A push by Attorney General Andrew Cuomo to curtail the state comptroller’s power over New York State’s pension fund would face opposition from lawmakers, who say the nation’s third-largest public retirement fund would suffer financially if it were overseen by a trustee board.

Mr. Cuomo, whose office is investigating alleged “systemic conflicts of interest” surrounding fund investments approved by a disgraced former comptroller, Alan Hevesi, is reportedly considering advising lawmakers to remove the comptroller as sole trustee of the $154 billion New York State Common Retirement Fund and hand power to a trustee board.

The question of who should control the fund has emerged in the aftermath of last year’s comptroller scandal that ended with the felony conviction and resignation of Hevesi, who pleaded guilty to defrauding the state.

The office is the subject of ongoing investigations led by the attorney general’s office and the Albany County district attorney’s office, which are looking into allegations of improper fund management under Hevesi’s leadership.

Mr. Cuomo said the probe has uncovered “very troubling, serious, systemic conflicts of interest,” but has not said whether his office would recommend that a trustee board oversee investments.

A few government watchdog groups have expressed support for a board, arguing that it would limit corruption by diffusing power and adding more checks and balances. Under the current system, teams of government and outside financial experts advise the comptroller, Thomas DiNapoli, who has final say over the equity, real estate, and bond portfolios.

The idea of a board is meeting resistance from state lawmakers, who have the final say over such a restructuring, and is getting a lukewarm reception from Governor Spitzer. Opposition is strongest among Democrats, the party that has controlled the comptroller office since 1994.

“It’s not a particularly good idea,” Assemblyman Richard Brodsky, a former Democratic candidate for comptroller, said. “Boards are less able to make the right kind of decisions. Funds with board managers tend not to do as well.”

The chairman of the tax-writing Ways and Means Committee, Herman “Denny” Farrell, also questioned the need for a board, saying: “At this point, we appear to be getting a lot of value for the buck.

A spokesman for the Republican Senate majority leader, Joseph Bruno, said a trustee board is “not something we’re focused on right now.”

A spokeswoman for Governor Spitzer, Christine Anderson, said Mr. Spitzer believes that the idea of a trustee board “merits consideration.”
One of Mr. Spitzer’s closest party allies, H. Carl McCall, a former comptroller, is urging Albany leaders to reject such a move.

“It would be a very bad idea,” Mr. McCall said in an interview. “I don’t see any need to change it.” Mr. McCall said diffusing the power over investments would limit accountability, saying that under the current one-person-in-charge arrangement, “there’s somebody responsible for the way in which the money is invested.”

Mr. McCall, who was recently nominated by Mr. Spitzer to the board of the State University of New York, said he’s seen “little support” in Albany for a trustee board.

He argued that being in charge of the fund made it possible for him to fend off attempts by governors Cuomo and Pataki to use hundreds of millions of dollars in supplemental pension funds to balance the state budget.

New York is one of only a small handful of states whose public pension fund is governed by one person, as opposed to a trustee board representing various political, business, and labor interests. New York City’s retirement system is ruled by a board that includes labor leaders and borough presidents.

Albany has periodically debated the merit of restructuring control over the fund but proposals calling for transferring decision-making to a multi-trustee board have historically been brushed aside by the Legislature.

In 1989, when Comptroller Edward Regan was facing accusations that he steered contracts to contributors, a task force appointed by Mr. Cuomo released a report urging lawmakers to place the fund under the oversight of a seven-member board composed of business and labor representatives. While Mr. Cuomo backed the report, lawmakers did not vote to create such a board.

Between 1996 and 2006, the state pension fund had an annualized rate of return of about 9.6%. The past three years have been especially lucrative for fund, with a rate of return of 17%.

In comparison, the city pension fund had a rate of return of 9.83% in 2006, 11.74% between 2003 and 2006, and 8.4% between 1996 and 2006. The California public fund, which is also run by a board, had an 11.8% return during a one-year period ending in June 2006 and has averaged a return of 9% over the last decade.