The Oregon Investment Council faces tough questions from lawmakers, unions and advocates. An email shows the former state treasurer shared their concerns.
By James Neff
Oregon Journalism Project
As Oregon state treasurer for eight years, Tobias Read didn’t have a discouraging word for “private equity,” the secretive investments that account for one quarter of the state’s $100 billion Public Employees Retirement System fund.
At least not publicly.
But privately last summer, Read told key aides he worried the costly investments might pose too much risk to the PERS fund, which 415,000 Oregonians and their families rely on for retirement.
“We should be talking more about risk…and the broader private equity portfolio (I know I’ve been a broken record),” Read wrote in August 2024 emails obtained by the Oregon Journalism Project. “I worry [about]…our private equity asset class generally, which has underperformed for years now.”
His behind-the-scenes concerns are understandable.
As a recent OJP investigation documented, Oregon’s PERS continued investments in private equity over the past 10 years produced returns that fell significantly below its benchmark. The State Treasury also had billions of dollars more in PERS private investments than the agreed-upon target of 20%, which its outside investment advisers recommended and the Oregon Investment Council approved.
Being overweight in private equity dragged the overall investment returns from the PERS portfolio, which included stocks, bonds, fixed assets and real estate. It also meant the fund underinvested in public equities, which soared in value last year.
Private equity firms, such as Apollo, Blackstone, KKR and thousands of others, devote themselves to making profits from highly leveraged investments in private companies with money from public pension funds, foundations, and wealthy investors. The firms face little public disclosure or regulation, and charge lucrative fees: typically 2% a year and 20% of any profits.
In an August 2024 email, Read told his staff to have the treasury’s chief investment officer, Rex Kim, prepare “a white paper” on risk by the end of October.
“We don’t fully understand what is going on with these investments right now nor where they are headed,” he wrote.
OJP requested a copy of the report, but the treasury hasn’t confirmed whether Kim’s staff wrote a white paper.
The issues about PERS, private equity, and risk will come up Sept. 3 when the Oregon Investment Council, which oversees PERS and other Oregon investment funds, holds a public meeting in person and live online at the treasury’s Tigard offices.
In advance of the meeting, six Oregon lawmakers, the American Federation of Teachers–Oregon, the American Association of University Professors–Oregon, and the activist group Divest Oregon sent a joint letter with detailed questions to State Treasurer Elizabeth Steiner and members of the OIC about concerns with PERS’s private equity portfolio and its poor performance.
“These losses have subsequently increased the tax burden of public employers, such as schools —schools that have now had to lay off teachers,” the letter says. Poor returns by the fund mean public agencies have to pay more for employees’ retirement benefits.
Representatives of Divest Oregon and the unions are expected to testify briefly during the public comments part of the meeting.
“I do have concerns that we have perhaps over invested in private equity, and that might have been a strategy that worked maybe 10 to 20 years ago, but it’s clearly not working now,” state Sen. Khanh Pham (D-Portland) says.
She and the other five lawmakers — Sen. Jeff Golden (D-Ashland), Sen. James Manning (D-Eugene), Rep. Farrah Chaichi (D-Beaverton), Rep. Lisa Fragala (D-Eugene) and Rep. Mark Gamba (D-Milwaukie)—meet with Steiner and her staff on Sept. 4 to discuss their concerns, Pham says.
In a recent interview with OJP, Steiner said trea
sury staff will continue to invest PERS funds with private equity firms, including $2 billion in 2025, but has started to sell more than it buys. She said that the treasury adopted a plan in October 2024 to reduce its private equity portfolio by billions of dollars to get the $100 billion fund to its 20% target by the end of 2028.
“I’m confident that they’re moving in the right direction,” she said.