HARTFORD, Conn. -- Denise Lynn Nappier, who becomes Connecticut's treasurer Jan. 1, already is mapping plans for her role as sole trustee of the $16 billion State of Connecticut Retirement & Trust Fund.
Ms. Nappier, a Democrat, defeated Republican incumbent Paul J. Silvester earlier this month by a mere 2,810 votes.
First, she said, she will issue a request for proposals for a consultant to conduct an asset allocation study.
"I want to know how efficient the portfolio is, and particularly its policy on passive management, to determine if it complements the rest of the portfolio," she said.
She also expressed concern about underfunding. Patrick O'Neil, spokesman for Mr. Silvester, said that as of June 1997 (the most recent available data), the teachers' fund was 78% funded, while the remaining seven funds were 60% funded. He explained these levels were set by the state Legislature seven years ago when the unions involved agreed to cut back funding in exchange for job security.
In addition, Ms. Nappier said she will study the value the pension fund's money managers bring, and noted she could reduce the number.
"My decisions will be driven by quantitative and qualitative assessments of the portfolio, not political interests," she said.
The fund is 55% in equities, the limit allowed by state law, said spokesman Patrick O'Neil. Of that, 15% is in international equities.
Ms. Nappier said she'd prefer a 60% equity allocation. But unless she can make a strong case for it to the Legislature, she doesn't know if she will be able to get it changed.
The domestic equity portfolio is all indexed, although a quarter of it is in an enhanced index strategy.
The fund also has 35% in fixed income and 10% in alternatives, including real estate and private equity.
The Connecticut pension fund went through a major restructuring when Republican Christopher Burnham assumed office in 1995. With his then-deputy Paul Silvester, Mr. Burnham slashed the number of money managers to 22 from 67, asking all of them to resign and re-apply for their jobs. He also sharply reduced the staff in the treasury office and eliminated an emerging manager program, even though it had received national praise.
Mr. Burnham resigned his post in July 1997 to join Columbus Circle Investors, Stamford, Conn., which had been one of the state's money managers. Mr. Silvester then was appointed treasurer. During his tenure, Mr. Silvester added a few managers, bringing the current number to 26 to 28, Mr. O'Neil said.
Ms. Nappier, meanwhile, will be the first person elected Connecticut treasurer who already knows how to run a pension fund. For the past nine years, she has been treasurer of Hartford, which has a $940 million pension fund.
Connecticut wasn't alone in having pension assets affected by the Nov. 3 ballot. Here's a roundup.
CALIFORNIA
Democrat Phil Angelides, California's newly elected state treasurer, will get his chance to increase instate investments made by the California Public Employees' and California State Teachers' retirement systems.
CalPERS now invests about 10.7% of its $134 billion fund in the state and CalSTRS, 8.9% of its $88 billion. Mr. Angelides in his campaign proposed a two to four percentage point increase.
He replaces Matt Fong, who was unsuccessful in his bid for Barbara Boxer's seat in the U.S. Senate. Mr. Angelides lost to Mr. Fong in 1994, when Mr. Angelides made the same arguments for in-state investing.
Mr. Angelides also intends to establish regional investment advisory councils to help identify local investments.
NEW YORK
In New York, where unsuccessful Republican challenger Bruce Blakeman blasted incumbent Comptroller H. Carl McCall for accepting a reported 40% of his donations from out-of-state firms connected in some way to the New York State Common Fund, Mr. McCall prevailed on election day -- with 64% of the vote. He is sole trustee of the $100 billion pension fund. With this campaign behind him, he might have his sights set on higher office. But he said it is too early to decide.
ARIZONA
In Arizona, voters approved Proposition 102, which allows the state's permanent trust fund to be invested in equities. Previously, the fund could invest only in "interest-bearing securities" such as bonds and bank accounts. A board of investment will be established and will invest no more than 60% of the fund in stock listed on any national stock exchange. The state treasurer and board of investment will be required to adhere to the prudent-investor rule.
Exactly how much will be invested in equities and the timing have yet to be decided, said Neal Helm, deputy state treasurer.
MISSOURI
Missouri voters passed a constitutional amendment calling for the state treasurer to prepare a written investment policy for investment of state funds, and authorizing additional categories of investment to include banker's acceptances and commercial paper. Treasurer Bob Holden already prepares written investment statements and has since taking office in 1993, said Chuck Miller, communications director. Missouri wanted to update the constitution and be in line with other states, Mr. Miller said. The amendment also allows state funds to invest in five-year U.S. Treasury notes. Previously, only three-year notes could be considered.
MINNESOTA
Some 56% of voters in Minnesota approved a referendum to abolish the state treasurer's office in 2003. Among the treasurer's duties is serving as trustee on the $8 billion Minnesota State Board of Investments. The treasurer, secretary of state and commissioner of finance have until January 2001 to decide on the distribution of the treasurer's duties.
OTHER RACES
In one of the closest state races, incumbent South Carolina Treasurer Richard Eckstrom, a Republican, lost to Democrat Grady Patterson in a race that tackled the issues of experience and bipartisanship. Mr. Patterson held the post for almost 30 years before Mr. Eckstrom took over in 1995.
In Wyoming, Republican Cynthia Lummis won the treasurer's seat vacated by retiring Stan Smith. Her campaign called for a change in investment strategy to focus on in-state investing. Ms. Lummis, former interim director for the $2.6 billion State Loan Board, wants to create a Wyoming-based group of "investment experts," both professionals and amateurs, to advise state funds in investments and help identify potential Wyoming investments that meet the requirements of safety and yield.
Her agenda also includes discussing passage of the prudent-investor rule by the Legislature.
In New Mexico, voters approved a constitutional amendment prohibiting the expenditure of public retirement funds "for any purpose except for the sole and exclusive benefit of the trust beneficiaries."
In Maryland, William Donald Schaefer won the comptroller's race, replacing Louis L. Goldstein, who died July 3. Mr. Goldstein had been chairman of the board for the $27.8 billion State Retirement and Pension System. Deputy Comptroller Robert Swann had taken over in the interim and sat as a trustee on the pension fund board.
Rhode Island Treasurer Nancy Mayer is leaving politics after losing her bid for state attorney general. Treasurer-elect Paul Tovaras, who has been a state Senator, will replace her. He currently sits on the board of the Rhode Island State Investment Commission, which oversees $5.6 billion in state funds.
