GOP Candidate For State Treasurer Campaigns In Bradford County

James Loewenstein
Towanda Daily-Review

State Treasurer Robert McCord has overseen the investment of Pennsylvania’s $26 billion state employees’ pension fund in “very high risk” investment plans which are providing a “very low rate of return” on those investments, according to Washington County Commissioner Diana Vaughan, who is seeking to unseat him in the fall election.

And with the pension fund facing, as characterized by Gov. Tom Corbett, a “crisis” in its ability to meet its financial obligations four years from now, the state should not have the pension fund exposed to such large-scale, high risks, Vaughan, the Republican candidate for state treasurer, said during an interview while campaigning in Bradford County on Monday.

“Since the downturn in the economy began in 2008, people are saving more, spending less, and being more conservative with their investments,” said Vaughan, who is currently serving her fifth term as a Washington County commissioner. “I think you have to be even more careful when it comes to (investing) the public’s money, because it’s the public’s trust.”

Vaughan cited an April 1 article in the New York Times, which compared the management of pension funds in Pennsylvania and Georgia, and which she said paints a “very bad” picture of the investment of Pennsylvania’s pension funds.

The $26.3 billion Pennsylvania State Employees’ Retirement System (PSERS) “has more than 46 percent of its assets in riskier alternatives (than stocks and bonds), including nearly 400 private equity, venture capital, and real estate funds,” the article states.

The annualized return on PSERS’ investments over the last five years was 3.6 percent, which lags behind the 4.9 percent median return among public pension systems and which is below PSERS’ 8 percent target needed to meet its financial requirements, the article states.

PSERS’ also paid $1.35 billion in management fees over the past five years, according the article, which Vaughan said was a high amount to be paying in fees.

She said investment of PSERS’ investment funds reflects on the performance of McCord, a Democrat, as state treasurer. She said that, from what she was told, McCord had cast votes as a member of PSERS’ board of directors in favor of PSERS’ investment policy.

But Mark Nicastre, a spokesman for the Pennsylvania Democratic Party, took issue with the way Vaughan was trying link McCord to PSERS’ investments.

“Rob McCord is one of eleven votes on the State Employees’ Retirement System and one of fifteen votes on the Public School Employees Retirement System. He doesn’t control those investment decisions,” Nicastre said. “Her basic lack of understanding just goes to show how important it is, in these economically challenging times, to have a business professional, not a career politician, in charge of the treasurer’s office.”

Mike Nevins, a spokesman for the McCord campaign, said McCord has generated more than $1.4 billion in profits from investments while cutting the expenses of the Treasurer’s Office, including reducing its work force by 19 percent and its automobile fleet by 22 percent.

Vaughan said that if she is elected state treasurer, she would have a much more conservative approach than McCord to investing state pension funds.

Vaughan said after she became Washington County commissioner, she and her fellow commissioners adopted a written policy on investing Washington County’s pension fund using a very conservative approach. The pension fund is doing “very well” and, during the last quarter, was in the top 7 percent in the nation in terms of its investment return, she said.

Vaughan also cited other favorable statistics for Washington County, including having one of lowest county property tax rates in southwestern Pennsylvania, a low amount of debt, and an A-plus rating on its bonds, which she said is a very good credit rating.

“We watch our budget carefully,” Vaughan said, explaining the low property tax rate. “We’re very fiscally conservative.

According to the U.S. Department of Labor, as of October 2011, Washington County had the third highest rate of job growth in the country, she said. While 40 percent of that job growth was related directly or indirectly to the large-scale Marcellus Shale gas development that has been taking place in the county, the creation of business parks in the county helped pave the way for that development because companies could find quickly find sites to move into, she said.

Vaughan said that during her terms as county commissioner, several business parks in Washington County have been created or are in the planning stages of being established.

The creation of business parks in the county, which added 6,000 jobs, has also helped keep the county tax rate low, she said.

Vaughan said that as a commissioner, she has taken new approaches to doing things.

For example, she said, during her first term as a county commissioner, the commissioners partnered with the Washington County Chamber of Commerce to create a “one-stop shop” for developers and business owners interested in undertaking economic development in the county.

In addition, during her first term as commissioner, the county commissioners created the Furlough into Service program, under which non-violent inmates in the Washington County jail do community service projects for local governments and non-profit organizations.

Furlough into Service “is a hugely successful program,” and local governments rely on the program, as it provides free labor for annual maintenance programs and other projects, she said.

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