North Carolina's pension lost about $4.1 billion in the first three months of 2009.

State Treasurer Janet Cowell said Tuesday that the negative 6.4 percent return, which left the pension fund valued at $55.9 billion, was about average.

About 41 percent of the funds are invested in stocks, another 47 percent in bonds, six percent in real estate and the remainder in other investments.

Cowell asked lawmakers to put $358 million into the system over the next two years to make up the losses, but a projected $3 billion budget deficit makes that unlikely. (WRAL)

The Senate Finance Committee, meantime, gave is approval to a bill that would expand the types of investments Cowell can make for the fund, allowing 10 percent more to go into nontraditional investments.

Cowell said that would reduce risk. (Insider)

Richard Moore says the state's pension fund is solid.

In an interview with the N&O, the outgoing state treasurer said the state's portfolio dropped from $72.3 billion in value at the end of June to $65.9 billion as of Sept. 30.

The portfolio secures pension funds for nearly 900,000 people in the state and local government retirement system, Rob Christensen reports.

"State pensioners should not be concerned about their checks," Moore said. "We will finish this year in an overfunded status. We will be one of the top-performing pension plans in the country this year. But we have lost money. We have lost a lot."

Because the state has long had a conservative investment policy — about half the assets are in fixed-income investments such as bonds — the state's losses were far less dramatic than in many investment funds.

The state pension fund was down 12 percent for the year ending Sept. 30, compared with the S&P 500, which was down 24 percent, Moore said.

North Carolina is one of three states — the others are New York and Connecticut — where an elected state official has sole responsibility for investment of the state's pension fund.

U.S. Sen. Elizabeth Dole and Rep. Robin Hayes could get federal pensions.

As the two multimillionaires leave Congress next month, they will be eligible immediately for congressional pensions: Dole, about $15,000 a year for life; Hayes, about $25,500, according to the National Taxpayers Union, a government watchdog group.

The amounts would be increased with an annual cost of living adjustment, Lisa Zagaroli reports.

"Even after attempts to reform the system in the early 1980s, members of Congress were left with a very sweet deal," said Pete Sepp, a spokesman for the group. "They get both defined benefit pensions and a defined contribution plan. Most workers in America have to choose one or the other if they're even offered both."

Rep. Howard Coble of Greensboro campaigned against the system in his first race in 1984 and has never enrolled in it. He said he knows of only one other lawmaker who isn't enrolled, Rep. Ron Paul of Texas. 

"It's a taxpayer ripoff," he said.

Hayes is worth between $75 and $272 million, making him the fifth richest member of Congress, while Dole is worth between $15 and $48 million, making her the 23rd richest lawmaker, according to a 2007 ranking by the Center for Responsive Politics.  

Both declined to comment on the pension.

Janet Cowell thinks the treasurer should have more tools.

The treasurer-elect told Dome that she thinks financial planners taking care of the state's pension fund should have more options to invest in order to hedge against bad markets like this one.

Cowell was not ready to talk specifics about her proposal, but she said as an example that if the pension had invested heavily in German securities, it might look for another investment to hedge against the euro rising against the dollar.

"You could use that tool to control risk," she said. "Some people might be afraid that if you give (the treasurer's planners) that authority, they might use it to increase risk. So the question is can we give them tools so they can make good investment decisions, but put some contraints on them?"

She said any changes to investing strategy should be "appropriate, prudent and conservative."

Cowell said after her January swearing-in she'll talk more with legislators about expanding the statutory authority of the state treasurer's office, perhaps with a bill as early as next session. 

Richard Moore says the Federal Reserve is welcome to borrow from North Carolina.

In an appearance on CNBC, the Democratic state treasurer said Wednesday that the state's public pension fund would be willing to lend money — at the right price — to try to boost liquidity in the banking industry.

"I'd like to think that Hank Paulson has been as creative as possible. I've got a solution for you this morning, Becky," Moore told the channel's Becky Quick.

If the Congress is not willing to loan this money, if the Fed will give me a guaranteed rate of return — 7, 8 percent — I'll loan them the money, and I think there are a lot of pension plans across the country that would loan money to the federal government at that kind of rate. And I'll give him the fire power he needs to settle this out.

Moore described the heart of the problem as banks being unwilling to loan to each other.

"We really do have a real problem if banks can't trust each other, particularly with short-term trading, so we do need a solution to this and we need it quickly," he said. "But boy, that's easier said than done in our society, isn't it?"

Moore spokeswoman Sara Lang told Dome Thursday that the idea of lending to the Federal Reserve is still only a hypothetical. 

Gov. Mike Easley should not have diverted $225 million headed to the state pension fund, a judge said.

An Appeals Court ruled Tuesday that Easley should not have intercepted $225 million for the state employee pension to cover a budget shortfall in 2001. 

Though the state repaid the money and pension benefits were not affected, the 14 former and current state workers who first sued in 2002 wanted to ensure that it didn't happen again.

Republican Gov. Jim Martin also withheld pension money in 1991.

"It's a great ruling for the teachers and the state employees," said Hardy Lewis, an attorney representing the plaintiffs. "It essentially says the government can't use the pension fund as a rainy-day fund." (AP) 

State spending was in the news this week.

The most-read posts on Under the Dome from last Sunday to noon today included gatherings with the contradictory goals of cutting spending and boosting state worker pay. Also, both state budget writers and an imprisoned legislator have less to spend.

1. Take Back Our State: More than 1,000 activists rally in front of the legislature to hear Bob Dole tell jokes and Pat McCrory keep the beat. But no rim shots.

2. Give Back Our Raises: More than 200 state workers rally at — wait for it — the legislature to ask for a 3 percent raise in the state budget. Talk about the beat of a different drummer.

3. Hands Off Our Pension: Meanwhile, a group representing state workers spends some of their money on a full-page ad in the N&O. Dome stays employed for another week.

4. Cut Back Our Spending: The taxman tells lawmakers they'll have $70 million less to spend. Good news for those at No. 1 above, bad news for those at No. 2?

5. Cut Back My Spending: Disgraced former House speaker Jim Black pays a $1 million fine for taking cash in bathrooms. He'll have to cut back at the prison commissary.

The State Employees Association of North Carolina has taken its case to the newspapers, again.

In a full-page color ad in the front section of today's N&O, the state workers group promotes a House bill that would transfer control of the state pension away from the state treasurer to a board appointed by the governor and legislative leaders.

"Q: Why does the North Carolina retirement system need reform?" the ad says, above a photo of a mournful-looking couple. "A: $4 billion lost in 4 months."

The ad cites a May 30 story in the Triangle Business Journal that noted the value of the pension fund for state workers and teachers dropped from $43 to $38 billion in the first quarter of 2008 due to the drop in the stock market.

In an interview, SEANC spokeswoman Toni Davis would not say whether the pension fund lost value because of mismanagement by Moore or just a poor economy.

"All that we are saying with that ad is that we woud like for the General Assembly to consider legislation that would have an investment board rather than a state treasurer," she said.

State Treasurer Richard Moore's office said that the ad was "irresponsible scare tactics."

"It is unfortunate that SEANC continues to scare retirees and public workers about their pension fund," said spokeswoman Sara Lang in a statement. "North Carolina's pension fund is one of the best in the country, and our conservative investment strategy means that members can count on their benefits to be there for them."

It cost around $9,500 to run the ad.

The head of a state workers' group said claims of bribery are "crazy allegations."

Dana Cope, president of the State Employees Association of North Carolina, told Dome after a hearing today that he was involved in an offer by attorney Tom Harris to drop a public records lawsuit if state Treasurer Richard Moore would back a bill.

He said that the records request was directly related to the bill, which would transfer the treasurer's role in managing the state pension fund to a board of trustees.

"The only reason why we sought the public information request is to make an independent determination is there a pay-for-play going on," he said. "If that is true, that would help us obtain a statutory change that we filed last legislative session in order to reform the system like every other state in the country."

He said Moore's attorney, Kieran Shanahan, was trying to "take the public's eye off the ball."

"Shanahan shenanigans are in play here," he said.

Judge Jim Hardin did not make a ruling on the allegation or the motion to dismiss the case today.

Immigration, energy efficiency, and soccer.

These are just a few of the topics taken up by state Sen. Kay Hagan in the current legislative short session. The Democratic nominee for U.S. Senate sponsored one and cosponsored 10 non-budget bills so far in 2008.

Two bills seem most likely to come up in her race against U.S. Sen. Elizabeth Dole. The first, which she cosponsored, would require employers use the federal E-Verify program to check that employees can legally work in the United States.

That program, you may recall, was touted by former Republican gubernatorial candidate Fred Smith, who used it at his road- and home-building businesses.

Another bill she cosponsored would create a state sales tax holiday for a week each April on energy-efficient light bulbs, home appliances, electronics and insulation. It would be similar to the popular back-to-school holiday already in effect.

On a lighter note, the bill she sponsored could also be used to remind political commentators of a popular swing vote constituency: Soccer moms. The bill would create a special "Support Soccer" license plate.

Other bills she cosponsored: Change the local requirements for recall petitions in the city of Greensboro. Increase the monthly pension for retired firefighters and paramedics. Limit or exempt baked goods from the state sales tax. Increase benefits from the State Health Plan. Allow the legislature to meet in Greensboro one day for its centennial. Honor Korean War Veterans. Commemorate Israel's 60th anniversary.