Where the gold glitters

The Alabama Scene

Gov. Bob Riley leaves office this month with an unemployment rate hovering at about 20 percent in Alabama’s Black Belt counties, the poorest of the poor in Alabama.
He refuses to even acknowledge it was his actions in forcing three bingo facilities to close that caused those numbers to skyrocket by the loss of over 6,000 good-paying jobs.
Gov. Riley, through his anti-gambling task force, shuttered those facilities even though his own attorney general had inspected the games and determined them to be perfectly legal under the law. Meanwhile, the Indian Casinos continue earning millions while paying no state and local taxes. State officials tell me that these layoffs in the Black Belt have already caused a significant strain on the state’s Unemployment Compensation Fund.
Gov. Riley is chairman of the State’s Employees’ Retirement System (ERS) Board of Control, one prong of the state’s two-pronged retirement system…teachers and education workers (TRS), state employees and judges (governed by the ERS). His finance director and others who earn retirement benefits under the two systems also sit on both boards. The inbred governance of these type boards across the nation has now become a matter of public discussion.
I will discuss that in a future column.
Last week I wrote that the performance by Alabama’s public retirement funds did not escape the economic downturn and some unexpected losses may have increased the severity of the investment problems, resulting in one of the lowest investment returns in the nation during the past decade for retirement systems. One of the unexpected losses, what has turned out to be a $675 million drain on the RSA, was a loan to a Canadian Rail Car manufacturer which defaulted leaving the RSA with a 2.2 million square-foot empty building in Colbert County.
At the same time Gov. Riley, perhaps the most important decision-maker in the state’s pension hierarchy, has failed the due diligence test, as have others on those boards.
The investment returns of Alabama’s two public pension funds (RSA) lagged behind 90 percent of the nation’s public pension funds in a survey by State Street Investments, a national financial services company. The Teachers’ Retirement System, which on Sept. 30, 2010 had $17 billion in stocks, bonds and other assets, posted an investment return of 8.4 percent for the year. The Employees’ Retirement System, which on the same date had $8.2 billion in assets, posted an investment return of 8.5 percent for the year.
The State Street survey showed the median gain for 67 public systems, each with more than $1 billion in assets, was 10.7 percent, or better than 2 percent higher than last year’s return for both Alabama systems.
The same pattern has been true in four other State Street surveys over the past decade. It is interesting to note that the RSA paid $157,950 to State Street for advice in 2010.
RSA, however, does continue to observe the “gold” standard.
All you need to do is view the gold glittering from the new and opulant RSA building on Union Street in Montgomery…or perhaps the gold in the one of the RSA logos…or the salaries paid to many of the department’s 300-or-so employees.
The RSA payroll for the fiscal year ending on September 30, 2010 totaled slightly over $24 million, including FICA, health insurance and retirement obligations. That figures to an average of $76,352 per employee.
RSA CEO David Bronner leads the standard in pay with a salary of $563,994, as previously reported in this column. According to state records, 40 RSA employees earn over $100,000 annually; 12 earn over $200,000 and three, including Bronner, over $300,000. So we have 15 at RSA who earn more than the state’s highest judge, the Chief Justice of the State Supreme Court.
This payroll combined with that of higher education (including coaches) is the gold stardard of public employment in this poor state.
If Auburn wins the national championship, giving the state two-in-a-row such ahcievements, the coach pay may be worth it.
The disappointing record of RSA over the past decade doesn’t merit a $24 million-dollar payroll…or a gold-plated office building.

Email Bob Martin at: bob@montgomeryindependent.com

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