Raleigh, N.C. — The State Employees Association of North Carolina has accused the State Treasurer's Office of hiding millions of dollars paid to money managers handling the state's $86 billion pension for state employees, teachers and retirees.
The Treasurer's Office says it pays about $416 million a year to outside money managers to handle the pension's stakes in hedge funds and alternative investments. SEANC obtained thousands of pages of documents through a public records request and hired an auditor to crunch the numbers, and the auditor said in a Thursday letter to Treasurer Janet Cowell that "massive hidden fees" haven't been disclosed.
The auditor, Florida-based Benchmark Money Management Intelligence, cites Chapel Hill-based Franklin Street Partners as an example. The Treasurer's Office says it paid the firm $2.6 million in 2013, but Benchmark argues that Franklin Street acts as a middle man and contracts with other money managers, and none of those fees are reported.
Benchmark estimates that Franklin Street is actually paid $16 million a year, and that the unreported fees to the firm since 2002 could top $120 million.
Franklin Street said Benchmark's "claims are terribly inaccurate and misleading."
Schorr Johnson, a spokesman for the Treasurer's Office, said a recent review of North Carolina's pension management fees found they are lower than industry standards.
The uncertainty frustrates state employees.
"There's no way we should be spending millions of taxpayer and member money and not have any idea who's getting paid," said Charles Johnson, who works at Central Prison.
"They're hiring other people to manage it and then everybody gets a cut. Everybody's getting rich off this except the state employees and retirees," said Ardis Watkins, SEANC's legislative affairs director.