Morning Memo: Cowell faces tough questions about pension fund fees

Posted by John Frank on March 5, 2014 

A consultant hired by the State Employees Association of North Carolina has accused the state Treasurer’s office of paying “over-the-top fees,” including “massive hidden fees,” to money managers who invest the state’s $86 billion pension fund.

The Treasurer’s office, which has repeatedly clashed with SEANC, counters that the consultant’s conclusions are based on assumptions that “are not based on conventional industry standards.”

The state’s fees are in line with what other state pension funds pay, and its fee-disclosure policy also is on par with industry norms, spokesman Schorr Johnson said. Johnson also said that the fees the state paid jumped significantly last year because of fees based on performance; since the pension fund performed much better, its fees rose. ...

(The SEANC investigator) noted that the Treasurer’s office’s disclosed fees amounted to “a staggering $416 million last year,” up from $121 million a year earlier. Read more here.

*** More North Carolina politics and U.S. Senate race news below in the Dome Morning Memo.***

TODAY IN POLITICS: Gov. Pat McCrory starts his morning at a Charlotte Chamber of Commerce conference at 9 a.m. before attending the state Chamber’s annual meeting in Greensboro at 11:30 a.m. In the afternoon, McCrory travels to Chapel Hill to attend a meeting of his education cabinet at 1:30 p.m.

At the legislature, a panel of lawmakers looking at public guardianship will meet at 9 a.m. in room 643 LOB. A joint oversight committee will continue to look at the state’s unemployment insurance system at a 10 a.m. meeting in room 544 LOB.

A coalition of environmental groups will hold a rally at 4:45 p.m. across the street from the governor’s mansion.

The protesters will call for McCrory to “come clean” about the Duke Energy coal ash spill, asking him to disclose his financial ties his former employer and more about his three-decade tenure. The groups also want McCrory to “stop treating polluters as ‘partners’ ” and force Duke to pay for the entire spill clean up as well as cleaning up all its coal ash ponds.

#NCSEN – TILLIS REMARK ON THE AFFORDABLE CARE ACT DRAWS ATTENTION: North Carolina Democrats are calling attention to a February radio interview in which Republican U.S. Senate candidate Thom Tillis says the federal health care law is “a great idea that can’t be paid for.”

A Washington Post blogger is highlighting the quote as Tillis tries to fend off primary challengers who want to repeal the law outright. (Tillis wants to repeal it but supports a handful of the more popular provisions.)

Tillis spokesman Jordan Shaw told the Post that Tillis’ full remark shows he opposes the federal health care law. Read more here.

HARRIS CONTINUES IMPEACHMENT TALK: The strong language Republican candidates are using to attack President Barack Obama is escalating.

Charlotte pastor Mark Harris, a U.S. Senate contender, recently criticized Congress for not taking action to impeach Obama. According to the Hendersonville Lightning, Harris stopped short of using the “i” word but his message was clear.

“I know from a practical standpoint the reason that they haven’t is because Harry Reid and the United States Senate would not even pick it up and move it forward,” Harris said at a Republican men’s club meeting, the publication reported. “But I would tell you if we manage to take back the U.S. Senate this fall, then I truly believe you will see this president either change his tone, change his actions or face the full double action of the U.S. House and the U.S. Senate. We can’t live inside this lawlessness.”

Other GOP candidates are using similarly strong language but not all.

The Lightning also reported that Harris was told not to focus his campaign on social issues. From the report: “Don’t worry, he told his conservative audience, he’ll ignore the advice. A strong domestic policy, strong foreign policy and family values is the “three-legged stool” that supports his campaign, he said.

“Someone has said this race is for the heart and soul of the GOP in North Carolina,” he said. “Someone said this Senate race in North Carolina is about the heart and soul of the GOP in this nation. Ladies and gentlemen, Ronald Reagan taught us if you try to break off any one of those three legs, that stool will not stand.” Read more here.

MEMO FROM ALEX BRADSHAW: A late-comer to the Republican primary for U.S. Senate emailed a handful of reporters under the subject line: “Who the heck is Alex Bradshaw?”

In the memo he criticizes the press for giving his longshot bid so little coverage. “Before I go, I would like to say a few words about my rationale for running. ...

“I am running as a full-platform candidate, not a single-issue one. But rather than aligning with the Establishment or the Tea Party, I am intrigued by new wave conservative thinkers like Ramesh Ponnuru and Ross Douthat. For instance, they argue that Republicans should reorient our tax policy away from obsessing over the income, capital gains, and estate taxes, which bite the affluent hardest, towards cutting payroll taxes and boosting the earned-income tax credit, which affect the working class. They want the GOP to celebrate the Reagan tax reform that took millions of the indigent off the tax rolls and lent them a helping hand through the earned-income tax credit, rather than making smug remarks about a shiftless, parasitic ‘47 percent.’ ”

HEADLINE: “Scoop: Local Republican business owner supports Hagan.” From the Greensboro News & Record: Kernersville businesswoman Jenny Fulton, co-founder of Miss Jenny’s Pickles, says U.S. Sen. Kay Hagan supports small businesses in a new campaign video released Tuesday. Read more here.

#NCPOL – TOP STORY – STATE ELECTIONS BOARD LOOKS AT WHETHER CANDIDATE BROKE ABSENTTE BALLOT RULES: The Winston-Salem Journal wrote an exhaustive look at small town politics in Rhonda, focusing on Kevin Reece, a town commissioner and boyfriend of Debra Goldman, the former Republican Party nominee for state auditor.

Reece and Goldman were elected to the town board as write-in candidates. Reece’s role in those votes are now under scrutiny. Don Wright, the general counsel at the N.C. State Board of Elections said it would look into the matter.

The story is too crazy to summarize. Read it here.

BLISTERING: Bloomberg View columnist Margaret Carlson – “A dystopian nightmare is unfolding in North Carolina. It is what the whole country would look like if you were to marry David Koch to Ted Cruz, with a prenup by ALEC, the outside agitator also known as the American Legislative Exchange Council.” Read more here.

FOREST REPEATS FRACKING MYTH: Lt. Gov. Dan Forest defended the practice of fracking in a UNC TV interview Tuesday, saying it has never contaminated a drinking well. (At about the 1:45 mark.) “It’s a safe procedure,” he said. Forest is the chairman of the state’s Energy Policy Council.

Forest is repeating a claim debunked years ago. From a 2011 New York Times story:

“There have been over a million wells hydraulically fractured in the history of the industry, and there is not one, not one, reported case of a freshwater aquifer having ever been contaminated from hydraulic fracturing. Not one,” Rex W. Tillerson, the chief executive of ExxonMobil, said last year at a Congressional hearing on drilling.

It is a refrain that not only drilling proponents, but also state and federal lawmakers, even past and present Environmental Protection Agency directors, have repeated often.

But there is in fact a documented case, and the EPA report that discussed it suggests there may be more. Researchers, however, were unable to investigate many suspected cases because their details were sealed from the public when energy companies settled lawsuits with landowners. Read more here.

PUTTING POLITICS ASIDE: GOP Senate President Pro Tem Phil Berger on state Sen. Martin Nesbitt of Asheville: “I am terribly saddened to hear that my friend Martin is stepping down as Senate Minority Leader in order to deal with medical issues. Sen. Nesbitt and I share a deep respect for the institution of the Senate, and he can rest assured his colleagues from both sides of the aisle will stand with him as he focuses on getting well.”

ART POPE CALLS UNC BUDGET “NOT REALISTIC”: Art Pope, the state budget director, has kicked the UNC system’s budget proposal back to the Board of Governors for a rewrite, saying it “simply is not realistic.”

In a memo on Feb. 28, Pope took university leaders to task, saying they’re asking for far too much money at a time when the state has competing priorities such as Medicaid and raises for K-12 teachers and state employees. He said the university system had basically ignored his office’s instructions in December to come forward with budget expansion requests of no more than 2 percent.

Pope, a retail magnate and Republican campaign financier, has been a high-profile critic of the university system going back to his days as a legislator. Now, as state budget director, he wields considerable power over state agencies, including the university system. Read more here.

HAGAN CONCERNED WITH MILITARY CUTS: U.S. Sen. Kay Hagan is protesting a military proposal to deactivate a Fort Bragg-based Air Force unit, according to her office.

The Air Force’s most recent budget proposal would “inactivate” the 440th Airlift Wing at Pope Field, a Hagan spokesman wrote in an email. Pope Field is an Air Mobility Command facility at Fort Bragg.

The proposed change would cut more than 1,100 part- and full-time jobs from Pope Field, according to Hagan’s office. The affected group is charged with maintaining “operational readiness” for airlifts, according to its website. Read more here.

ROB CHRISTENSEN: North Carolina Sen. Sam Ervin Jr. was “the perfect man” for the Watergate investigation. Read more here.

GROUP CHALLENGING VOTER LAW TO GET SOME DOCUMENTS: North Carolina must provide groups suing to overturn last year’s voting law with documents created even after it was signed in the summer, a judge has ruled.

The federal magistrate judge’s order released Tuesday is important to civil rights groups and the U.S. government, which contend portions of the law are unconstitutional and discriminatory under the Voting Rights Act. They argue they need documents about how the law is being implemented to show it’s going to hurt voters in minority groups.

(The court) hasn’t yet ruled whether General Assembly leaders can cite special legislative immunity to ignore subpoenas seeking documents. Read more here.

FJELD ENDORSES MINIMUM WAGE HIKE: Democrat Laura Fjeld is challenging her Republican rivals in the 6th Congressional District race to take a stand on the issue.

“It’s past time to raise the minimum wage,” she said in a statement. “There are nearly 700,000 workers in North Carolina who would greatly benefit from an increase. Most of these people are women who are supporting a family and they can’t make it on $7.25 an hour.”

QUICK HEADLINES –

New PAC forms to promote higher education, UNC campuses. Read more here.

Wake County school board opposes teacher tenure elimination. Read more here.

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