Giannoulias Presser:
Illinois State Treasurer Alexi Giannoulias is calling for the consolidation of the investment activities of all five of the state-funded pension systems into a single investment entity to curb ethics abuse in state government and save beneficiaries tens of millions of dollars annually.
The legislation Giannoulias is crafting aims to eliminate the fraud and abuse committed in connection with the federal Operation Board Games investigation. The consolidation would also cut administrative costs and management fees, saving beneficiaries up to $82 million annually.
A similar proposal to combine the pension systems surfaced in 2003, but was squashed by political powerbrokers William Cellini, Tony Rezko and Stuart Levine. Each has been implicated in the ongoing investigation spearheaded by U.S. Attorney Patrick Fitzgerald.
“The cost of corruption is real,” Giannoulias said. “If these corrupt insiders had not been successful in thwarting this worthwhile proposal, the state retirement systems would have saved substantial amounts of money over the last five years.”
The Trib covers it as well:
The state could save $50 million to $80 million a year on administrative costs and management fees by merging the investment duties of five government employee retirement systems, according to the proposal. The overhaul also includes ethics measures that would set higher standards and stricter regulations for board members.
“The cost savings are going to be enormous, and then you have the ethics component,” Giannoulias told the Tribune. “We obviously know what took place in the past with cronyism and pay to play and people giving deals to their friends. We want to eliminate that.”
But the treasurer’s plan could face an uphill climb at the Capitol, where lawmakers say they welcome the ethics reforms but put the idea of combining the investments “on very thin ice.”
Kwame Raoul (the Kwame Tsunami) offers up a legitimate concern, but one that can be incorporated:
Sen. Kwame Raoul (D-Chicago), who heads the Senate’s pension committee, said he worries that forming one massive investment group could hinder the ability of smaller investment firms, particularly those headed by women or minorities, to get state business.
“Without the needed sensitivity, there’s likely to be the sentiment that they don’t want to waste time investing smaller amounts of money with smaller companies, and it’s been the good ol’ boys who’ve benefited from this historically,” Raoul said.
The essential idea is to create one pool, better regulated and overseen by a smaller group to reduce duplicated costs and create a smaller pool of potential scams.
Or as Cindi Canary says:
“Corruption has cost the Illinois millions of dollars and created a climate of cynicism throughout the state,” said Cindi Canary, Director of the Illinois Campaign for Political Reform. “This bill will make it more difficult for influence peddlers to line their pockets and candidates to fill their campaign chests with money that belongs to state retirees. Merging the boards should have taken place long ago to prevent such abuse.”
Rest of the press release below.
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