A lawmaker says job retention changes for an official weren't vindictive. The official disagrees.
By DIANE RADO
© St. Petersburg Times, published May 8, 2001
TALLAHASSEE -- As Florida officials worked to overhaul the state retirement system, House Majority Leader Mike Fasano butted heads more than once with Tom Herndon, the chief state official overseeing the pension reform.
Fasano, R-New Port Richey, complained that Herndon ignored recommendations of advisers, including himself.
Herndon suggested that Fasano remove himself from some aspects of the project because he is employed by Morgan Stanley Dean Witter -- a firm that could potentially benefit from the pension reform.
Last Friday, in the waning hours of the legislative session, Fasano pushed through a change that could make it more difficult for Herndon to keep his job as executive director of the State Board of Administration (SBA).
"I assume that it's personal," Herndon said Monday of Fasano's actions.
To an existing bill, Fasano added an amendment that would require the SBA's executive director to be approved every year by the state Board of Administration -- the governor, the state comptroller and the insurance commissioner.
The amendment states that the governor must vote on the prevailing side, which is a departure from the current practice. Now, the executive director serves at the pleasure of the board -- there's no requirement for annual approval -- and needs support from at least two of the three trustees. The governor's vote is not given greater weight.
Bush is Republican, and Herndon is associated with the prior Democratic administration. He served as chief of staff to Gov. Lawton Chiles, who defeated Bush in 1994.
But Bush, who said he will sign the bill, pledged his support to Herndon on Monday.
"I think he has done a good job," the governor said. Bush also said he will essentially ignore Fasano's amendment, which was approved as a part of an important bill that affects pensions for thousands of police officers and firefighters.
"I"m going to operate the state Board of Administration as equal trustees . . . just as we are doing now," Bush said.
The governor said Fasano's amendment raises legal questions over whether the three trustees must share equal responsibility in matters relating to the state board.
Fasano said he was not trying to be vindictive by pushing the amendment.
He feels that the governor, as Florida's top elected official, should have greater say over who will head the state Board of Administration, which oversees more than $100-billion in pension funds.
"If he (Herndon) is doing a good job, he should have nothing to worry about," Fasano said.
But Fasano's actions didn't sit well with Sen. Ken Pruitt, R-Port St. Lucie, who was instrumental in starting the pension reform last year.
On the last day of the legislative session, Fasano approached him about the Herndon amendment, Pruitt said.
"I looked at him and said, "I'll debate public policy with you all day long, but on stuff like this, I can't deal with this.' "
Pruitt said he went along with the provision only after checking with Herndon.
"He (Herndon) is so focused on public policy that he didn't care," Pruitt said. "This guy is a very secure individual. He is not a shrinking violet."
Herndon and Fasano clashed when Fasano served on an advisory committee overseeing the pension reform, a pioneering effort to give public employees a chance to manage their own investments.
Under the new plan, employees will have the option to transfer their traditional state-managed retirement plans to a 401(k)-style account that would be riskier but potentially more lucrative, depending on how employees invest and manage their funds.
Between $8-billion and $33-billion is expected to move from the state's traditional plan into individual investment accounts beginning June 1, 2002.
Fasano has been insistent that employees have as many choices as possible. That would include "bundled providers" -- mutual fund and insurance companies that provide clients with both investment options and education, account management and other services.
Herndon has been reluctant to bring too many companies into the mix, and prefers an "unbundled" approach in which the state offers a variety of low-cost investment products to employees, and separate companies provide education services. That way, employees get the most objective advice possible.
Fasano said the advisers preferred allowing bundled providers, but Herndon didn't listen.
"There's no question that Mr. Herndon and his staff fought the advisory committee every step of the way," Fasano said Monday.
Fasano pushed legislation this session that would have forced the state to offer only bundled providers in the new retirement plan. He retreated from that, ultimately passing a bill that would require at least one bundled provider under certain conditions. He insisted that his own company, Morgan Stanley, would not benefit from his actions.
But in the final days of the legislative session, to Fasano's embarrassment, Morgan Stanley expressed interest in a lucrative bid to be a bundled provider in the plan.
The company missed the state deadline for applying, however, and will not be considered.
Fasano said he did not know of the company's actions and threatened to quit his job as an associate vice president for investments for Morgan Stanley in Pasco County if his company didn't back off the bid.