The commission is part of Ms. Cowell's broader effort to bring more transparency to the system and to create a stronger ethics culture for money managers doing business with the state.
That effort has already brought a multiyear review of placement agents that led to new limits on their use and $15 million in refunds and fee discounts from eight investment managers. Now, Ms. Cowell wants to see how her office's investment policies can be further improved in terms of transparency, accountability, cost-effectiveness, and investment results, she said.
“Treasurer Cowell wants to leave the office better than she found it,” said spokesman Schorr Johnson, who noted Ms. Cowell is being proactive rather than waiting for problems to happen. ”You want to do reforms from a position of strength,” he said.
It couldn't happen too soon, say critics like the State Employees Association of North Carolina. SEANC, an affiliate of the Service Employees International Union — with 55,000 active and retired members — has long advocated for ending the sole trustee arrangement.
“There are no checks and balances. We don't have enough structure in place. It's a system that invites bad actors ... to do business with (the state),” said Ardis Watkins, Raleigh-based SEANC legislative affairs director.
The sole trustee model is widely viewed as outdated in terms of pension governance. In a 2009 Pensions & Investments survey, 91% of respondents agreed with then-New York Attorney General Andrew Cuomo's proposal to replace the New York State Common Retirement Fund's sole trustee with a 13-member board of trustees, and 90% favored eliminating all sole-trustee systems at state pension funds. The New York Assembly did not act on the proposal.
“I've tended to believe that well-run investment boards were superior to sole trustees, primarily due to the risk of malfeasance,” said William Fornia, president of Pension Trustee Advisors Inc., Centennial, Colo., a public pension fund consultant specializing in trustee education. “But I'm very interested in viewing the commission's findings.”
Ms. Watkins said SEANC members don't take issue with Ms. Cowell personally, but with the current governance structure. “It's about who is treasurer 100 years from now,” said Ms. Watkins. “Our Legislature and governor have about a quarter of the power of the treasurer. We want to know that it's going to change.”