State names interim fund director
Former comptroller Bob Milligan will head the board that invests public funds.
By HELEN HUNTLEY, Personal Finance Editor
Published December 12, 2007
Retired general and former comptroller Bob Milligan got new marching orders Tuesday: restore investors' confidence in the State Board of Administration.
The board's trustees tapped Milligan, who turns 75 today, to become the interim executive director. He replaces Coleman Stipanovich, who resigned last week in the midst of a crisis that denied local governments full access to their money.
"He is a proven leader," said Alex Sink, the state's chief financial officer, who nominated him to the post even though it leaves her short-handed at the office. Milligan has been working for Sink for the past nine months as insurance consumer advocate. Although he is a Republican, Milligan supported Sink, a Democrat, in last year's election.
Gov. Charlie Crist called Milligan "an extraordinary selection," saying he is "just a great guy and his integrity is beyond reproach."
The board manages about $180-billion, including one of the nation's largest pension plans. It came under fire last month for management of the Local Government Investment Pool, a short-term investment vehicle for cities, counties, school boards, universities and other government entities.
Last month, those investors found out some of the pool's assets were riskier than they expected. Assets bought for about $2-billion, mostly mortgage-backed securities, have been downgraded and in some cases defaulted. A run on the fund by worried investors forced board trustees to halt redemptions for a week.
The fund reopened on a restricted basis last week and now holds about $10-billion in assets, making it about a third of its former size.
"The SBA needs to be responding to our investors' interests and increase communication and transparency substantially," Sink said Tuesday.
Milligan accepted the charge. "We will come to grips with what we need to do to get this operation on the right track," he promised. He invited investors to meet with him Jan. 3.
Milligan is already familiar with board operations because he served as a trustee during his eight years as state comptroller. The comptroller's position was eliminated in 2003 with the creation of the position of chief financial officer.
Milligan served in the U.S. Marine Corps for 35 years, retiring as a three-star general. He has a bachelor's degree in engineering and a master's degree in business administration, and has done graduate studies in economics.
His new assignment also calls for him to make recommendations regarding the search for a permanent executive director and to develop a request for a proposal for a new manager for the local government pool. The board has given the job temporarily to the investment advisory firm BlackRock Financial Management.
BlackRock officials said Tuesday that they had arranged with Wachovia Bank to offer investors in the local government pool loans secured by their shares in the pool. Although they may borrow from any lender, the arrangement with Wachovia is designed to simplify the process.
A loan allows investors access to their money without incurring a 2 percent excess withdrawal fee that the board has imposed.
BlackRock and the board also clarified that investors in the pool won't get their November interest payments. The money is being retained by the pool to help offset any potential losses on the troubled assets.
Helen Huntley can be reached at firstname.lastname@example.org or (727) 893-8230.
[Last modified December 11, 2007, 21:56:34]
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