By a rare narrow vote, the House Finance Committee approved a bill Wednesday to give State Treasurer Janet Cowell more flexibility to invest the state's pension money, even after the panel weakened the measure.
The 14-13 vote reflects the ardent opposition from the State Employees Association of North Carolina, which is concerned about the risk of moving into alternative investments and opposes Cowell's sole management of the retirement fund.
Cowell appeared at the meeting to push to increase the current 34 percent total cap on private asset investments, such as hedge funds and real estate, saying the state's $80 billion pension portfolio is too limited to stocks and bonds. She said with the stock market at all-time highs and interest rates about to rise, the current investment strategy is not sustainable.
The original measure moved the cap to 40 percent, with more more than 15 percent in any one asset class. But the amended bill approved by the committee, moves the cap to 35 percent.
But even the minor change generated contentious debate. Rep. Andy Wells, a Hickory Republican, said the concerns of state employees are unsubstantiated. "All of it is based purely on fear," he said. It's an unknown. ... One of the worst things you can do in an investment decision is make fear a criteria."
SEANC's Ardis Watkins argued that Cowell's push for more flexibility is motivated by the same feeling. "We believe this bill itself is reaction out of fear," she said, comparing private equity investments as "going to Vegas."
Cowell distributed a letter from Richard Vinroot, a former Charlotte mayor and Republican gubernatorial candidate, who wrote that the bill is in the state's best interest and not "grandiose or far reaching."