Audit questions costs at Wisconsin’s state Investment Board

(The Center Square) – It is costing Wisconsin a lot more money to manage the state’s investments than just a few years ago.

A new report from the Legislative Audit Bureau looks at the costs associated with the State of Wisconsin Investment Board.

Auditors found that some investments are seeing good returns, while others are just missing the mark.

“For the five-year period ending in December 2021 [Wisconsin’s] Core Fund benchmark was 11.9%, and the Core Fund average annual investment return was 12.5%,” auditors noted. “The five-year benchmark for [Wisconsin’s] Variable Fund was 15.6 percent, and the Variable Fund average annual investment return was 15.5 percent.”

The auditors said the 20-year rate of return for Wisconsin’s pension investments was also nearly a half-point better than expected.

But while the investment returns were solid, auditors found several issues with the Investment Board’s costs.

“SWIB’s expenses increased from $427.4 million in 2017 to $702.1 million in 2021, or by 64.3%,” the audit stated. “SWIB’s annual expenses increased primarily because of an increase in management fees [the board] paid to external investment managers.”

The Investment Board manages just over 53% of its investments in-house. That’s down from over 64% back in 2017.

Meanwhile, bonuses at the Investment Board are also up from 2017.

“For 2021 performance, 217 SWIB staff received a total of $24 million in bonuses, which was the highest amount awarded from 2017 through 2021,” auditors said.

In 2017, the Investment Board paid out just $11.5 million in bonuses.

Auditors also dinged the Investment Board for adding more staffers, being late in a transition project that is supposed to bring more investments back to in-house management, and for being closed to the public.

“SWIB should increase the accessibility of its Board meetings to the public,” auditors wrote. “As of April 2022, 17 [other investment] governing boards allowed the public to watch or listen to governing board meetings online, as SWIB’s Board of Trustees did during the public health emergency. But [the board] did not do so for meetings held after December 2021.”

In all, the audit recommended more than a dozen changes at the Investment Board.

Disclaimer: This content is distributed by The Center Square