Today Oregon PERS is one of the nations largest public pension funds, with more than $70 billion in assets. In Oregon the administation of PERS is handled by the PERS administrative board yet the investments are managed by a separate board, the Oregon Investment Council (OIC). This link shows the members on the OIC in addition to minutes from recent OIC meetings. The council has 5 voting members, four appointed by the Governor, and the State Treasurer by position. The SEC has no oversight of public pensions, even though they are now 8 of the nations 10 largest investments pools, CalPERS alone having more than $150 billion.
It is noteworthy that the current OIC Chairman, Dick Solomon, has no biographical background information listed. Solomon is a practicing Certified Public Accountant serving many local top executives, including the previous OIC Chair Gerard Drummond, a former Pacific Power executive,for whom he had prepared tax returns for many years. Traditionally, this was considered an unacceptable conflict of interest between accounting and investing activities. Only when CPA’s goes on to receive appropriate credentials in the investment industry is it considered appropriate yet Solomon has no such credentials or experience.
Prior to serving on the OIC, Solomon served on the Oregon College Savings Plan board. During his tenure on this board he and State Treasurer Randall Edwards, when faced with choosing a new key vendor due to the dismissal of Strong, they chose Oppenheimer over Vanguard. This was very unfortunate because the choice of Oppenheimer set up a system in which most participants are fleeced by investment advisors earning large commissions. A key selling point of the Oppenheimer program was its offer to provide $300,000 in free television ads, those would be the ads State Treasurer Randall Edwards appears in.
Today most credible advisors in Oregon recommend the Nebraska, Iowa or Nevada college savings plan, forgoing the small tax benefit to Oregon residents of the Oregon Plan. While Solomon and Edwards may argue that Vanguard choices do exist, one need only look at where the dollars have gone overall to see the influence of Oppenheimer’s high fee program.
Solmon’s candidacy to be on the OIC and later appointment as Chairman was aggressively championed by one of Oregon’s most powerful Lobbyists, Len Bergstein. Berstain is a regular election day contributor, on the Democratic side, to the State’s leading media outlets, including KGW TV and the Oregonian newspaper.
Bergstein also launched Neil Goldschmidt’s campaign for Governor in the 1980’s while leading his public relations company, NW Strategies. Another major contributor was the local office of Arthur Andersen, where I worked at the time. The managing partner of the office was Harry Demorest who was added to the Oregon investment council after Neil Goldschmidt’s wife Diana and his best friend, Gerry Bidwell, were forced to resign over conflict of interest issues.
Bergstein has also done work for local utilities and supported acquisitions, including Warren Buffett in his takeover of Pacific Corp. While Buffett is served by Omaha public power and enjoys electricity rates considerably below market averages back home in Omaha, he is enjoying high profits off Oregon ratepayers and using these funds to finance several new coal plants in Utah, Pacific Power’s second largest region behind Oregon.
There is currently no requirement in Oregon that investment firms who go before the OIC for contracts to manage funds, at times exceeding $1 billion, disclose who their lobbyists are.