Lots of government functions have been outsourced to save money, but Oregon Treasurer Ted Wheeler wants to go the opposite direction. He says the state can save $12 million a year by hiring more staff and reducing fees to outside firms for managing part of the state’s retirement fund.

If further study affirms the savings, it’s a plan that deserves support.

The proposal comes on the heels of a report that shows the state spending more than its peers for investment management fees. The analysis by CEM Benchmarking of Toronto compared Oregon’s Public Employees Retirement Fund with 18 other large funds. Although Oregon got good returns, it spent $400 million on fees in 2011, which amounted to 0.69 percent of assets, while its peers in the study spent 0.59 percent.

Because the Legislature limits staffing at Treasury, the state must use outside firms to manage a large segment of the fund, leading to higher fees, according to Treasury spokesman James Sinks.

Sinks said Wheeler plans to introduce a proposal from the Oregon Investment Council asking the Legislature to give the council control of the investment division that now works for the treasurer, including its staffing decisions.

The council, which makes investment decisions for the state, is composed of the treasurer and four members appointed by the governor.

The change would allow the council to make its own hiring decisions and staff up as needed to manage more of the investments internally.

The Oregon Treasury invests the retirement fund and therefore controls the cost of investment management, but has no role in benefits or other features.

If it can reduce those management costs, more money stays in the fund. The annual $12 million would amount to $24 million per biennium, and would grow further as it earns returns in the fund.

If the investment council can manage the funds at a lower cost without hurting returns, it’s clearly a good move for taxpayers.