SPRINGFIELD - A proposal to let Gov. Rod Blagojevich replace all members of most of the state's boards and commissions and pick new chairmen and full-time directors may give him more responsibility than he bargained for.
Pension system boards of trustees and their executive directors are fiduciaries of their systems, meaning their personal assets are at risk if they fail to act prudently and exclusively in the interest of the plan participants and beneficiaries, said James Hacking, executive director of the State Universities Retirement System.
?For the trustees to fulfill their fiduciary obligations, they must be able to choose to whom they delegate administrative authority, since they are ultimately responsible,? SURS President Stanley Rives said in a letter to the legislative leaders. ?Yet this delegation would be devastated if the governor, rather than the board, has the power to appoint the executive director. Indeed, House Bill 3511, by giving the governor the power to appoint the SURS director, could make the governor a fiduciary of the retirement system, a result that we believe is neither contemplated nor desirable.?
Tom Wilson, a retiree from Normal who draws pensions from the Teachers Retirement System and from SURS, said he worried that if the governor appointed the executive director, he could pressure that person to make investments for the wrong reasons.
?Even with good intentions, the governor might come to the executive director and say you need to invest in Boeing, or you need to invest in Enron, whatever the company is in the state,? Wilson said. ?That's one thing. The second thing is coming to the retirement system and saying, we have a social need here and you should invest to fulfill that social need, it might be low-income housing. And there's no question that that quite often is a social need, but we don't want the retirement system to be making bad investments as a way of trying to fulfill some social need.?
In addition, by replacing all of the board's members at once, ?the entire institutional memory of the system at the governance level would be eliminated, thus disrupting the continuity and stability that are the reasons for having staggered terms in the first place,? Hacking said.
The Teachers Retirement System is also objecting to the parts of the bill that deal with retirement systems, as are the Illinois Federation of Teachers and the Illinois School Management Alliance.
The bill was approved on a party-line vote by the House state government committee Tuesday.
But state Rep. Jay Hoffman, D-Collinsville, who is sponsoring the bill at Blagojevich's request, said the pension systems raised some concerns of which he had been unaware, and said the bill may need to be amended as a result.
?While we need to make sure that we have accountability to the general public, I think that there's a larger accountability issue of being accountable to the annuitants, the people whose money is actually in the pension system,? Hoffman said.
The goal of the bill is to streamline the state's boards and commissions for greater efficiency, accountability and savings, he said.
It is supposed to save the state nearly $5.7 million by ending pay for members of all but the Prisoner Review Board, the Illinois Commerce Commission, the Pollution Control Board and the Illinois Industrial Commission, banning paid board members from having any other outside employment and ending per diem payments for members of nonsalaried boards.
In addition to the pay cuts, a number of panels would be downsized or eliminated, cutting a total of 87 seats. That still leaves hundreds for the governor to appoint, particularly since the legislation terminates all current members of most boards and commissions at the end of June.
In many cases, including the pension systems, the legislation also takes away the power of those boards to choose their own chief executive officer or director and gives it to the governor. Under the legislation, appointments to those paid director posts would not require the advice and consent of the Senate.
State Rep. Chapin Rose, R-Mahomet, voted present on the bill in committee, saying he had a number of concerns about the legislation.
Rose called the bill ?a blatant power grab? by the governor and questioned giving Blagojevich so many more appointments to make, when he has yet to appoint about half of his Cabinet members.
?I've got farmers in the fields this week, and we don't have a state director of agriculture, yet we are going to worry about hundreds of new appointments to boards,? he said.
You can reach Kate Clements at (217) 782-2486 or via e-mail at email@example.com.