Overview of BONUS: NY Comptroller Candidate Drew Warshaw on Changing the NY State Pension Funds
This Bloomberg Masters in Business bonus episode features Drew Warshaw, a Democratic candidate for New York State Comptroller, interviewed by Barry Ritholtz. Warshaw—former Port Authority chief of staff on the World Trade Center rebuild, veteran of renewable-energy corporate strategy, and ex-co-CEO of the affordable-housing nonprofit Enterprise Community Partners—lays out his critique of the current comptroller’s management of New York’s ~ $300 billion public pension fund and his agenda if elected: governance reform, a shift in investment strategy toward low-cost indexing, targeted audits to lower costs (housing, utilities, insurance), and concrete measures to return unclaimed funds and finance affordable housing.
Key points / main takeaways
- The New York State Comptroller combines three powerful roles: chief financial officer, chief auditor, and sole trustee/chief investment officer of the third-largest U.S. public pension fund.
- Warshaw accuses the incumbent (Tom DiNapoli) of (per Warshaw’s claims) mismanaging the pension by:
- Paying ~$11.3 billion in fees to external managers,
- Underperforming benchmarks by ~39% over 18 years (Warshaw’s analysis of public reports),
- Forcing taxpayers to make up a shortfall—what he calls the “DiNapoli tax”—amounting to roughly $59.1 billion in extra taxes over 18 years.
- He proposes replacing 664 active managers with a diversified set of low‑cost index funds, focusing resources on asset-allocation and the fund’s job description rather than trying to pick active managers.
- Governance change: transition from a single sole-trustee model to a board of trustees—but avoid politicized appointments; design the board thoughtfully.
- Audit priorities: shift the Comptroller’s audit office from thousands of diffuse audits to concentrated, impact-focused audits—examples include the Department of Financial Services (insurance regulation), Public Service Commission/Dept. of Public Service (utilities), and a top-to-bottom review of building codes as a major cost driver.
- Housing proposals: create a $10 billion housing fund aimed at financing ~100,000 affordable homes and use pension/leverage tools to reduce cost of capital for housing.
- Unclaimed funds: Warshaw highlights $20 billion in the New York State Unclaimed Fund and proposes automatic, data-driven returns to citizens rather than requiring clumsy web lookups and claims.
- Warshaw emphasizes making the Comptroller’s office far more visible and activist in using its levers to address affordability crises (housing, energy, insurance, taxes).
Candidate background (relevance to platform)
- Education: BA in history & government (Cornell), MBA (Columbia Business School).
- Public sector: Chief of staff at the Port Authority during the World Trade Center rebuild; experience in major government projects and coordination.
- Private sector: Worked in a Fortune 250 power company developing renewables and building a renewables investment platform.
- Nonprofit: Co-CEO of Enterprise Community Partners (large affordable-housing nonprofit).
- Uses that mix of government, corporate finance, and housing-development experience to argue he can both audit/regulate and design capital solutions.
The Comptroller role & pension fund specifics (Warshaw’s framing)
- Scope: audits all spending that touches state tax dollars, manages the pension fund (
$300B), and oversees the unclaimed funds ($20B). - Governance concern: New York’s Comptroller is a sole trustee (rare among large funds). Warshaw wants a board structure but cautions against politicization.
- Investment critique:
- Current model: 664 active managers paid high fees, with Warshaw arguing the net result is lower risk‑adjusted returns and higher taxpayer contributions to make the fund whole (because the law requires the fund be fully funded).
- Proposal: Emphasize asset allocation and liquidity needs; shift most assets to low-cost indexed strategies; use private markets selectively when they provide genuine diversification/value, not merely “volatility washing.”
- Funding impact: Warshaw contends better stewardship could reduce pressure on property taxes and state revenues.
Audit & operational priorities Warshaw proposes
- Audit focus: Concentrate audits on systemic cost drivers rather than disperse audits across thousands of small matters.
- Specific audit targets:
- Department of Financial Services: top-to-bottom audit of insurance regulation and consumer outcomes (premiums, claims friction).
- Public Service Commission / Department of Public Service: audit regulators of electric and gas utilities to address runaway rate increases and the utility business model.
- Building codes (city + state): a forensic, track‑change audit comparing model codes to current codes to identify changes that could cut construction costs (Warshaw estimates potential ~15% savings to construction costs).
- “Audit the audits”: consolidate learnings from prior audits of big agencies (e.g., MTA) to ensure recommendations are implemented rather than producing more redundancy.
- Service-level metrics: push for measurable turnaround times and performance targets (e.g., permitting/building department SLAs) to remove friction and extra costs.
Housing, infrastructure, and affordability proposals
- Housing: Warshaw argues the U.S. is millions of homes short; New York faces acute affordability and homelessness problems (example given: 1 in 7 NYC public school students homeless). He proposes:
- Use public capital and pension-levered tools to reduce the cost of building and financing affordable housing.
- A $10 billion state housing fund targeted at creating ~100,000 affordable units.
- Infrastructure: argues current projects often overpay and slow down due to regulation, codes, lack of service standards, and add-on costs (expeditors, “Lexus lanes”).
- Energy/Utilities: audit regulators; rework incentives and regulatory frameworks built for a century-old utility model to fit renewables, resilience, and lower consumer costs.
Notable quotes (representative)
- “One person has all three of those responsibilities. So it's an extraordinarily powerful position.”
- “Mickey Mouse could be the state controller, and it must be [fully funded]. The question is how.”
- “We have overseen one of the largest wealth transfers that no one knows anything about — from ordinary taxpayers to hundreds of Wall Street bankers.”
Action items & recommendations (for voters, policymakers, and a new Comptroller)
- For voters: evaluate comptroller candidates on pension governance, fee transparency, and a clear plan to reduce cost pressures on taxpayers (housing/utility/insurance).
- For policymakers:
- Consider statutory reforms to create a board governance structure for the pension fund (with safeguards against politicization).
- Require transparency on fees, net-of-fee performance, and a review of active vs. passive allocations.
- Commission a model-building-code simplification and a timeline for adoption at municipal/state level.
- For a Comptroller-elect:
- Reallocate audit resources to a small set of high-impact systemic audits (insurance, utilities, building codes).
- Move large portions of the pension to low-cost indexed instruments where appropriate; clearly document liquidity planning and the role of private assets.
- Modernize unclaimed funds—automate returns using existing data and reduce friction for citizens.
Where this fits in the 2026 election context
- Primary (June 2026) is critical—Warshaw frames the comptroller role as underutilized and argues the current officeholder has been too passive.
- The message links fiscal stewardship to everyday costs (property taxes, insurance, energy, housing), turning a historically low‑profile office into one with immediate voter-relevant levers.
Bottom line
Drew Warshaw makes a data-driven, activist case that New York’s Comptroller should be a visible, reform-minded fiscal watchdog: reduce external manager fees, favor low-cost indexing and disciplined asset allocation, use audits to lower structural costs (housing, utilities, insurance), reform pension governance, and return unclaimed money to citizens. His proposals combine governance changes, investment strategy shifts, and operational audits intended to relieve affordability pressures that affect everyday New Yorkers.