Volume 6 Number 51 December 18, 2009
Like many of you, I love watching sports — football, basketball, you name it. And, if you're like me, you occasionally find yourself standing in front of the TV, shouting at the refs.
Sure, we take issue with the referees from time to time. But imagine if there were no referees at all. No qualified professionals down on the field, trained to call the game and stay on top of it play after play. Chances are, you'd be shouting at your TV every five minutes, "Hey, no fair! No way! How'd they let that happen? Gimme a break!"
For nearly two years, as Florida's chief financial officer, I've been making the case that the state pension fund urgently requires that very same kind of trained, qualified, professional oversight.
Now the pension fund is overseen by just three elected officials — the governor, the attorney general and the CFO. All of us are elected by the people of Florida, but only one of us brings a financial background in the private sector to our roles as trustees of the state pension fund. As that lone trustee who brings financial and business experience to the job, I'm greatly concerned for the pension fund's long-term health and stability.
That's why I'm pushing the Legislature to create a new pension fund oversight board that would include qualified financial professionals with relevant experience, and at least one member who is a beneficiary or participant in the fund.
By late 2007, it was clear that the system managing funds for our local governments and pensioners funds was broken and needed to be fixed. The first step was replacing a longtime political appointee with a qualified financial professional as executive director of the State Board of Administration. Next we required the board of trustees — the governor, the attorney general and the CFO — to conduct in-depth, quarterly meetings and institute independent, external audits. But the most important fix, the reform that matters most, is to dramatically change the board of trustees itself.
We have to take action now, while our fund's financial situation is strong. We can't rely on the status quo until we have another crisis on our hands. Other states have seen poorly governed pension funds quickly turn from stable moneymakers into bottomless money pits that suck away funding for other services. We can't allow that to happen to Florida.
The attorney general has suggested that the Legislature should merely expand an existing advisory committee. I could not disagree more. The buck stops with the Board of Trustees — only the trustees are empowered to make decisions and take action. Putting three more members on an advisory committee does not address the real issue: the experience of the people ultimately responsible for overseeing this fund.
Maybe you're asking: "What does all of this have to do with me?"
If you are one of the almost 1 million retired or working state and local employees — a public schoolteacher, firefighter, law enforcement officer, or other public servant who is a part of the Florida Retirement System — your stake in this is obvious. A strong, healthy, professionally managed state pension fund is what you and your family depend on for a secure and comfortable retirement.
If you never worked for the state, you nonetheless have something important at stake, too.
Florida has the fourth-largest state pension fund with assets of $112 billion. If those assets aren't managed properly and the fund starts to lose money, the burden falls to state and local governments to make up the difference. That means the burden falls to Florida taxpayers. When our state can scarcely meet its current budget, the last thing we need is another drain on your hard-earned tax dollars.
A stable, well-managed pension fund also provides a boost to Florida's business climate — giving private industries and companies more confidence that Florida is a good place to relocate, the kind of place where they can create jobs and achieve prosperity.
Simply put: None of us can afford the status quo when it comes to the pension fund. Too much is at stake, and we need real reform now.
That's something to think about next time you flip on the game and take some comfort when those guys in the zebra shirts trot onto the field.
Alex Sink is Florida's chief financial officer.