In one of the few things Republicans and Democrats can agree on in North Carolina, the state is adding to its lagging bets on private equity and real estate to pump up its $80 billion public-worker pension fund.
Governor Pat McCrory, a Republican, signed a bill in August raising limits on investments in alternatives to stocks and bonds. The Tar Heel state's $3.4 billion private-equity portfolio has returned about 7 percent over 10 years, almost 4 percentage points below the pension's benchmark. Real estate investments returned 2.6 percentage points below target.
"We're behaving like a losing gambler right now," said Ardis Watkins, legislative-affairs director for North Carolina's State Employees Association, the state's second-biggest public-worker union. "We're chasing money."