FORTUNE — There has been lots of political talk this month about the future of public employee unions, in the wake of Wisconsin’s recall results. Indiana Gov. Mitch Daniels even went so far as to say yesterday that America would be better off without them.
Such a debate could be tricky for Mitt Romney, who has received an extraordinary amount of support from his former colleagues in the private equity industry.
While plenty of PE executives likely agree with folks like Daniels from a macro perspective, there is little chance that any of them believe the abolition of public employee unions would be anything short of catastrophic for their market.
U.S. private equity firms have received approximately 26% of all fund commitments from U.S. public pension systems since 2006, according to data provider PitchBook. Or, in terms of hard dollars, more than $283 billion of around $1.1 trillion.
Those are not replaceable dollars. In fact, one could make a good case that the entire private equity industry was super-sized in the late 1990’s when large public pensions began allocating to the asset class (in many cases after changing existing regulations that prohibited “high-risk” investing). Even Bain Capital, which historically has raised less from public pensions than have many of its peers, has $625 million in commitments from The California State Teachers Retirement System.
In other words, these are not replaceable dollars. And if you eliminate public employee unions, most of the money also disappears. After all, how many non-union shops still feature defined benefit plans?
Losing public pensions also would deny private equity a powerful talking point, about how the industry helps secure the retirements of policemen and firefighters and the like.
So far, Romney hasn’t waded into this specific debate. The closest he’s gotten were comments last week about how America doesn’t need additional teachers and the like. But he’s certain to get asked about broader support for public employee unions, and it will be interesting to see how hard he’s willing to bite the hands that feed his former colleagues (and current contributors).
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