The state of Delaware pulled in more than $43 million from its investment portfolio over the past three years according to preliminary figures from State Treasurer Chip Flowers (D-Delaware).
Flowers says there were just seven months of negative returns during the past 37 months. He credits his controversial practice of breaking from the guidance of the state’s unelected Cash Management Policy Board for that success.
Flowers specifically touts his decisions to hire an independent financial advisor and install a merit-based system for banks handling portions of the portfolio.
“We believe that you should tie the fees that these managers are getting to their performance, because they’re getting significant fees – about $1.6 or $1.7 million in fees – and so if you’re going to make that kind of money, I believe you have to perform,” said Flowers.
But Finance Secretary Tom Cook, who sits on the Board with Flowers, says he hasn’t seen figures to back up that claim, adding Flowers hasn’t released those reports to the board.
“I can’t comment on any numbers that don’t have supporting documents with them and that hasn’t been released to the Cash Management Policy Board,” said Cook.
Flowers notes that final, audited figures from independent financial advisor Credit Suisse will be available online later this week.
With legislation returning financial management powers to the Cash Management Policy Board soon to be signed by the governor, Flowers says he hopes it will leave his changes, despite prior resistance.
Asked about the CMPB's impending assumption of responsibility, Flower's referenced former Secretary of State Colin Powell's warning to President George W. Bush prior to the invasion of Iraq.
"You break it, you own it, and so right now, it's not broken," said Flowers. "It is performing very well, so we wish the [CMPB] well and we tell them that don't break it."
Other reforms to the board proposed by Flowers, including financial disclosure and addressing potential conflicts of interest, are slated to be heard by the Joint Sunset Committee in the coming months.