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Thursday, September 1, 2011

S.C. official’s salary soars to $485,000

News - S.C. Politics

Thursday, Sep. 01, 2011


EXCLUSIVE | 37 PERCENT PAY HIKE

Panel gives investment officer boost; governor calls hike ‘irresponsible’ but his backers disagree

- Columbia - The State

The state’s top investment officer received a 37 percent raise this summer, making him one of the state’s highest paid employees at a time when most state agencies are cutting budgets and laying off workers.

The S.C. Retirement Investment Commission, a five-person board, voted unanimously in July to increase Robert Borden’s salary to $485,000 from $353,500, after the Virginia Retirement System tried to hire him.


Commissioners voted after discussing the raise in a closed-to-the-public meeting.

The State Investment Commission includes state Treasurer Curtis Loftis. The State Budget and Control Board, which includes Gov. Nikki Haley, appoints the other four commissioners.

Rob Godfrey, Haley’s spokesman, called the raise “irresponsible and unacceptable.”

“The governor has made her appointee abundantly clear that she feels this way, and that it is not to happen again,” Godfrey said.

Still, many who work with Borden — whose job is to control how money in the pension fund is invested — give him high marks for growing the fund, even in a challenging economy.

The fund was worth $25.9 billion when Borden took it over in 2006. It’s now worth $26.1 billion, according to the latest quarterly report. It reached a high of $28.5 billion in 2007 and a low of $21 billion in 2009 following the housing market crash.

But in the past year, the fund grew by $3.2 billion. That’s despite the fact that lawmakers began 2010 with a sizable deficit.

“I think this guy is earning his salary, to be honest with you,” said Sam Griswold, president emeritus of the State Retirees Association, a group that watches the retirement system closely. “When somebody is producing like that, I don’t begrudge them to get rewarded for it.”

Loftis, who repeatedly has criticized Haley in recent weeks over state spending issues, said the raise was necessary to keep Borden from leaving.

Loftis said he expects the state Legislature to have extensive debate next year about changing both the state’s pension plan and the Budget and Control Board that oversees it.

Losing Borden, Loftis said, would only add to the uncertainty.

“I knew when I (voted for it) I would get in trouble,” Loftis said. “But the best thing for the 491,000 people in that system is having continuity in that chief investor’s job. And I had to vote for the raise.”

State lawmakers control how much money taxpayers and state employees put into the pension fund, and they control how much money the fund spends on benefits for retired state employees.

Borden’s salary comes from that pension fund.

Still, State Comptroller General Richard Eckstrom, who as a member of the State Budget and Control Board appoints one member to the Retirement Investment Commission, called the raise “extreme.”

“Other state employees haven’t received raises in a few years,” he said. “And raises of that magnitude are just absolutely unheard of.”

The pension fund has undergone considerable changes under Borden’s leadership.
The fund is now spread out over15 different types of investments instead of four.

Borden said his strategy is paying off. According to his analysis, the fund would have $925.9 million less if the state had not followed his investment policies.

“We pay for ourselves 100 fold,” he said.

Still, the retirement system is the state’s largest debt. The state owes about $41 billion to its current and future retirees. The trust fund only has $26 billion available, leaving a $14.7 billion deficit, according to the most recent estimates.

The deficit is so large, some lawmakers worry it could affect the state’s credit rating.

“The reason we have a $14 billion unfunded liability has nothing to do with Bob and how much money he makes,” Loftis said. “We’re making plenty of money. The problem is we’re giving away too much money on the other side.”

Loftis said he only agreed to the salary increase because the commission agreed to set up an executive compensation committee, and make Loftis its chairman. Loftis said he wants to make sure South Carolina’s salary for its investment officer is on par with other states.

Britt Harris, the chief investment officer of the Texas Teachers Retirement System, has a base salary of $480,000. But it’s possible for him to earn $1 million annually with bonuses if the fund he manages performs well, according to Howard Goldman, a spokesman for the fund.

Borden also receives performance bonuses, but it’s unclear how much those bonuses are. A spokesman for the state’s investment commission referred questions to commission chairman Allen Gillespie, who was unavailable for comment Wednesday.
Reach Beam at (803) 386-7038.