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Stringer: NYC Could Broaden Pension In-House Asset Management

New York City's comptroller-elect will explore how much internal asset management the city's five pension funds can assume as a means of minimizing investment fees, he said Friday.

"Other large institutional investors have expanded asset management in-house and we're working on that," Scott Stringer told reporters after delivering the keynote address at a Citizens Budget Commission conference on financial challenges facing the new city administration.

"We'll evaluate what our capacity is and discuss issues related to that with the 58 trustees of the New York City Pension Funds. We'll have to have conversations with the trustees and [the state government in] Albany."

Stringer, the outgoing Manhattan borough president and a former state assemblyman from Manhattan's West Side, will take office on Jan. 1, as will Mayor-elect Bill De Blasio. In addition, roughly one-third of the 51 members of the City Council will be new. Stringer, who defeated former Gov. Eliot Spitzer in the Democratic primary and Republican John Burnett in the general election, will succeed John Liu, a Democrat who ran unsuccessfully for mayor.

Stringer will oversee the city's bond program and five pension funds valued at $140 billion, as well as audit the city's $76 billion budget and agencies. He said he would work with the trustees to possibly consolidate the five funds.

"We must recognize that being progressive and governing responsibly are not mutually exclusive," Stringer said at the Harold Pratt House on the Upper East Side. "We must never lose sight of the bottom line and our AA bond rating."

Moody's Investors Service rates the city's general obligation rating Aa2, while Fitch Ratings and Standard & Poor's assign AA ratings.

Stringer vowed to transform the comptroller's office into a "think tank for innovation," and tap the technology sector for business expansion and educational opportunities. The latter, he said, could help the city grasp the challenge of poverty. "People aren't going to live here if the entry fee is a $1 million condo," he said.

"I'm not kicking Wall Street to the curb, but we've been too reliant on Wall Street," Stringer told reporters. "When I was in the Assembly, we used to wait for the Wall Street bonuses to come in and budget accordingly. Now we have to look to high-tech and biotech."

Stringer deferred to de Blasio when asked about the call for retroactive back pay by municipal employees. City and teacher unions have been working on expired contracts, some as far back as 2008. "The next mayor and labor have to get to the table," he said.

In a swipe at incumbent Mayor Michael Bloomberg, Stringer added: "Negotiating in the media, as we've seen over five years, has accomplished nothing."

CBC President Carol Kellermann said settling the expired contracts poses the greatest budgetary risk to the city. "This is the one everybody's talking about," she said.

Stringer suggested that employees could contribute to health-care benefits. The city now pays 100% of pension costs for 90% of its employees. "We often think of ourselves as a national model for best practices and usually we're right, but we have a lot to learn from other cities when it comes to squeezing the most out of dollars," he said.

Philadelphia workers, he said, contributed $2 million toward so-called wellness programs aimed at reducing smoking and improving nutritional habits, resulting in a 2% drop in health-care benefits.

Stringer also promised a "top to bottom" forensic audit of the New York City Housing Finance Authority. "We have 650,000 people living in NYCHA housing — the size of Boston," and no long-term strategy, he said.

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