RALEIGH -- State Treasurer Janet Cowell said Tuesday that she is open to overhauling the relationship between her office and the outside money managers hired to help handle the state retirement fund.
Cowell said she is willing to discuss ending the longstanding practice of some money managers paying for travel for the Treasurer's Office staff to meet with the financial firms, potentially bringing more transparency to the oversight of the more than $60 billion state pension fund that Cowell's office oversees.
"We're open to saying, 'Maybe we should be paying for everything and just forget third-party reimbursement,'" Cowell said. The downside is "you have to go to the General Assembly and get a bigger travel budget."
That means tax dollars.
Cowell's comments came as she announced several new ethics and travel policies a few days after documents provided by her office showed that she fired the agency's chief investment officer in August amid questions about travel and expense reimbursement.
Cowell said she is trying to get a full picture of how much her staff is traveling.
"Right now we just need to get a better grip on thedata," she said.
After taking office, Cowell hired an outside firm,EnnisKnupp of Chicago, to conduct a top-to-bottom review of the office, essentially an audit. She hopes to receive interim findings next month.
Cowell, a Democrat, campaigned as an advocate of transparency and said that the reforms announced Tuesday help fulfill that agenda. Those changes include:
•Prohibiting the treasurer and top staff from doing business with the Treasurer's Office for two years after leaving that office.
•Requiring full disclosure when a third party pays for travel.
•Requiring money managers to disclose any use of agents who help secure contracts with pension funds.
Cowell described travel as essential to her office. Members of her staff regularly meet with the firms that help manage the pension fund to make sure the firms are doing their job well. If the Treasurer's Office doesn't check in on the firms, then the office is not doing due diligence, she said.
Travel added up
Pat Gerrick, chief investment officer in Cowell's office until August, filed an amended financial disclosure form in September that listed 13 trips worth about $20,000 that were paid for by outside firms. The updated form followed an August ruling by the State Ethics Commission that the trips should be disclosed. Cowell had asked for the ruling as she tried to gather information on the office's travel.
Gerrick said Cowell and her predecessor, Richard Moore, authorized the travel and were aware that it was part of agreements between the Treasurer's Office and the investment firms. It is typical for pension funds to negotiate, as part of the contract with a money manager, for the manager to pay for a limited amount of travel for those who run the pension funds. In the case of the Treasurer's Office, the transactions are all handled through that office.
"I never got a check from a [money] manager for expenses," Gerrick said.
Gerrick also reimbursed the state for about $3,000 in personal cell phone calls. She said her phone had unlimited minutes, and she didn't know reimbursement was required. She then turned in her state cell phone and exclusively used a personal phone, she said in a statement.
Gerrick said her dismissal boiled down to a dispute over paying out vacation and comp time. Gerrick said she proposed working reduced hours as a transition to a new chief investment officer and getting paid for her comp time. Cowell said state law does not allow agencies to pay for comp time.
Cowell's office is in the process of hiring a search firm to help hire a new chief investment officer, a position she hopes to fill by January.
