Initial steps were taken to deal with some of the immediate shortcomings of the state retirement system in a Senate subcommittee last week, but more can be done. For example, legislators need to revise the questionable expectation for a high return on investments and look at the continuing liability of a post-retirement program that has ballooned beyond original intention.

The primary goal of reforms to the state retirement system shouldn't be to guarantee a cost of living increase this year, as stated by one legislator, but to put the system on firm financial ground for the long term.

Among the most notable proposals were a constitutional amendment that would allow investments in international markets, and revisiting a 2001 change in the time required for retirement service, which was dropped from 30 to 28 years, creating an additional financial liability to the system. Total liabilities are currently estimated at $4 billion.

The Finance subcommittee recommended that investments be handled by a new Retirement System Investment Commission to provide more flexibility, and bring a better return to the state. That suggestion already has been panned by Treasurer Grady Patterson, who currently invests about 60 percent of the retirement funds in bonds. A Patterson spokesman told The Associated Press the treasurer's advice wasn't sought, adding: "It should scare the retirees of this state that legislation is being proposed to give an investment panel sole fiduciary responsibility for investing $25 billion without being held accountable to the people of this state."

The committee should seek the advice of Mr. Patterson, and of State Comptroller General Richard Eckstrom, who has been at the forefront of urging reforms to the system.

Mr. Eckstrom describes the committee's proposal as essentially similar to "painting a rotten watermelon green."

He criticized the decision to accept an anticipated investment return of 8 percent, higher than that recommended by state actuaries. And he insists that the investment board envisioned by the subcommittee would have too much authority over investments, and could be financially liable in the event of losses.

But primarily, Mr. Eckstrom insists that the committee's proposal avoids confronting the long-term financial burden created by annual COLAs to state employees. The comptroller general was given a brief opportunity to speak before the committee, and cited some of his concerns.

A spokesman for Gov. Mark Sanford observed that the current rate of investment return is about 7 percent, and suggested that any retirement system reform must be based on realistic numbers.

The Senate panel unfortunately took a pass on eliminating the Teacher and Employee Retirement Initiative, which has grown into a major liability under a court-ordered expansion. Under TERI, retired employees can continue working for another five years. Initially designed to retain teachers and a few exceptional employees, a judge ruled that the TERI program had to be offered to all. That created a much broader system and a substantial liability to the retirement system, which serves more than 410,000 former public employees. Sen. Greg Ryberg, R-Aiken, says that the Senate has been advised by attorneys for the state Budget and Control Board that the TERI program can be terminated immediately, while accommodating existing participants.

The pressure to provide another round of COLAs by mid-year should encourage a long-term fix that will enable the state to provide the retiree benefit not just this year, but into the foreseeable future. Long-term goals should similarly guide other decisions necessary for the reform of the retirement system.