got the feeling Mr. Rombach is some young guy shooting off his mouth, someone trying to make a name for himself by going for shock value. But his biography on the web shows he has been working for more than two decades in Louisiana government. Academically, he's no slouch: He has a master's degree in economics. Not surprisingly, he's also a home-grown product — born and educated in Louisiana.
OK, I guess I've bashed Mr. Rombach about as much as he bashed New York. And I must say he made some valid points when he wasn't ranting and raving. Still, don't let me discourage anyone reading this column from sending an "I k New York" bumper sticker to John R. Rombach.
Note: Editor Nancy K. Webman grew up in Florida, lived in Texas long enough to be a naturalized Texan and has called Chicago home for 21 years. She has never lived in Louisiana or New York.
