When Beth McCague stepped in as interim executive director of the embattled Police and Fire Pension Fund late last year, she expected the worst.
“When I walked in the door, I thought there was no process at all around how the funds were chosen,” McCague told members of the Rotary Club of Ponte Vedra Beach last week. “To read the paper, you’d think (former Executive Director) John Keane had been sitting alone in a back office…calling up his buddies to come in and manage money for the fund. Nothing could have been further from the truth.”
As McCague prepares to turn over the pension fund reins to newly selected permanent director Timothy Johnson – who is expected to start sometime in mid-July – she clarified some of the misconceptions that she and others had about the state of the pension fund – which currently has a $1.8 billion unfunded liability – and outlined some of the accomplishments achieved during her tenure as interim director. For example, contrary to public perception, McCague said, she found the pension fund’s internal financial controls to be all in order. In addition, the fund has benefited from an outside investment advisor since its creation in 1990 – and since that time, it has experienced only five down years.
She also contended that the benefits provided to police officers and firefighters through the fund are in line with similar plans throughout the state.
“People say, ‘these benefits are so rich,’” she said. “Well, they do look rich relative to corporate America these days, but relative to other at-risk officers’ plans throughout the state of Florida, the plan is about average.”
Following pension reform, she added, the cost of living adjustment (COLA) for new retirees with fewer than 20 years of service as of 2015 will be just 1.5 percent a year, compared to 3 percent previously.
McCague praised the caliber of the fund’s board of directors and the individuals who serve on its numerous advisory committees.
“These members bring a lot to the table,” said McCague, a longtime banking executive who agreed to take on the interim director position for six months until a permanent director could be hired. “Their role is to look out for and protect the long-term benefits of the members and survivors of the plan. And they take that role very seriously.”
She acknowledged, however, that the sizable unfunded liability was a challenge that could not be ignored.
“If you ask me, ‘With all these people working on the management of the fund, why are we $1.8 billion underfunded,’ the answer is it’s not one person’s problem, it’s everybody’s problem,” she said.
According to McCague, previous boards became distracted by lawsuits and other issues. “There was a lot of deferred maintenance,” she said. “For the past couple of years they had made no changes in their fund. And they needed to make some changes….”
During her interim tenure, McCague said, the fund has settled or finalized a number of outstanding lawsuits, terminated low-performing fund managers, cut fees and added new asset classes in order to improve its financial performance. It has also begun implementing a new electronic records management system to replace the antiquated paper-based system still in place since 1990 that made searching for records an arduous and time-consuming task.
As she prepares to return to the banking world, McCague said that despite the challenges, she has enjoyed her role with the Police and Fire Pension Fund.
“The fund is on its way,” she said. “I’ve had a ball doing this job. I’ve been bruised and bloodied some of the time when I’ve come back from City Hall, but it’s been a privilege to serve in this role.”
Rotarian of the Year
The Rotary Club’s June 9 meeting also saw the presentation of its annual “Rotarian of the Year Award” to Toni Boudreaux, whose father, Roy, was on hand to see her receive the honor.
Club President Will Montoya noted that Boudreaux – the development director for the Cultural Center at Ponte Vedra Beach – previously belonged to Rotaract, Rotary’s young professionals group.
“We saw a diamond in her,” Montoya said, adding that before Boudreaux even officially joined the club she took on the responsibility of producing the club’s weekly newsletter. “She has really lived up to the Rotary motto of ‘Service Above Self.’”
The club also presented a donation to the Cultural Center at Ponte Vedra Beach, and inducted Ponte Vedra Recorder Managing Editor Jennifer Logue as its newest member.
