Retirement system needs injection of private expertise

Privatization isn't the be-all and end-all when it comes to improving government efficiency.

There are inherent dangers mixing private industry and public money, but the problems are fewer than another mix: slow-moving bureaucracy and computer technology that changes by the hour.

The latest example is Nebraska's public employee retirement system. Previously troubled by questionable investments, the system has now been found to have wasted millions of dollars on old computer equipment and software that can't even do all of the work that needs to be done.

The problem is bad enough that the Legislature's audit committee has asked for the resignation of the Public Employees Retirement Board, according to a story by The Associated Press.

According to a performance audit, the retirement board purchased a "PIONEER" computer system in 1999 to handle the coming tidal wave of retiring Baby Boomers, and has since spent more than $16 million trying to bring the system up to speed.

The problem is, the computer language used to run the system will soon be obsolete, and will have to be rewritten for an additional $5 million to $6 million, according to Sen. Chris Beutler of Lincoln, who heads the Legislature's audit committee. And, that probably won't even solve the problem with the way the system functions.

In addition, the board pays another half-million dollars a year to have an outside agency keep records its in-house system can't.

According to the news story, employees knew the system was a disaster but feared retaliation if they complained about it.

It's no wonder then, that the retirement board has a high turnover rate in key staff positions such as internal auditor, information technology manager and legal counsel, as Beutler reported.

The tragedy is that all the wasted money will come directly out of the pockets of the retirees it is supposed to help, as well as the taxpayers who support them.

The system has more than 95,000 members, with assets of about $7.2 billion.

Commercial retirement systems handle numbers like those with ease, thanks to efficiencies produced by marketplace competition and timely adaptation of the latest technology.

Why can't some of that private expertise be brought to bear on the public retirement system's problems?