Dennis Leone re: The Ferguson contract

Dennis Leone to Dave Parshall, November 10, 2006

Subject: Ferguson Explanation

Dave -- here is what Damon did not choose to share with CORE and you regarding the Ferguson contract matter. Please share this with whomever received the CORE minutes:

1. Damon came to the board in May seeking support for staff raises and a new compensation package for all employees. He stated that if the board approved it, it would make it possible for STRS to attract and retain quality employees. The board approved the plan, 11-0.

2. In June, Damon made the case for hiring 3 additional real estate employees. We listened, we asked questions, and Damon said the new compensation package in approved in May would make it possible for STRS to get good people. We approved the recommendation 11-0.

3. In August, Damon came back and said, oh well, we "tried" to find the 3 new real estate employees, but we couldn't, so now we need to fork up another $315,000 for a Chicago headhunter named Ferguson. I objected, saying publicly that the staff needed to "try again" and that I never would have voted yes in June (to approve the 3 additional real estate employees) had I known that we'd be expected to come up with another $315,000 two months later. I was the only Board member who voted no on the Ferguson expenditure (Lazares was absent) and I was the only board member who seemed to care whether the expenditure was $315,000 or $415,000 or $515,000. I remarked that it sure easy for my fellow board members and the staff to spend someone else's money. The expenditure was approved with the Board having any document about the contract we were voting on.

4. In September, I brought out the fact that Damon actually was asking Ferguson to hire a 4th real estate employee, due to another resignation. I pointed out that we were able to hire this person in years past without Ferguson, so why has it changed now. To make matters worse, I said, the Board approved the Ferguson contract without knowing or discussing a single word that was in it, and without having any specific information of what steps the staff took to find the 3 people. .

5. In October, I asked a question about Paragraph V in the Ferguson contract, which requires STRS to pay Ferguson a huge amount if we hire someone on our own during the term of the contract. Damon admitted that he and the staff didn't like that contract provision either, but that it was an "industry standard." I said that I did not care if it was a corporate-sector "industry standard," because STRS is a PENSION SYSTEM, funded by taxpayer money and retiree money. Lawyer Bill Neville explained that the the Board would first have to fire Ferguson before we could hire someone NOT on the Ferguson list. Ever try to fire someone without cause? This was the Board meeting when Meyers said that my question about the Ferguson contract was a "waste of time." All board members sat quiet when he said this, except Lazares.

The Board has problems, and the lack of leadership on issues like the Ferguson contract, credit cards, and the payment of employees' private legal fees, etc., make matters worse.

Dennis Leone