Wednesday, October 26, 2011

From the House

Bluffton Today

Thanks for all the calls and emails on last week’s column about my gleanings from the Conference on School Choice in California. The feedback was about equally divided between positive and negative, which is pretty much what I expected. On emotional issues like school choice, I mostly hear from either defenders of the status quo or folks that want to go to an entirely different system. I am somewhere in the middle. I want to preserve and enhance those elements of the current system that are working, while allowing for creativity in evaluating variations and alternatives to what we have now, especially in areas of chronic deficiency. Your opinion and analysis will, of course, help guide my thinking on this crucially important matter.

Most of this week was spent in Charleston at a pre-session budget conference. We are trying to get out in front of some of the issues likely to dominate the budget portion of the new session beginning the second Tuesday of 2012.

Right now, we are taking a hard look at the State Retirement System, especially given the blows to our retirement trust account issued by the Great Recession.

When we speak of the State Retirement System, most people think it just covers state employees, or those of us in the statehouse. In truth, this system covers not only those working for the state, but also those working under what are called the local subdivisions. These are county and municipal employees. Also covered are school system workers, university and tech school employees, even the good folks making lunches in school cafeterias. This is obviously a very large pool of workers who have legitimate claims on the system to which they have contributed.

Currently that system has an unfunded liability of around $19 billion. Thirty-one percent of this liability is direct state employees, twenty-six percent is to local subdivisions, and forty-three percent is to local school systems. There are some structural reasons for our present situation but a large part of it has to do with the health of our investments. In 2008, the funds lost 2.56 percent, followed in 2009 by a massive loss of nearly 20 percent. Fortunately, this was followed by two years of gains of around 14 and 18 percent respectively. Unfortunately, as investors know, the miracle of compound interest works strongly against you in a down market. For example, if your portfolio contains 100 units, and it declines by 20 percent, you then have 80 units. If, in the next year, you gain 20 percent, you are still 4 percent behind where you began the previous year. Multiple down years take a tremendous toll, which often takes many years of great returns to make whole. This is a part of our current situation. It is a big challenge, but we will meet it head-on and you will hear all the details from me as they emerge.

On a lighter note, the Historic Bluffton Arts and Seafood Festival was another wildly successful event. We all need to thank Brooks Willis, the Festival Committee Chairman, along with Board President Mary O’Neil, VP Dan Wood, Secretary Tammy Sauter, and Treasurer Barry Connor, as well as board members Tina Toomer, Nancy Schilling, and Dave Dickson. Fantastic job from all the volunteers, Bluffton Rotary and the patient residents of Old Town.

Also, next Saturday, 29 October, from 11 to 3, will be the First Birthday Paw-ty of the PAL adoption center in the River Walk Business Park in Okatie. Might be the perfect time to adopt a grateful shelter pet.