The investment fees paid to Wall Street firms to manage the state pension fund increased 28% last year. According to the investorcookbooks blog, currently 27% of all new teacher and state employee contributions go to Wall Street.
To put this in perspective - the current fees are about 40 basis points of the $75 billion under management. That may not seem like much, but about half the portfolio is managed in house (the fixed income piece) and so these 40 basis points are going to the equity and alternatives which make up the other half of the portfolio. Simple math implies that the average fee on these assets must be well above 40b.p. Considering that the fees on institutional equity index funds can be well below 10b.p., these fees seem high.
Unfortunately, overpaying Wall Street in the hope of beating the market is an affliction suffered by pretty much all state pension funds - which is a shame, because this is an easy way for a state to save a couple of hundred million dollars a year.