Originally created 05/17/98

Analysis: Negotiators reach fund compromise



COLUMBIA -- When Republican state Treasurer Richard Eckstrom hugged Senate President Pro Tem John Drummond around the neck last month, it appeared an agreement had finally been reached on investing the state's pension fund.

That was not the case, because two weeks later both sides were back to Square One, accusing the other of breaking down the compromise.

Negotiators announced recently, though, that they had signed their names on an official compromise.

Rep. Steve Lanford, R-Roebuck, was picked to lead the House panel that began studying the investment plan four years ago. "There's so many different tentacles to this octopus -- you just don't realize," he said.

In November 1996, voters were told if they approved a proposed amendment to the state constitution, South Carolina's retirement fund could invest in the stock market like many other states had done for years. Voters passed the question hands down.

The amendment was ratified with little fanfare, but then came the legislation to implement the law.

The bill would set up the investment process and, more important, determine who would control the investments. That led to a power struggle between Mr. Eckstrom and Mr. Drummond, D-Ninety Six.

The showdown almost doomed the plan for another year.

In an attempt to push the bill through, Mr. Eckstrom painted a picture of the Senate stalling the measure. Mr. Drummond accused the treasurer of trying to gain control of stock choices.

They sent nasty notes. They questioned each others' motives in public meeting. They argued over how much money would be lost. At one point, Mr. Eckstrom, who claims the state is losing $5 million a day, sent Mr. Drummond a tiny calculator to figure exactly how much the languishing bill would cost.

Mr. Drummond has said he thinks that amount could be as low as $100,000 a day.

"We all recognize there's a tremendous need to put this thing to bed in a proper way, so we can move forward and avail ourselves of the opportunities," said Sen. Larry Martin, R-Pickens.

Late in April, it looked like the bill would go through, until it hit a snag over whose office would control the investment panel's staff.

But by Thursday afternoon, things had calmed down enough that all six of the House-Senate conferees signed off on a plan that includes Mr. Eckstrom -- but doesn't give him exclusive control.

"We believe the treasurer's office will be involved in it and ought to be involved in it," said Mr. Martin, who helped hammer out the compromise.

Under the committee-approved plan, which still must pass the full House and Senate, the buck stops with the state Budget and Control Board. The board also will provide money for the staff -- another sticking point.