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The Swiss investment firm Credit Suisse will handle the new $230 million fund within the state pension fund that invests in North Carolina companies.

The fund was initially announced by State Treasurer Janet Cowell in December as $250 million, with the manager to be selected that month. The treasurer's office reduced the figure to remain within a limit on "alternative investments," according to spokeswoman Melissa Waller.

Those investments typically carry more risk but can generate larger returns.

Suisse already manages other funds for the pension fund and has 1,000 employees at its Research Triangle Park offices.

"North Carolina is a good investment," Cowell said in a prepared statement. "As we look globally for opportunities to achieve a high rate of return for our pensioners, we need to be diligent in looking into the possibilities that are in our own backyard."

Equity funds typically are not established with a goal of promoting economic development, even when that purpose is secondary to getting a good return. But State Treasurer Janet Cowell established the fund to make money and, as a "collateral objective," to help create jobs in the state. Her request for proposals from potential managers said the fund was authorized to commit to "investment opportunities with significant operations in North Carolina."

A press release announcing Credit Suisse Monday said the fund would "seek" to invest in North Carolina companies.

Cowell drew skeptical observations in December about what is sometimes called "social investing" from, among others, the State Employees Association of North Carolina, whose representatives said the fund should focus on one goal: getting the best return.

UPDATE: Waller said the selection process for the fund's manager was extended to allow for suffficient scrutiny of the eight firms that submitted proposals.

LARGER CLASSES: About 3,700 fewer teachers are at work in the state's public school classrooms this year, and most of the decline is because of budget cuts that sacrificed instructors. (N&O)

PRIVACY FENCE: The state's personnel law makes it difficult to track and expose cronyism in state government. It also hides all but the most basic information about state workers. (N&O)

NEW FUND: State Treasurer Janet Cowell on Monday will announce who has been hired to administer a new Innovation Fund. That's the name given to a pool of money from the state's $67 billion pension resources that will invest in companies that have major operations in North Carolina. (AP)

North Carolina's state pension fund ended 2009 with a 15 percent return on its investments, State Treasurer Janet Cowell announced Wednesday.

The fund, the tenth largest public pension fund in the country, ended the year with $67 billion, which is a $1.2 billion increase from the end of the third quarter.

Stocks and bonds make up 90 percent of the fund's investments, and stock gains helped account for the growth. Real estate investments continued to go down, but Cowell said the losses had slowed.

Despite the positive returns, Cowell cautioned, as she has before, that the recession will leave an impact on the fund for years. She emphasized that the legislature will need to pump more money into the fund.

"The long-term health of the pension fund is important not only to retirees, but to the financial stability of the state," Cowell said in a prepared statement. "It is imperative that state and local leaders prepare for increased and sustained pension contributions in their budgets over the coming years."

State Treasurer Janet Cowell is in South Korea this week meeting with money managers for the state pension fund about real estate investments.

Cowell also will visit China as part of her checkups on the managers of the funds that hold pension fund money.

"We're just looking at options out here," Cowell said in a telephone interview this week. Cowell's department is paying for the trip.

Cowell is looking at the possibility of expanding Asian real estate investments for the fund. The $60-plus billion fund's portfolio of investments in Asia is relatively low, less than 7 percent, as of Dec. 31. The Asian share of the fund's real estate portfolio also is less than 7 percent, or $205 million out of $3 billion.

UNION? Gov. Bev Perdue has given North Carolina's largest state employee association the authority to represent workers in discussions about workplace conditions, a move that business and conservative groups say is a step toward unionization.

Without fanfare, Perdue issued an executive order Jan. 21 to create a formal procedure for "meet and confer" gatherings between agencies and representatives of the State Employees Association of North Carolina, which is Local 2008 of the Service Employees International Union, the nation's largest public employee union. (N&O)

HIT DELETE: Former Gov. Mike Easley's press secretary said in sworn testimony that the governor wanted e-mail messages to and from his office deleted so they would not become public.

Easley's communications directors denied giving that instruction, although public information officers took notes in a meeting suggesting the order was given. (N&O)

IN THIS CORNER: State Treasurer Janet Cowell wants the legislature to referee a fight with Perdue's administration over the funding for Interstate 485 in Charlotte - along with the bigger question of who controls the state's credit card. (N&O)

The N.C. Attorney General's office has settled a squabble between the state Department of Transportation and State Treasurer Janet Cowell over the unfinished I-485 loop around Charlotte.

Grayson Kelley, chief deputy to Attorney General Roy Cooper, wrote a letter Tuesday saying that DOT's funding plan for finishing the long-unlinked highway is legal and constitutional.

The plan, announced with considerable fanfare by Gov. Bev Perdue, included the state promising to pay the contractor $50 million of the $340 million cost over a period of ten years. Cowell, who oversees the state's debt load, said the transportation department didn't have the authority to go into debt.

Kelley wrote that there was no law and no court ruling that would prohibit the "Design, Build, Finance" plan that DOT proposed.

"We believe the General Assembly has authorized NCDOT to expedite construction in this manner," Kelley wrote.

North Carolina's pension system for state and local government employees is about to get a fresh examination.

A 13-member commission, appointed by State Treasurer Janet Cowell, will hold its first meeting in January to evaluate what changes need to be made in the system that serves 820,000 North Carolina including teachers, state employees, firefighters, police officers and other public workers, Rob Christensen reports.

Cowell appointed members of the Future of Retirement Study Commission in December. The commission was created in October by the boards of trustees of the Teachers' and State Employees' Retirement System and the Local Governmental Employees' Retirement System. The chairman is Robert Clark, a professor of management and economics at N.C. State University who specializes in aging and labor economics and pension and retirement policies.

Cowell said said the current pension system was designed in 1963 and had not been significantly changed since then. Pension systems across the country have drawn attention during the recession as funding levels have dropped and many private sector employee have been forced to delay retirement.

The first meeting will be held 9 a.m. January 25 in the Dawson Conference Room of the Albermarle Building.

Committee members include Sen. Richard Stevens of Cary; Rep. Deborah Ross of Raleigh; Charles Abernathy, county manager for McDowell County; Mary Bethel, co-director for AARP North Carolina; Randy Byrd, criminal investigations supervisor for the Cary police; Joseph Coletti, a fiscal analyst for the John Locke Foundation; Monda Griggs, a curriculum specialist for high schools; Darleen Johns, a Raleigh business woman; Charles Johnson, vice president of the State Employees Association of North Carolina; Shirley Morrison, human resources officer for Guilford County School; Aaron Noble, human resources director for the City of Burlington and Charles Perusse, state budget director.

Democratic Senate candidate Elaine Marshall attended a White House Christmas Party Tuesday night.

Marshall, who is secretary of state, was one hundreds of state officials from across the country invited, Rob Christensen reports. Other Democratic North Carolinians attending included state Rep. Verla Insko of Chapel Hill, state Rep. Pricey Harrison of Greensboro, Durham Mayor Bill Bell and state Treasurer Janet Cowell.

So that means on Tuesday, three North Carolina Senate candidates were having some sort of interaction with President Barack Obama.

Republican U.S. Sen. Richard Burr was appearing at a rally to protest the president's health care plan, Democratic candidate Cal Cunningham was taking a call from Obama in his hometown in Lexington, and Marshall was attending a White House party.

Secretary of Transportation Gene Conti said his agency has not communicated well on the new financing plan for the I-485 loop around Charlotte.

The plan calls for the contractor to front $50 million of the $340 million cost. Conti emphasized that, if the contractor borrows its $50 million from a bank, the state will not back that loan.

Conti also said that the state will pay the contractor its $50 million over ten years with no interest - "an extended payment plan," Conti said in a meeting today with reporters and editors from the News & Observer and Charlotte Observer.

Conti emphasized those points in the aftermath of questions raised by State Treasurer Janet Cowell over whether the Transportation Department has the authority to add to the state's debt load.

"We just haven't communicated very well," Conti said. 

Attorney General Roy Cooper said his office never issued a formal opinion on whether the Department of Transportation can use a new financing plan to pay for finishing I-485 in Charlotte.

Both Gov. Bev Perdue and transportation officials indicated a few days after the plan was announced that Cooper's office signed off on it. The plan involves the contractor financing $50 million of the $340 million project and the state paying the company back over ten years.

"Prior to announcing the plan, we worked with the (Attorney General)’s office as we developed the design-build-finance program for completing I-485," Perdue said in a prepared statement on Nov. 24, two weeks after announcing the plan. "During this process, the Attorney General’s office indicated that our plan was legal."

Cooper said his office "provided advice as this process went along" to both DOT and the office of State Treasurer Janet Cowell, who has questioned whether the transportation department has authority to add to the state's debt. Cooper won't disclose what advice his lawyers provided. But he made clear his office was never asked for a formal opinion on a plan for 485.

"If we are given a specific plan for a written legal opinion," Cooper said, "then obviously we will do it and that opinion will be made public."

Perdue, Cooper and Cowell are all Democrats. Cooper said agencies can present ideas and get advice about those ideas and routinely do so.

"Our mission is to make sure that any financing plan be done within the law," Cooper said.

So does the DOT plan fit within the law? "We are giving advice," he said.