Three statewide politicians who oversee the state agency that invests billions of dollars in government assets finally agreed this week to exercise more direct oversight. The State Board of Administration trustees — Gov. Charlie Crist, Attorney General Bill McCollum and Chief Financial Officer Alex Sink — plan to meet quarterly with SBA staff to hear directly about investments and policies. And they've ordered a study due in September on whether more should be done to improve accountability and transparency.
Such action is welcome, but Crist, McCollum and Sink need to remain open to the potential that the agency's governance may need a fundamental overhaul. Three elected officials have multiple distractions, an inherent conflict of interest and often lack expertise to oversee complicated financial investments.
This week's actions stem from a recent St. Petersburg Times investigation that found that several times since the mortgage-market meltdown in mid 2007, SBA staff misled investors, advisers and pension members about how the crisis would affect assets. The fallout led to the resignation of the agency's executive director and changes in disclosure to clients in the Local Government Investment Pool.
Executive director Ash Williams did little to instill confidence that the agency is more transparent on Wednesday. When Sink noted, "I am disappointed that all the same people involved in these situations are still in senior management at SBA," Williams countered that they were in different jobs.
McCollum appeared ready at one point to abandon any reform, noting Florida's investments still had performed relatively well compared to others and questioning the need to consider a new form of oversight: "We don't want to fix something that ain't broken, as they say."
The attorney general misses the point. The assets managed by the SBA are those of pensioners and government agencies who have a right to know how their money is being handled every step of the way. The SBA staff lost sight of that basic fiduciary responsibility.
Now the questions are whether the trustees can restore transparency as a core value and whether the agency needs a new form of oversight. Sink has suggested expanding the board of trustees to include financial professionals and others — which would require a constitutional amendment. While that may be ideal, the trustees might effect a similar outcome by implementing a more powerful audit committee of their own. Regardless the method, the trustees must make sure the SBA sheds its culture of duplicity.