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May 17, 2007

DiNapoli’s First 100 Days

Comptroller Focuses on Ethics, Campaign Reform
Pension Fund Returns Beat Benchmarks

On the eve of his 100th day in office, State Comptroller Thomas P. DiNapoli repeated his call for enactment of his campaign finance reform legislation. DiNapoli also announced the appointment of George King as Inspector General and Suzanne Dugan as Special Counsel for Ethics for the Office of State Comptroller.

“When I took office 100 days ago, I said my priority was to restore public confidence and trust in this office,” DiNapoli said. “We’ve done a lot in a little time to bring back that trust. The appointment of George King and Suzanne Dugan represents another major step forward. Now we need to take the next step and enact the campaign reform legislation I announced earlier this month.”

Shortly after he took office as Comptroller, DiNapoli created a Management Review Commission, led by former New York City Mayor Ed Koch and long-time finance and government expert Frank Zarb. One of the Commission’s recommendations was the creation of the Inspector General post.

King, the new Inspector General, has a long history of public service. For the past seven years, he has served as the chief legal advisor for the New York State and Local Retirement System. Prior to that, he was a commissioner of the New York State Board of Parole. A graduate of Albany Law School, King also worked as Associate Counsel for the New York State Division for Youth (now the Office of Children & Family Services) and as General Counsel for the New York State Commission of Correction.

Dugan, the new Special Counsel for Ethics, has been a counsel for the New York State Ethics Commission for the past 14 years, and is presently counsel and acting executive director of the Commission, which is chaired by former Fordham Law School Dean John Feerick. A graduate of Albany Law School, Dugan also served as Appellate Court attorney for the New York State Supreme Court, Appellate Division, Third Department, from 1989 -1991.

DiNapoli’s Comptroller Campaign Finance Reform bill, which he transmitted to the Legislature on May 14, would create a new system of public campaign financing for statewide office in New York, starting with a pilot project for the State Comptroller’s race in 2010. DiNapoli’s proposal would limit contributions from individuals to $10,000, cap campaign spending for the comptroller’s race, and provide up to $6 in public funds for every dollar raised by candidates.

Earlier this year, DiNapoli signed a multi-faceted executive order detailing ethics rules and principles that apply to all employees of the Comptroller’s Office – including the Comptroller. The Executive Order covers a range of issues including restrictions on use of agency phones and computers and acceptance of gifts or gratuities. It also bans employees from making campaign contributions to the Comptroller, asking job applicants their political party affiliation, and participating in a hiring or contracting decision that involves a family member.

DiNapoli expressed his gratitude to the entire OSC staff for continuing to provide excellent service to New York State taxpayers.

“The work of this office is getting done,” DiNapoli said. “There was no real transition period after I was chosen to be Comptroller, but every OSC employee kept on performing at the incredibly high professional level we’ve come to expect from this office. They are truly great public servants.”

DiNapoli asked the Koch Zarb Commission to make recommendations in five key areas of OSC operations: organizational structure; personnel and recruitment; internal controls within all areas of OSC; programs to improve the effectiveness of audits; and policy development in such areas as public debt and stimulating economic growth. DiNapoli said that he had just completed a reorganization of OSC management and had filled most of the vacancies in management positions at OSC.

“The Koch Zarb Commission has been looking at ways to make our operations more effective and efficient,” DiNapoli said. “They’ve also helped us with our new system of internal controls and with the reorganization. We’ll continue to work with them.”

DiNapoli also announced that the New York State Common Retirement Fund returned 12.6 percent for the fiscal year ending March 31, outperforming its benchmark of 8.0 percent. The returns generated $6.4 billion of added value. The Wilshire’s Trust Universe Comparison Service (TUCS), the most widely accepted benchmark for the performance of institutional assets, ranks the Fund’s results in the top 10th percentile of public funds and notes that the Fund has the lowest risk return among public pension funds.

The Fund assets have grown to $154.4 billion from the 2006 fiscal year end assets of $140.7 billion.

“Last year the Fund paid out more than $6.6 billion in benefits, and the assets still grew by nearly $14 billion,” DiNapoli said. “Our staff has done a great job. There was a two month lag in investment decisions created by the Comptroller vacancy, but after I took office, we were able to rebalance the portfolio and really drive returns in an uncertain market. The Fund has outperformed virtually every benchmark, and our prudent investment strategy continues to produce returns and keep the Fund secure. Public employees and retirees should know this: their pensions are safe and secure. The Common Retirement Fund is sound and strong.”

Summary highlights of Fund’s 2006-07 results include:

  • The Core Fixed Income Portfolio returned 6.83 percent, surpassing the Lehman Brothers Aggregate Bond Index of 6.59 percent.
  • The Real Estate Portfolio returned 31.7 percent, outperforming the NCREIF Index of 16.59 percent.
  • Public Equities, including international equities, returned 12.9 percent.
  • Alternative Investments, comprised mainly of private equity, returned 22.71 percent, more than the Russell 300, which returned 11.28 percent over the same period.

In addition, DiNapoli said that, as part of the Comptroller’s In-State Investment Program, the Common Retirement Fund had made more than $183 million in new commitments in New York State since he took office.

DiNapoli said that OSC has carried on its critical functions.

“All of the vital services that OSC provides have continued without interruption,” DiNapoli said. “Hundreds of thousands of state employees have gotten paid every two weeks. Pension checks have been mailed to hundreds of thousands of retirees. Unclaimed funds have been processed and the rightful owners have received their money. Thousands of contracts have been reviewed. Audits of state agencies, public authorities, school districts and other local governments have been issued. In short, we’re pressing on with the people’s business.”

As part of his commitment to ensuring schools are effectively run, DiNapoli secured $2.7 million from the Governor and Legislature to hire 44 new school auditors. He also issued an audit critical of Roosevelt School District and conducted a budget review of the district’s spending plan for 2007-08. In addition, DiNapoli announced a first-of-its kind plan for “real time” auditing of the district’s finances to ensure the district keeps its spending on budget.

In February, DiNapoli issued a detailed report on the Executive Budget proposal and last week he released his report on the enacted state budget.

In his first 100 days, DiNapoli has also:

  • Reported on the growing number of special districts throughout New York State, and how those districts impact taxpayers.
  • Completed and issued dozens of audits of state agencies and local governments.
  • Released proposed regulations regarding the new training requirements for fire district commissioners. The regulations are in response to new laws enacted in 2006 to strengthen oversight of fire districts and fire companies in New York State.
  • Announced an online training program on fiscal issues for school board members.
  • Worked with the Attorney General to secure a guilty plea from a state employee who stole more than $1 million in taxpayer dollars.
  • Reported in an analysis of New York City finances that the City had benefited from $7 billion in unanticipated revenues, due largely to a resilient real estate market and extraordinary Wall Street profits and bonuses.



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