Dennis Leone: Answer to Ferguson Contract Question

Wonder if Mr. Meuser's textbook mentioned this? -- JC

From Dennis Leone, October 25, 2006

Subject: Fw: Answer to Ferguson Contract Question

Molly -- At your request, I double-checked the Ferguson contract with STRS legal counsel Bill Neville today, and I confirmed what was said at the Board meeting.

1. Let's assume that Ferguson submits 5 names to STRS.

2. Secondly, let's assume that STRS determines not to interview or consider 3 of the 5 because they have poor qualifications.

3. Thirdly, STRS decides to seek, screen, interview and hire its own candidate -- someone NOT on the Ferguson list

Conclusion: STRS would have to fire the Ferguson firm in total BEFORE we chose to hire anyone on our own. In other words, as long as Ferguson is under contract (which they will be for the next 18 months, unless fired), STRS must pay the firm $315,000 no matter whom is hired. It doesn't matter if Ferguson does a lousy job. It doesn't matter if we hire a person who was never on the Ferguson list. If we hire ANYONE, we pay unless we fire Ferguson first. It's a good deal for the firm, at the expense of STRS. I don't like it. Not publicly-generated pension money. THE BOARD SHOULD HAVE LEARNED THAT THIS WAS IN THE CONTRACT BEFORE $315,000 WAS APPROVED.

Dennis Leone