Public pensions are the next budget issue - we all see it coming. The question is whether the investments they make are also a potential issue.
The head of theTeacher Retiremnt System of Texas - Steve LeBlanc - has this to say about private equity:
The main point, though, is that the retirements of millions of teachers in Texas, cops in Florida, fire fighters in California and public employees in New York are more financially secure because of private-equity and real-estate investments. It's been a critical part of TRS's success and it should be part of the equation for others as well. The fact that many U.S. companies are prospering and creating jobs because of the capital and expertise invested by private equity just makes it all the better.
Its mission is:
Teacher Retirement System of Texas (TRS) is a retirement plan sponsor. The firm provides retirement and related benefits for those employed by the public schools, colleges, and universities supported by the State of Texas. It also provides a health insurance program for public school retirees.
OooooKkkkkk - lt's look a little deeper. The TRST has $112 billion in assets. It allocates those assets where it wants, in fact:
Bain's Connection to Government Pension Funds
Bain Capital, founded by Mitt Romney, has received significant amounts of its capital from government-worker pension funds.
According to NyPo, Preqin uses public documents, news accounts and Freedom of Information requests to track private-equity holdings. Since 2000, Preqin reports, the following funds have entrusted some $1.56 billion to Bain:
Teacher Retirement System of Texas ($122.5 million)
(FYI - Ohio Teacher's Retirement System has almost twice as much in Bain).
TRST has even developed more relationships, per Mr. LeBlanc:
At TRS, in fact, we've steadily increased our allocation to private equity and real estate. In addition, we recently struck an innovative strategic partnership with the firms KKR & Co. and Apollo Global Management that affords us greater flexibility and more control over our investments.
So, in essence, TRST is privatized - what could go wrong?