Patricia Gerrick, North Carolina’s chief investment officer and one of the state’s highest-paid public employees, resigned in late August. Gerrick, who oversaw a commitment of more than $12 billion of the state’s pension money into real estate and private equity investments, received a $340,000 salary and got a $51,476 bonus last year. No explanation was given for her departure.
Her resignation, announced Aug. 25, comes after news in early August that the pension fund’s assets had dropped 14.2 percent during the last fiscal year to $60.2 billion — a better performance than that reported by many other pension funds. The median loss last fiscal year for public plans with assets of more than $1 billion was 18.76 percent, according to Wilshire Associates, a California consulting firm.
“I appreciate Patricia Gerrick’s service to the State of North Carolina and to the over 800,000 members that depend on the pension system,” State Treasurer Janet Cowell said in a news release.
Gerrick said she didn’t have time to talk when contacted by Carolina Journal on Tuesday and did not return a phone call Wednesday.
Gerrick’s departure baffled some political observers.
“She seemed to be very articulate and seemed to be very knowledgeable,” said state Sen. David Hoyle, D-Gaston.
“It’s kind of weird that she would just quit,” said Ed Macheski, a retired New York money manager and Alamance County resident who has been critical of the pension system. “There aren’t a lot of $340,000 jobs hanging around on the sidewalk.”
State Rep. Dale Folwell, R-Forsyth, said he hopes that Cowell will disclose why Gerrick quit.
“There’s 800,000 people and even more lives that are impacted by the success or failure of the state’s chief investment officer,” Folwell said.
Richard Moore, Cowell’s predecessor, hired Gerrick in 2004. Gerrick’s salary had doubled under Moore, who got the General Assembly to pass a law letting him give Gerrick and other top investment advisers big pay raises.
During her tenure, the state made investments in more than 120 different private equity and real estate funds from 2005 to 2008. They range from Elevation Partners — a firm named after U2’s song “Elevation,” that invests in the media and entertainment industries — to Cherokee Investment Partners, a Raleigh company that buys and cleans up contaminated land. About half of the $12 billion allocated to those funds has been invested so far.
Overall, the value of real estate investments in the state pension fund sank by 31.4 percent last year, while private equity investments went down by 21.2 percent. In comparison, the stocks in the portfolio declined by 27.7 percent. Bonds were the only investment to do well, earning a 7.6 percent return.
Stephen Cummings, the chief executive officer of EnnisKnupp, will serve as the interim investment adviser while the state searches for Gerrick’s replacement. EnnisKnupp, a Chicago firm, is reviewing the business and investment practices of the treasurer’s office.
Soon after she was hired by the treasurer’s office, Gerrick learned she had leukemia. She underwent a bone marrow transplant, sometimes working from her hospital bed.
Gerrick has also worked at pension funds for the states of Indiana and New York, Kansas City, and Sprint Corp.
In 2001, she became Indiana’s first chief investment officer, a position created after voters overturned a state ban against the pension fund investing in stocks. The ban dated to a disastrous investment by the state about a century earlier in the Wabash and Erie Canal. Gerrick helped diversify Indiana’s investments into stocks and private equities.
“That [diversifying the portfolio] was basically dumped in her lap,” said Bill Butler, the former executive director of the Indiana Public Employees’ Retirement Fund, who hired her. “She was able to manage that task.”
But Gerrick was fired in 2003 after a new executive director took charge. The firing was later changed to a resignation after she filed a discrimination complaint with the federal Equal Employment Opportunity Commission, and she was paid $212,000. That payment was part of a secret settlement that came two light two years later in an audit.
The executive director who fired Gerrick, Craig Hartzer, also got rid of other top managers at the pension fund. Hartzer, who no longer works for the pension system, did not respond to a request for comment.
Sarah Okeson is a contributor to Carolina Journal.