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SD County Treasurer Questions Huge Fee Increase For Pension Fund Manager

San Diego County hired a private consultant, Lee Partridge, three years ago to manage their multi-billion-dollar pension fund. His fee at the time was several times more than the the salary of the county employee he replaced.

Now the County Pension Board has agreed to increase the fees they pay Partridge and his partners, Salient, by a factor of about five.

County pension fund CEO Brian White said that’s justified by excellent investment returns over three years.

“For public pension plans greater than a billion dollars," White said, “we outperformed 99 percent of all other public funds.”

The new contract approved this week could pay fees of more than $7 million a year to Partridge's firm.

But San Diego County Treasurer Dan McAllister said the industry average for managing pension funds over $2 billion is less than a million dollars. He said San Diego officials have been duped before.

“People have come to town and more or less hornswaggled the people into believing they were something they weren’t,” McAllister said, “and all of a sudden - when they left with the money - we discovered they were not what they said they were. “

McAllister was one of three pension board members to vote against approving the contract. They were outvoted on the nine-member board.

Four members of the board are appointed by the County Board of Supervisors, and four represent county employee unions. McAllister is the ninth. The treasurer said he wants an independent consultant to evaluate the contract.

But White says he beleives that is unnecessary. He said the pension fund already employs a company to monitor Partridge's fund management practices: Hewitt EnnisKnupp.

Comments

Avatar for user 'HarryStreet'

HarryStreet | December 23, 2012 at 2:30 p.m. ― 1 year, 12 months ago

Just another example of how the government earns our trust.

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Avatar for user 'lifesaver1'

lifesaver1 | December 27, 2012 at 8:50 a.m. ― 1 year, 11 months ago

“For public pension plans greater than a billion dollars," White said, “we outperformed 99 percent of all other public funds.” Over what period? Who is doing the comparing?

In fact, the County’s returns are about the same as those of the City of San Diego’s plan.

Both the City and County plans publish a Comprehensive Annual Financial Report that is available on their websites. For some reason, the County plan has yet to publish its report for the most recent fiscal year, whereas the City has done so. The County reportedly earned around 5.5% in fiscal 2012. Under that assumption and averaging the annual reported rate of return for the two plans, the County’s returned an average 13.07% over the past three years and the City’s 12.56%. In terms of the many variables of plans of this size, that is essentially a tie.

In that context, where are the stellar returns the County claims that supposedly justify this contract?

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