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Sink Gets Backing on Florida SBA Overhaul

Chief Financial Officer Alex Sink’s push to expand oversight of state investments in a troubled economy could be approved by the state Legislature – not Florida voters, under an analysis released Monday.

Former Florida Supreme Court Justice Major Harding conducted the review sought by Sink – saying that adding members to the State Board of Administration could be accomplished by state law, with no need to change the Florida Constitution.

The SBA, comprised of Sink, Gov. Charlie Crist and Attorney General Bill McCollum, oversee the state’s $110 billion pension fund and other investments.

Sink is the lone Democrat on the panel. Crist and McCollum earlier said they were unsure whether the change could be made without voter approval, and expect to hear more about the proposal in December from SBA executive director Ash Williams.

In Harding’s analysis released by Sink's office, the former justice wrote that the Legislature has authority to change the oversight of the Pension Fund, “either by divesting the SBA of its supervisory authority or by expanding the Pension Fund's oversight board to include officers or entities in addition to member of the SBA.”

“Oversight of the Pension Fund is not now and has never been a constitutional duty of the SBA,” Harding concluded.

Sink plans to talk about her proposals with the Investment Advisory Council, which meets Thursday in Tallahassee.

“Because of the fiduciary responsibility to the participants in this fund, I believe we need to strengthen our oversight of the fund by expanding the Board of Trustees to include one or more members with extensive investment experience, and one or more members who are members of the Florida Retirement System,” Sink said in a statement accompanying Harding’s analysis.

The SBA has drawn criticism, particularly from Sink, about its investment approach. Two years ago, the board was under the microscope when local governments essentially staged a run on the bank when investments in the Local Government Investment Pool were reduced to junk bond status while officials said publicly that investments were solid. The scandal led to the resignation of then-SBA director Coleman Stipanovich.

Crumbling financial markets later led to major investment losses in the state’s Hurricane Catastrophe Fund and pension fund.

The markets have improved, rebuilding the CAT Fund and pension account. But Sink, a former banker, has maintained her call for more oversight of the pension fund.

Along with the elected officials on the SBA, the Investment Advisory Council – appointees from the private sector -- also review investment strategies and procedures.

Dennis MacKee, a spokesman for the SBA, said Monday that board staff haven’t taken sides in the oversight debate.

“As staff, we are steadfastly focused on the prudent investing and health of the funds we manage and, in spite of the recent challenges of the financial markets, the FRS remains one of the healthiest pension funds in the U.S.,” he wrote in an email to the News Service.

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