(Host) State Auditor Elizabeth Ready is calling on State Treasurer Jim Douglas to take a more active role in protecting the state’s pension funds. It was announced earlier this week that the state employee retirement fund has lost roughly $180 million in the past two years. Douglas says Ready’s comments are purely political.
VPR’s Bob Kinzel reports.
(Kinzel) Since the beginning of 2000, many public and private pension accounts have had a very difficult time. Most of these funds are heavily invested in the stock market and the roller coaster ride of Wall Street, coupled with the scandals involving Enron and WorldCom have caused many of the pension accounts to lose money. During this period the Vermont State Employees’ Fund lost about 15% of its value, or roughly $180 million.
State Treasurer Jim Douglas says it’s important to look at the performance of these funds over the long term. He points out that the state’s three major retirement funds have doubled in value since he became treasurer in 1995.
State Auditor Elizabeth Ready says she has a different philosophy concerning these funds. Ready thinks the state should take a more aggressive stand regarding the management of these funds and she questioned if Douglas had accurately portrayed the state’s pension losses from the sale of WorldCom bonds:
(Ready) “We’ve seen two years when public pension funds have taken big hits. It’s a result of fraud, it’s a result of greed, it’s a result of malfeasance in the market, and I think that Vermonters deserve straight talk. They need to hear both the news and the weather. And I think that instead of sugar coating a bitter pill, it is up to us as elected leaders to use these scandals as an opportunity to demand greater accountability and to ask some tough questions.”
(Kinzel) Douglas, who described Ready’s remarks as being purely political, did admit that his office had made a mistake when it calculated the WorldCom bond loss. Instead of losing several hundred thousand dollars, the actual loss was closer to $9 million. But Douglas notes that the state pension funds have more than two billion dollars in them and that the state already has a review board in place that oversees these pension accounts:
(Douglas) “Well I made a mistake and I admit that and I regret it in the case of the World Com bonds. But overall I believe our process of monitoring performance of the funds is substantial: it’s adequate, it’s what other states do. I think that our system of keeping track of our investment manager is sufficient and provides adequate protections for the members of the system.”
(Kinzel) Douglas says the pension funds remain in good shape and that the recent losses will not affect anyone’s pension checks. The pensions are guaranteed so if there are substantial losses in the future, taxpayers will be responsible for meeting the obligations.
For Vermont Public Radio, I’m Bob Kinzel in Montpelier.