Dennis Leone on Buser resignation

From Dennis Leone
August 9, 2006

I received a telephone call today from Paul Kostyu about the Buser resignation. He undoubtedly will have an article tomorrow. Dr. Buser called me last night and we talked for about 30 minutes about his situation. While I do not have all of the details, and I have not seen his full statement to the Board because I am now visiting family in Alabama and Florida, he did tell me that he believes he has developed a conflict of interest due to competing interests of companies he professionally consults -- which are companies that may wish to be considered for future STRS work.

One thing I said to Paul Kostyu (which he may or may not use in his article tomorrow) is the fact that Dr. Buser was the one Board member who pushed for the full Board to develop a Doomsday Plan (which he called a "Contingency Plan") in the event that a catastrophe occurs in the future that sends the stock market straight downhill. While Dr. Buser pushed for an aggressive approach by STRS investors to achieve stock market gains (which WAS approved) he always stated that the aggressive approach carries high risk, which is why he also pushed for a "Contingency Plan" to be developed (which we HAVE NOT yet done).

John Lazares and I both agree that Dr. Buser was right. We actually should have developed the Contingency Plan BEFORE we adopted our investment strategy. Dr. Buser said this over and over again, but no one on the Board really responded. Speaking for myself, I did not fully appreciate what he was saying on this score, but I came to understand it months later. I worry now, with Dr. Buser gone, that it will be more difficult for the Board to agree on such an important measure. It must happen in order to mitigate the negative aspects of [any] terrible national/world event that collapses the stock market. Board members, in my opinion, may be resistant to taking the tough steps needed to take to protect our pension as much as possible in advance of a tragedy. Steps will need to be taken that some of my fellow Board members, OEA, and future retirees will NOT want to hear. As John Lazares has said often: "Do we want to have a pension in the future of not?" I told Paul Kostyu that I hope to do as much as I can in Dr. Buser's absence for this plan to be developed. It MUST happen. This is far more important than health care plans. I am talking about taking steps to protect our pension as much as possible. There ARE things that can be done.......Dr. Buser talked about them last night.

Regarding Dr. Buser's resignation, perhaps Conni Ramser should offer her own "official" reason for the resignation. She certainly thought she was qualified to speak on Judith Fisher's behalf. Comments by Ramser and Fisher were not only unprofessional, they were a total disservice to STRS. They both often said: "Now Dennis, let's put the past in the past." Then they shoot from the hip with cheap shots, which caused an undoing of many positive things that were moving forward. How can I respect anything that Ramser says in the future? Maybe Ramser and Gary Allen attended the same inservice session on how to attack those who stand for things you don't like.

Regarding Judith Fisher's replacement, I spoke with the Governor's Chief of Staff (Jon Allison) for nearly an hour today. I told him I hope Fisher's replacement will not be a cry baby, will have a understanding of the basic differences between a public board and a corporate board, will develop a complete understanding of the problems caused by the past actions of the Board and STRS Staff, will not pretend that he/she knows as much about things like the Sunshine Law as he/she does about investments, will not consider it "intrusive" if a Board member wants basic budget data and staffing information before he/she votes, and will not label it "micro-managing" if a Board member wishes specific information before he/she votes on a multi-million dollar vendor contract or a settlement agreement. I told Mr. Allison that I was not legally permitted to suggest a replacement by name. Mr. Allison said he understood and that he would a have a conversation with the governor about the issues I raised. I told him I was speaking for myself, not for the full Board. We talked a great deal about pension reform, my 2003 findings, and all of the work that went into the passage of SB 133 in 2004. He has a better understanding of history than Judith Fisher did.

Dennis Leone