After months of writing predominantly on retirement plan reforms, it's refreshing to shift to a different topic: public pension fund opportunities to invest in venture capital. As recently noted in Governing, there is both a need for, and a shortage of, investment capital willing to make long-term investments in start-up and mezzanine companies. That tells me there is a solid investment theme for public pension funds to pursue: Investing now in viable venture capital deals that will likely pay off later in this business cycle or the next one.

Typically, venture capital attracts public pension money at the wrong time in the cycle — when stocks are red hot and trustees are feeling flush. My contrarian advice to the public funds is that now is the time to make deep-pocket investments in early-stage businesses, in what is still the beginning phase of nascent economic recovery — especially with the current global nervousness about Mideast tensions and Japan's recent catastrophes, which has sidelined many risk-averse investors.

The problem for the larger pension funds is finding enough venture opportunities to invest in, to make a difference in total returns in their megabucks portfolios. For the smaller funds, the greater problem is diversification. Here's a solution to both these problems: A multi-state consortium of public pension plans, advised by professionals knowledgeable in venture capital and overseen by qualified public fiduciaries, that could make national investment decisions with a broadly diversified portfolio, while still seeking good opportunities in the sponsoring states. It doesn't have to be a 1-1 mapping of money as would occur in a single-state venture capital fund, but rather a general commitment to seek good opportunities in the regions from which the money comes. With other pension trustees and investment staffs overseeing the money manager and the companies selected, there will be a much-lower risk of "lemon socialism" and in-state politicking by special interests seeking to convert political connections into investment capital at taxpayer expense.

The perfect time to launch such a "multi-plan venture consortium" strategy would be the absolute bottom of a recession, which would allow a year or two to get organized. But even though we are now one year into this economic recovery, the 8 percent national unemployment and 15 percent underemployment rates tell us that we're a long way from the next cyclical peak. So, there is plenty of time to get organized and pick the right investments before it's too late in this cycle.

This won't happen without a catalyst and an entrepreneurial collaborator. Somebody needs to pull together the resources and the players. As I offered a year ago, I'd be happy to work on a project team to help a handful of state and major municipal pension funds launch this strategy. Time will be of the essence here, so that the investments launch before the economy shifts from recovery to expansion mode — at which point it will be too late in the cycle to earn superior returns.