TALLAHASSEE — State Sen. Dan Gelber, vying to be Florida's next attorney general, says the proposed anticorruption package he unveiled earlier this week is more vital than ever in light of confirmation this week that the Securities and Exchange Commission is investigating possible fraud by the board that oversees the state pension fund.
The reform package by Gelber, D-Miami Beach, would remove the attorney general from the State Board of Administration, which now consists of the governor, attorney general and chief financial officer. Gelber says the attorney general should have "more arm's length oversight" so he can prosecute wrongdoing.
"Floridians should expect their attorney general to be scrutinizing their pension fund and protecting them from wrongdoing," Gelber said. His proposal would replace the attorney general with the commissioner of agriculture.
The federal investigation centers on whether the state and three Wall Street firms — JPMorgan Chase, Credit Suisse and the now-defunct Lehman Brothers — misled the public about the risk and liquidity of some of the board's investments.
The investment fund holds more than $130 billion, including retirement savings for more than 1 million Floridians. The SBA also manages the Local Government Investment Pool for cities and counties.
State Chief Financial Officer Alex Sink has been advocating changes since taking office, and more urgently over the past year as the pension fund fell to a low of $87 billion and questions arose over its management.
She wants to expand membership of the SBA to add at least one person with financial expertise and one person who participates in the pension fund. Also, all trustees would get financial training, and there would be regular external audits of the pension's management and performance, under her proposal — which got lukewarm reception from Attorney General Bill McCollum and Gov. Charlie Crist when she unveiled it at a September Cabinet meeting.
A recent survey of 15 other states' funds found that Florida is unique in its small governance structure, especially considering it is one of the nation's largest pension funds. Also, the survey found Florida is the only state whose governor and attorney general help oversee the fund. Some ethics watchdogs say the attorney general's service on the board is a potential conflict.