news-record.com

BY TOM CAMPBELL

"Who Do You Trust?" was the name of a television game show in the late-1950s.

Whom would average North Carolinians say they trust today? Recent polls report people don't trust politicians much, but there is also healthy distrust for many in business, the health field, nonprofits and even religion. Leaders in today's reality are coming to understand that they must confront and speak truth to potential problems in order to gain and maintain people's confidence.

State Treasurer Janet Cowell is facing two challenges that could affect her trust level in North Carolina. The first involves the state's former chief investment officer, Pat Gerrick, who was fired by Cowell earlier this year. Responding to requests from the news media, Cowell's office released documents showing Gerrick had been offered favors by firms doing business with her agency. Cowell stated that she would not respond to questions as to why Gerrick was fired, citing state personnel laws requiring privacy in such matters. Gerrick, on the other hand, has not felt that same restraint in responding to accusations.

When does the well-being of the state trump privacy rights for one individual? The treasurer has sole responsibility for investing approximately $60 billion. Some of the firms wanting state money are willing to do most anything to get the state's business. We want to know what is and isn't acceptable in the treasurer's office. In a press release dated Sept. 29, Cowell announced reforms aimed at "transparency, ethics and accountability" but stopped short of directly responding to the accusations made about Gerrick or in telling us her boundaries for employee and financial company relationships. While Cowell says she has adopted the governor's ban on gifts, we haven't heard enough. Cowell could go a long way in establishing trust for herself and her agency by getting in front of this issue.

Cowell now oversees the 10th-largest pension program in the nation. For the first time in decades, these plans are not fully funded, slipping to 99.3 percent, meaning that contributions plus investment earnings are not sufficient to fully meet all the promises made to teachers and other public employees. So far this isn't a serious problem, but it is a serious concern to present and retired public employees who count on these pensions. Recent stories of failed pension plans have many fearful.

As the plan gets larger, markets become more erratic and contribution levels more volatile, many organizations are faced with either defaulting or changing their plans. A large number have shifted from the traditional defined benefit plan to a defined contribution type of program. Simply stated, new employees coming into the plan will not get fixed incomes; their pensions will be based on contributions plus earnings in their individual account.

Cowell is obviously aware of this threat and has wisely formed a study commission to make recommendations to the state. We look forward to these recommendations. The stakes are high. These are early tests of Cowell's leadership in upholding her fiduciary relationship to both public employees and the state. If there is one department in state government in which we need trust, it is with the keeper of the public purse.

Tom Campbell is former assistant North Carolina state treasurer and host of "NC SPIN," a weekly discussion of North Carolina issues airing at 6:30 a.m. Sundays on WFMY (Channel 2). Contact him at www.ncspin.com.