If Mr. Blue becomes treasurer, he would bring all pension fund money managers to Raleigh within his first few months along with legislators, academics and citizens “and have a very public conversation” about investing.
“The question is whether public pension funds should be as complicated as they are. Should we be active investors or passive investors?” asked Mr. Blue. On more controversial alternative asset classes, he said, “we've got to tease apart fees vs. performance.”
“If we can have that conversation I think we can do a lot of good. It's going to be an ongoing battle to show that we have transparency.”
If elected, Mr. Folwell's second order of business would be revisiting the 7.25% assumed rate of return for the pension system, whose latest return was 0.8% for the 12 months ended June 30, an annualized 6% over the past five years, 5.5% over the past 10 years, and 5.8% over 15 years. “I would recommend to the board that we need to be realistic; we need to lower the discount rate,” he said.
Mr. Folwell is endorsed by the State Employees Association of North Carolina, a frequent critic of pension fund fees, alternative investments and the sole trustee arrangement. Mr. Blue, whose father is the state Senate's top Democrat, has won other key labor endorsements, including the AFL-CIO.
Fees paid to outside money managers is also an issue in the treasurer's race in Pennsylvania, where earlier this year legislators came close to creating a hybrid retirement plan for new employees participating in the $48.5 billion Public School Employees' Retirement System and the $26 billion State Employees' Retirement System, both in Harrisburg.
The treasurer sits on the boards of both funds, which together have more than $56 billion in unfunded liabilities.
In a crowded race of four candidates, the leaders, Democrat Joe Torsella and Republican Otto Voit, have called for less reliance on outside managers and more promotion of the state's 529 college savings plan. Mr. Torsella, a former deputy mayor of Philadelphia, wants to stop allowing the use of placement agents for hiring money managers. He also promised to create the PA-IRA program for private-sector employees without access to workplace retirement plans that would automatically enroll workers but give them a way to opt out.
Voters in several states will decide constitutional amendments that could change how public funds are invested and managed.
In Wyoming, voters will weigh in on whether to amend the state constitution to allow all state investment pools to invest in equities. The $7.4 billion Wyoming Retirement System, Cheyenne, and some other state funds already have that ability.
Wyoming Senate President Phil Nicholas and House Speaker Kermit Brown oppose the measure, citing 2008 stock market losses that reduced public pension fund assets by nearly one-third.
In Oregon, a similar measure would allow public state universities to invest some of their assets in equities, which the constitution currently prohibits. The amendment, Measure 95, won widespread approval in the Oregon Legislature, despite concerns over a perceived lack of transparency at the $775 million University of Oregon Foundation, the likely investment adviser for the schools if the measure passes.
Hawaiian voters will decide on a legislatively referred constitutional amendment that would allow excess general fund revenues, now only to be used for emergencies, to be applied to bond payments and shortfalls in the $14 billion Hawaii Employees' Retirement System, Honolulu.
Pensions are a more personal campaign issue in the Illinois contest for comptroller, where GOP incumbent Leslie Munger has accused Democratic challenger Susana Mendoza of pension “double dipping” from stints as Chicago city clerk and a state lawmaker. The winner is expected to be in the middle of budget battles between Gov. Bruce Rauner and House Speaker Mike Madigan, which include disagreements over how much to contribute to the severely underfunded pension system.
As of June 30, 2015, Illinois' five state retirement systems faced $111 billion total in unfunded liabilities and a funding ratio of 41.9%, the worst in the nation.