As the state's former chief financial officer and someone who has been a close observer of the state's investments for more than 20 years, I have become increasingly concerned by recent attempts to play politics with Florida's pension fund.
In a recent opinion piece for the St. Petersburg Times, Chief Financial Officer Alex Sink laid out her plan to tinker with the State Board of Administration — the board composed of the governor and two Cabinet members that oversees billions of dollars of the state's assets in the Florida Retirement System Pension Plan. Chief among Sink's recommended changes is a plan to expand the board to include representatives of current state employees and retirees — which would result in adding the influence of Florida's unions to the Board of Trustees. This idea isn't new; it's been shot down by Democratic and Republican administrations in the past.
While the state should never stop looking for ways to improve the management of state monies entrusted to it by taxpayers and employees, there should be an open and honest dialogue about it.
It's time to look at all of the facts.
The state of Florida is fortunate to have an expert staff of professional investment managers that oversees the day-to-day operations of the pension fund. Suggesting otherwise is inaccurate and does a disservice to these respected career professionals. The success of our pension fund investments is due largely to the fact that the three statewide elected officials serving as trustees have historically allowed the professionals at the State Board of Administration to perform their jobs without political influence. The staff has the authority to make informed individual money decisions that are open to review by independent auditors and compliance officers.
Sink wants to add unelected public employee representatives as trustees to the board — individuals who are not accountable to the voters of Florida. This would ignite a political battle among the unions as to who would have representation on the board. That could ultimately lead Sink and other politicians to push for representatives from the four major public employee unions to provide trustees to the board, giving the unions control of the board.
Expanding the Board of Trustees in this manner will do nothing but put Florida on the slippery slope to fiduciary irresponsibility for the sake of political expediency. Florida's pension fund is the envy of states across the nation. The cost to administer our funds and manage our investment dollars is among the lowest in the country, while our returns are among the highest. In the more than three decades that I was involved in state government, Florida's pension fund was routinely one of the nation's top five performers, providing the best possible returns to participants.
If the leaders in the Florida Legislature look closely at the successful structure of our State Board of Administration, they will continue to allow the three statewide elected officials (governor, CFO and attorney general) sitting as the State Board of Administration to continue to be responsible for the pension funds and other money management duties that have been added by the Legislature over the years.
What we don't need is a plan that would allow the three statewide elected officials to escape their elected fiduciary responsibilities by watering down their influence in the management of Florida's multibillion-dollar pension funds. Maintaining and growing a stable Florida pension fund must be one of the state's top priorities, and now is not the time to play politics with it.
Tom Gallagher is a former Florida chief financial officer.