Florida SBA Hiring Firm to Find Two New Top Executives

BRADENTON, Fla. — Florida State Board of Administration trustees yesterday said they would hire a national search firm to find a new executive director and chief investment officer for the SBA, which oversees the Florida Retirement System Pension Plan, the Local Government Investment Pool, and other funds.

Gov. Charlie Crist, Chief Financial Officer Alex Sink, and Attorney General Bill McCollum, who are the trustees of the state agency, unanimously agreed that in order to get top-rate candidates to apply, the new director would be paid between $250,000 and $350,000 annually, plus bonuses.

Coleman Stipanovich, who resigned in early December because of a run on the local government pool related to subprime mortgages, earned $180,214 a year.

The pool had assets of $27.1 billion early last fall, but as word spread that investments could be linked to subprime mortgages, some cities and counties withdrew their funds. While the pool had no direct exposure to such investments, it does have investments in companies with subprime exposure.

To stabilize the pool, the SBA split it in two, placing prime investments into Fund A and distressed investments into Fund B, and allowed shareholders to make partial withdrawals from Fund A. The pool received its first rating, a AAAm from Standard & Poor’s, on Dec. 21.

As of last Friday, Fund A had a market value of $9.8 billion and Fund B had a market value of $2 billion.

“We cannot continue to have the kind of operation that we’ve been dealing with that’s shown up in the investment pool,” McCollum said yesterday, referring to the salary of a new director. “If we are going to go forward I, for one, want to invest what we need to do this.”

Sink felt the current situation was due partly to a lack of risk management. The state’s elected CFO wants the new director to be experienced in risk management as well as running multibillion-dollar funds.

SBA interim director Robert Milligan said he anticipated it would cost around $111,000 to hire a recruitment firm for a national search. He did not say what firm would be hired or how it would be solicited.

Milligan also told the SBA trustees yesterday that 15 firms responded to an invitation to negotiate a contract to become investment manager for the local government pool. Since 1982, the pool has been managed by the SBA.

State official have requested a performance audit of the SBA to determine if proper procedures were followed in making investments.

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