In the national debate over what to do about public pension shortfalls, here's something you may not know: The texts of the agreements signed between those pension funds and financial firms are almost always secret. Yes, that's right. Although they are public pensions that taxpayers contribute to and that public officials oversee, the exact terms of the financial deals being engineered in the public's name and with public money are typically not available to you, the taxpayer.

To understand why that should be cause for concern, ponder some possibilities as they relate to pension deals with hedge funds, private equity partnerships and other so-called "alternative investments." For example, it is possible that the secret terms of such agreements could allow other private individuals in the same investments to negotiate preferential terms for themselves, meaning public employees' pension money enriches those private investors. It is also possible that the secret terms of the agreements create the heads-Wall-Street-wins, tails-pensions-lose effect — the one whereby retirees' money is subjected to huge risks, yet financial firms' profits are guaranteed regardless of returns.

North Carolina exemplifies the latter problem. In a new report for the union representing that state's public employees, former Securities and Exchange Commission investigator Ted Siedle documents how secrecy is allowing financial firms to bilk the Teachers' and State Employees' Retirement System, which is the seventh largest public pension fund in America.

The first part of Siedle's report evaluates the secrecy.

"Today, TSERS assets are directly invested in approximately 300 funds and indirectly in hundreds more underlying funds, the names, investment practices, portfolio holdings, investment performances, fees, expenses, regulation, trading and custodian banking arrangements of which are largely unknown to stakeholders, the State Auditor and, indeed, to even the (State) Treasurer and her staff," he reports. "As a result of the lack of transparency and accountability at TSERS, it is virtually impossible for stakeholders to know the answers to questions as fundamental as who is managing the money, what is it invested in and where is it?"

Before you claim this is just a minor problem, consider some numbers. According to Siedle's report, this huge pension system now is authorized to invest up to 35 percent — or $30 billion — of its assets in alternatives. Consider, too, that Siedle's report shows that with such a large allocation in these risky alternatives, the fund "has underperformed the average public plan by $6.8 billion."

So what is happening to retirees' money? As Siedle documents, more and more of it is going to pay the exorbitant fees charged by the Wall Street firms managing the pension money.

"Fees have skyrocketed over 1,000 percent since 2000 and have almost doubled since (2008) from $217 million to $416 million," he writes, adding that "annual fees and expenses will amount to approximately $1 billion in the near future."

The details get worse from there, which makes Siedle's report a genuine must-read for anyone who wants to understand the larger story of public pensions. After all, North Carolina is not an isolated incident. In state after state, the financial industry is citing modest public pension shortfalls to justify pushing those pensions to invest more money in riskier and riskier high-fee investments — and to do so in secret.

It is a story that isn't some minor issue. On the contrary, the fight over that $3 trillion is fast becoming one of the most important economic, business and political stories of modern times. The only question is whether the story can even be told — or whether those profiting off secrecy can continue hiding their schemes from the public.