Grading Texas

Judging from a call to the office this morning, there is a misperception among some educators and retirees that Gov. Rick Perry and his appointees on the Teacher Retirement System board have been “cleared” of allegations that the pension fund has been abused to benefit some of the governor’s major political donors.

It is true that no one has been prosecuted. But the ethical propriety of Perry’s TRS appointees disregarding the advice of investment professionals to direct business to investment firms run by Perry donors hasn’t been thoroughly vetted. And, the extent of the risk to educators’ pensions is still unknown.

The allegations were raised in a memo by a TRS administratorturnedwhistleblower. That memo was provided to Democratic candidate Bill White, who publicly released it earlier this week.

TRS says it has been cleared of wrongdoing by an “independent investigation,” but that alleged “investigation” was a sham. It was conducted by Roel Campos, whose Washingtonbased private equity law firm had briefly served as TRS counsel in 2008. That relationship ended after Attorney General Greg Abbott (Rick Perry’s Republican comradeinarms, no less) raised concerns about potential conflicts of interest between TRS and some of the law firm’s investment clients.

If that conflict was enough to end Campos’ previous employment by TRS, how in the world could he be considered “independent” enough to investigate the whistleblower’s allegations?

The whistleblower has raised some serious concerns, and they must be addressed because they pose critical questions about the Perry administration’s stewardship of a multibilliondollar fund of crucial importance to teachers and retirees. It is the main or only source of retirement income for many Texas educators, most of whom don’t qualify for Social Security.

It should not be misused as a political slush fund to help Perry reward his political donors, one of his frequent pursuits as governor.

The TRS fund took a big hit during the recent financial market meltdown, and we may never know how much of that plunge could be attributed to outside economic forces or to politically induced mismanagement by Perry’s TRS appointees.

Bill White is talking a lot about the TRS these days, and educators and retired educators should pay attention to what he has to say.

Click on this link to read a discussion of the TRS issue, Perry’s cronyism and his paytoplay attitude by members of The Dallas Morning News editorial board:

http://dallasmorningviewsblog.dallasnews.com/archives/2010/10/govperryandt.html

Teachers and retirees, Gov. Perry may have a deal for you digging into your hardearned pensions to help build more roll roads for Texas.

In his Burkablog, linked below, Texas Monthly’s Paul Burka reminds us that Perry has entertained that idea in the past. The Teacher Retirement System board rejected it then, but as Burka also points out, Perry has been known to pressure reluctant appointees – or replace them – in order to get his way with other agencies. And, as a whistleblower pointed out in a memo made public by Democratic gubernatorial candidate Bill White this week, the TRS board (all Perry appointees) is very susceptible to political pressure.

Toll roads are dicey propositions that could really harm the financial integrity of the TRS fund. What’s more, toll roads are very unpopular with many Texans. But, remember, Perry likes them, and they were key components of his widely hated and allegedly deceased Trans Texas Corridor.

Depending on who wins this election, maybe the Trans Texas Corridor will rise again – on the backs of educators and retirees.

In case you are still catching up on the TRS story, the whistleblower, a former TRS manager, said in his memo that Perry’s appointees on the TRS board had pressured TRS managers to make potentially risky investments with companies whose executives had given Perry large political contributions. TRS claimed an external “investigation” had cleared the agency of wrongdoing.

In his blog, Burka also notes that the alleged “investigation,” conducted by a lawyer with potential TRS conflicts of his own, was a sham.

http://www.texasmonthly.com/blogs/burkablog/?p=8171

To no one’s surprise, Gov. Rick Perry was quick to dismiss challenger Bill White’s allegations that Perry’s administration has been abusing the Teacher Retirement System fund to benefit some of the governor’s major political donors – against the advice of investment experts and at the potential risk to teacher pensions.

No, Rick Perry is not going to acknowledge that he has a payforplay attitude toward state government, even though White’s allegations are backed up by a TRS whistleblower’s memo and follow on the heels of an independent investigation by The Dallas Morning News of taxpayerfunded technology grants given to companies in which other Perry contributors have been involved.

Over the years, Perry also has been caught making major appointments of interest to big contributors either just before or just after receiving large political donations from the same contributors. Just coincidental, or that is always his story.

Now – and also to no one’s surprise – the TRS board has circled the wagons in Perry’s defense. They all are his appointees, after all, and an election is on top of us. Early voting already has started. TRS claimed the allegations raised by White and the whistleblower all were examined last year by an “independent” investigator, who found no problem.

That alleged “independent” investigator, however, was not so independent. He was a former Securities and Exchange commissioner whose law firm has represented clients who might benefit from TRS funding. The state auditor and the attorney general’s office reviewed his report, but it isn’t clear how thorough their reviews were.

Ultimately, the bottom line for educators and retired educators is whether they can trust Perry and his appointees to manage the TRS fund for their maximum benefit, not as a favor to the governor’s friends. Given Perry’s political favoritism and his dismal record on teacher pay and overall education funding, I don’t know why they would.

Teachers are underpaid (34th in the country in average pay), and school districts are struggling with budgetary problems that will worsen if Perry gets to impose the deep spending cuts he has in mind for next year.

Teachers and retirees know how important the TRS fund is. For many, it is their only or main source of retirement income because most Texas teachers don’t get Social Security, thanks to a federal law that needs changing.

Educators can fight that federal law another day. But they can get Perry’s hands off their TRS pensions now.

http://www.statesman.com/news/texaspolitics/teacherretirementsystemdeniesallegationsofpoliticalinfluence981449.html

Follow this link to a story about the latest allegations about the Perry administration giving state business to political contributors. This one involves handling of the Teacher Retirement System fund, a nest egg for many teachers and retired teachers.

http://www.washingtonpost.com/wpdyn/content/article/2010/10/19/AR2010101904245.html