Leon Lott and Frank Fusco are the first two appointments to the controversial Public Employee Benefits Authority.

The Richland County sheriff and retired head of the state Budget and Control Board will be part of an 11-member commission that will oversee the state’s five retirement systems. They will serve two-year terms and be paid a $12,000-a-year salary.

The commission will make policy decisions, which could affect how much money taxpayers and employees have to pay into the $25 billion retirement fund. But those decisions also must be approved by the five-member State Budget and Control Board.

Lott, appointed to the authority as a representative of public-safety workers, has been the sheriff of Richland County since 1996, building one of the largest and most well-funded law enforcement agencies in the state. He is involved in various statewide law enforcement associations, including a stint as president of the S.C. Law Enforcement Officers’ Association. He was appointed by state Sen. John Courson, R-Richland, president pro tempore of the Senate.

Fusco, appointed to the authority as a representative of retired state workers, was the executive director of the State Budget and Control Board for about nine years. He also was former Gov. Jim Hodges’ deputy for legislative and budget affairs and, for 15 years, chief of staff for the House Ways and Means Committee. He was appointed to the authority by state Sen. Hugh Leatherman, R-Florence, chairman of the Senate Finance Committee.

The Public Employees Benefit Authority — or PEBA, as it is more commonly known — was created July 1 after Gov. Nikki Haley signed a law reforming the state’s retirement system. The centerpiece of the law was eliminating some controversial retirement incentives, a move projected to reduce the retirement fund’s $15 billion shortfall by $2 billion.

“We all realize that something had to be done. And while we’re not ecstatic, because it does have an impact on us, it was necessary for the system to survive,” Lott said. “We are willing to sacrifice and work within the system so it doesn’t collapse.”

Much of the debate in the Legislature centered on whether to create PEBA. Lawmakers in the overwhelming Republican House objected to creating another government agency. But senators insisted on creating the authority, saying it would give state workers — retired and active — a voice in the retirement systems’ management.

“For a long time, that voice has only been heard by making a lot of noise at the State House and having groups like mine be present,” said Jarrod Bruder, executive director of the Law Enforcement Officers’ Association. “We don’t have to ask for a seat at the table anymore. We’re there.”

Fusco spent time dealing with state retirement system issues as executive director of the Budget and Control Board. But he says he is more worried about the shortfall in the fund that pays for state employees’ health insurance.

Lawmakers have addressed the retirement system’s shortfall by changing the law. But the S.C. Retiree Health Insurance Trust Fund has an unfunded liability of $9.1 billion as of June 30, 2010, the latest date available.

“The state has to put a pretty good chunk of money in there to keep it going each year,” Fusco said. “We want to make sure we have a good plan, and that we’re finding whatever efficiencies we can.”

Leatherman and Courson each have one more appointment to the authority to make.

Haley, a Republican from Lexington, will appoint three members to the board, while House Speaker Bobby Harrell, R-Charleston, and House Ways and Means Chairman Brian White, R-Anderson, will appoint two members each.

A spokesman for Harrell said the speaker has not yet made any appointments. White also said he has yet to make any appointments. Attempts to reach Haley’s office were unsuccessful.

Reach Beam at (803) 386-7038.