COLUMBIA, S.C. (AP) — South Carolina Treasurer Curtis Loftis believes financial documents tied to investment decisions of the state's pension portfolio should be reviewed by more people.
He took his case Thursday to the Budget and Control Board, saying he's not comfortable signing off on payments of hundreds of millions of dollars without his experts first reviewing the contracts. The five-member financial oversight panel consists of him, the governor, comptroller general, and the Legislature's chief budget writers.
They voted to hire an attorney to interpret the 2005 state law that created the stateRetirement System Investment Commission, which manages the portfolio, regarding the rolls of the treasurer and commission. They also directed the commission to make recommendations on tweaking the law.
Gov. Nikki Haley said Loftis has a legitimate request, and she's hopeful an attorney can help resolve the issue quickly to bring stability to the process. An attorney should be hired over the next month.
As treasurer, Loftis is the only elected official on the six-member commission. He is also the only member without a financial background. But Loftis said his request has nothing to do with his training — that the documents are too complicated for anyone to fully understand.
Confidentiality agreements on current contracts require that financial documents related to investment decisions be viewed only by the commission's staff and six commissioners.
Loftis, who took office in January 2011, has threatened to refuse to fund investments if his staff isn't given access. That threat remains. After the meeting, he said he'd meet with his attorneys to determine his next step.
Commission Chairman Reynolds Williams told board members such a move would be disastrous to the $25 billion pension fund and harmful to the state's retirees. He contends the law does not give the treasurer veto power. Once the commission approves an investment, the treasurer's roll is like a bank, he has said.
Williams offered a compromise at the meeting's outset, saying he agreed with Loftis' desire to make informed decisions. Williams pledged that on future contract negotiations, staff would try to insert a clause giving the treasurer's office full access to records. He said staff would also try to re-negotiate current contracts.
"But we can't unilaterally decide to breach a contract. It damages our reputation," Williams said. He also added he believes investments should not rest on such a clause — that if a company refuses, that shouldn't automatically preclude an investment.
Loftis rejected the compromise, saying his office's access should be without exception.
Former Chairman Allen Gillespie said the commission has consistently asked Loftis what information he needed, in an effort to resolve the issue, and it wasn't until April — when Loftis gave the ultimatum — that we "ever saw the first detailed list of what you need."
As a commission member, Loftis helps decide what investments to make. But Loftis contends the contract details are negotiated by staff following the votes, and the inches-thick documents need to be reviewed by people outside the commission.
"We need a second set of eyes," he said. "I don't pay bills unless I know what they are."
Senate Finance Chairman Hugh Leatherman said a lawsuit may be the only way to resolve the issue.