After trouncing two challengers in the Democratic primary, state Comptroller Tom DiNapoli faces a general election challenge from entrepreneur Joseph Hernandez, who is promising to modernize the office’s oversight power and invest in New York state businesses.
For his part, DiNapoli has held the office of comptroller for 19 years. He’s brought the pension fund to $309 billion, its highest level ever; he’s used shareholder influence to press companies to address climate change among other issues; and he’s created a fiscal stress monitoring system for municipalities.
DiNapoli sat down with Capital Tonight host Susan Arbetter to answer questions on a variety of topics, including the performance of the pension fund.
In the first quarter of the fiscal year, the New York state pension fund reached its highest level ever: $309 billion with a 6.12% quarterly return on investment. But Republican challenger Joseph Hernandez called that “a victory lap for underperformance” compared to the rates of return other market indices are seeing, including the S&P 500 which earned a 14.87% return.
When asked about the difference, DiNapoli pointed to the health of the fund, as well as its diversification.
“You mentioned the number ($309 billion), a historic high, but what’s most important is how well-funded are we. We are 97% funded, so we’re virtually a fully funded public pension plan,” he said.
DiNapoli is referencing the fund’s ability to pay out its obligations, which last year totaled $17.5 billion. New York’s fund is one of the most well-funded in the country. Numerous state pension funds, including those in Illinois, New Jersey and Connecticut, are underfunded to the tune of billions of dollars.
“Our diversification is our strength,” DiNapoli said. “Go to some other parts of the portfolio, fixed income, private equity of late. They may not be as high as the S&P, but we’re not looking to beat the S&P. The volatility in the (S&P) market means that those public equity investments tend to be the riskiest. We don’t want to play risky games with our retirees’ money.”
While DiNapoli believes that cryptocurrency is too risky to invest in, the pension fund is invested in some other “alternative investments,” including private equity and infrastructure.
Additionally, the fund will remain invested in Israel Bonds, DiNapoli said, despite the current controversies surrounding the Jewish state.
“It’s been a safe and reliable investment, so we have no plans to change our strategy there,” he explained.
When it comes to pension investments, DiNapoli explained that he doesn’t determine whether to invest because of ideology, but rather because “we want to minimize risk of long-term investments.”
Bonds are long-term investments that need to be held until their maturity date to guarantee the return of principal; divesting too soon would mean a loss of value, which would hurt the state’s retirees who depend on the pension fund.
During the interview, DiNapoli also talked about his office’s fiscal stress monitoring system, which recently issued a report.
Additionally, he told Capital Tonight that his greatest achievement over the past 19 years is that his office has maintained its credibility.
“I like when we’re not on the front page of the paper all the time, because it means we’re doing our job,” he said, referencing his predecessor, Alan Hevesi, who ended up in prison after being found guilty of a pay to play scandal.
Interestingly, DiNapoli mentioned another former New York state comptroller when asked if he would run for a sixth term.
“Arthur Levitt was the longest-serving comptroller, and even when I get reelected and fill the next four years, I still will not beat his record,” he said.
Levitt served in the office for 24 years.
“I am going before the voters because I would like a four-year contract that makes no judgments about what happens four years from now,” DiNapoli said.
His challenger, Hernandez, will appear on Friday’s Capital Tonight program.
The two candidates will appear at a debate sponsored by Spectrum News on Thursday, Oct. 1 at 7 p.m.
