Senator Joseph Pennacchio (R-Morris and Passiac) expressed disappointment that Governor Corzine opposes legislative hearings on the operation of the state’s pension system:
“Wall Street’s deep slump isn’t going to be reversed overnight,” Senator Pennacchio said. “The deficit in our pension fund, which was reported at $29 billion before the stock market collapse, has surged. The state and local pension obligation is now almost certainly approaching or larger than the entire $33 billion state budget. Hearings could be the springboard for long-overdue reforms that will help us preserve the pensions of thousands of hard-working police officers, teachers and other government employees.
“The governor argues the Division of Investment and State Investment Council will do a better job if legislators just keep their hands off. I disagree. Now, when the state has lost billions of dollars, is not the time for legislators to let the pension system run on automatic pilot.
“Officials from the Council and the Division should come before the legislative committees and defend how they are handling $71 billion in taxpayer and worker money. On June 30, 2007, the pension funds totaled $83 billion. Given a $12 billion decline in value, it’s not unreasonable to hold hearings aimed at reassuring the public that the funds are being managed well.
“Events of the last few months have raised legitimate concerns about pensions. News reports showed the state paid more than $22 million in fees to outside managers even though they failed to reach performance goals. Recently, the state invested $144 million to bail out a BlackRock hedge fund. BlackRock warned the state that an early $400 million investment was at risk if it didn’t invest more. A $115 million loss on an ill-advised investment in now-bankrupt Lehman Brothers is perhaps troubling because the Council has refused to disclose how the investment was made. The Council, the state Treasurer and the Governor have all ignored calls for full disclosure about possible conflicts of interest surrounding the Lehman investment.
“I urge my colleagues in the Legislature to heed my call today for bipartisan special hearings on the pension system. Senate President Codey and Senator Barbara Buono are right: Retirees, taxpayers and workers must be reassured that billions of dollars of their money is safe.”
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September 15, 2008
