Miami Herald: Report finds fault with Florida pension overseers

Sep 17, 2009

This article was published by the Miami Herald on September 17, 2009

Herald/Times Tallahassee Bureau

A report presented to Gov. Charlie Crist and the Cabinet on Tuesday noted that Florida’s pension fund has fewer people overseeing it than most other states, and that annual independent audits may improve public confidence in investment decisions.

The findings add new momentum for state officials to ask voters to expand the three-member oversight board to add diversity and to include financial experts, and for more aggressive audits of the fund.

The report analyzed the governing setup of a powerful but little-noticed agency, the State Board of Administration, which oversees more than $110 billion in investments.

The study began May 13, 10 days after a St. Petersburg Times report showed that the State Board of Administration gives confusing and sometimes false information to its own customers — the families of 1 million government employees.

The board reports to three trustees: Crist, Chief Financial Officer Alex Sink and Attorney General Bill McCollum.

“Governance structure in itself is not necessarily the primary determinant of success,” said Jim Cassidy, Sink’s chief of staff, who worked on the report.

“It’s people and execution that matter the most.”

Sink suggested the trustees act on the report at their next meeting Sept. 29, including the possibility of an annual independent audit of the fund.

“Because the three of us have so many other duties and responsibilities, we do have limited time to spend” on overseeing the fund, said Sink, a former banking executive.

She also suggested that Florida’s existing Investment Advisory Council, a six-member board, which makes recommendation on investment strategy, report directly to the trustees themselves, “unfiltered from any staff.”

McCollum, who like Sink is running for governor in 2010, agreed on the need for fund audits.

The report compared Florida’s pension fund governance to 15 other retirement systems, including those of the states of New York, Texas and California. Some states, such as New York and North Carolina, have a single trustee, but most states have more than Florida’s three trustees. Colorado, for instance, has a 16-member board of trustees.

The report recommended more training for pension fund trustees and for advisory board members who lend additional oversight to investment decisions.

Steve Bousquet can be reached at

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