THE NEWS SERVICE OF FLORIDA: Sink calls for revamping of SBA

May 13, 2009


THE CAPITAL, TALLAHASSEE, May 13, 2009… Florida Chief Financial Officer and potential gubernatorial candidate Alex Sink called for a revamping of the State Board of Administration’s governing system Wednesday.

A year and a half ago, the SBA was mired in scandal. Investments in the Local Government Investment Pool that the state invests for cities and counties had been reduced to junk bond status while officials said publicly that investments were solid. And soon after, local governments essentially staged a run on the bank, pulling money out of the municipal pool. SBA executive director Coleman Stipanovich resigned in the wake of the scandal. The pool was designed as an entity for local governments to invest their money while still having quick access to it. But the meltdown last year caused the value of the pool to drop dramatically.

At Wednesday’s Cabinet meeting, Sink called for a change to the governing structure of the SBA, which also invests the state pension fund, the state’s tobacco settlement money and other state money. Currently, Sink, along with Gov. Charlie Crist and Attorney General Bill McCollum oversee the agency as the trustees of the State Board of Administration and are generally given short reports at Cabinet meetings. The agency has a director and a technical staff that run it day to day, and they answer to the trustees.

However, Sink said that it was not enough and that the three officials needed to have quarterly meetings with the SBA staff, advisory councils, auditors and the inspector general. She also asked SBA executive director Ash Williams to prove the competence of employees who were involved in the meltdown.

“All the same people involved in these situations are still involved in senior management with the SBA,” Sink said.

Both McCollum and Crist backed Sink’s motions and agreed to appoint a person from each of their staffs to research best practices in managing state investments. They praised Williams, who came on board after the LGIP meltdown, for changes he has made, but agreed that there could be more oversight.

Williams said the board had made huge strides in becoming more open, posting all meetings and information on its Web site.

“We’re in the trust business,” Williams said. “And if we can’t be open with our clients, look them in the eye and tell them the truth and have them accept that we’re telling them the truth, then we have a problem.”

The LGIP currently has 955 participants, and reached liquidity in late December. However, not all former participants were eager to return.

Cragin Mosteller, a spokeswoman for the Florida Association of Counties, said FAC launched an independent investment pool for counties, similar to the LGIP, three months ago. Currently, 15 counties are participating.

Mosteller noted that the SBA has made some improvements, but some county governments are still a little wary, and now have another option with the FAC pool.

“I think they’re trying to improve that and get more messages out, but it’s just too little too late,” she said.

Sink requested that McCollum and Sink name their staff people by June 15 and that the staff issue a final report by Sept. 1.

A spokesman for the SBA said that the board is staffed to handle any decisions the trustees make. “It really doesn’t change our world dramatically,” said spokesman Dennis MacKee.