The South Carolina Retirement System's plan to create an external firm to manage the $24 billion system's illiquid assets is expected to be delayed on the recommendation of Gov. Mark Sanford and other top state executives and legislators who want a more thorough review of the proposal.
During a Sept. 29 meeting, the five members of the state Budget and Control Board, including Mr. Sanford, unanimously approved a motion by Converse Chellis III, state treasurer, calling for the South Carolina Retirement System Investment Commission to delay development of the firm, now referred to as Devco, and to rescind its previous approval to create the firm as early as Oct. 1.
“It could be the greatest plan since sliced bologna, but we need more sets of eyes looking at it and a more comprehensive review before we move forward with it,” said Scott Malyerck, deputy state treasurer.
“I would be shocked if we didn't slow the process down,” said Allen R. Gillespie, commission chairman, adding that the Columbia-based commission would consider its “next steps” at a special meeting within the next several weeks.
“It would be unrealistic to say that there's not a lot of opposition at this point, but I'm not sure that (opposition) is permanent. They weren't asking us necessarily to pull the plug; they were asking us to slow down and provide more information,” he said.
“Clearly, there is not consensus at this time, and it would be irresponsible of us to push forward without building the proper consensus.”
The control board — whose membership is made up of the governor, the state treasurer, the comptroller general, the chairman of the state Senate Finance Committee, and the chairman of the state House Ways & Means Committee — serves as the retirement system's trustee. The control board appoints the members of the investment commission, which oversees the fund's investments. Mr. Chellis, the state treasurer, also serves on the commission.
The idea for Devco was first discussed formally by the commission at a retreat in May, at which Robert L. Borden, the commission's CEO, made a presentation on the proposal. Mr. Gillespie said. (Mr. Borden did not return telephone calls by deadline.) A motion to roll out Devco as soon as the beginning of October was adopted unanimously by the commission's five voting members — including Mr. Chellis — on Sept. 23.
But Mr. Malyerck said that Mr. Chellis subsequently decided the plan was possibly moving too quickly and that too few details were available. “He wanted to put it on hold until the idea could be fully vetted, not only by the Investment Commission, but by the General Assembly, the Budget and Control Board, and the attorney general,” Mr. Malyerck wrote in an e-mail response to questions.