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Teacher Retirement System of Texas
October 16, 2009
Three new trustees appointed to TRS board
Gov. Rick Perry on Friday named three new trustees to the Teacher Retirement System of Texas board.
Perry also made official that R. David Kelly, a trustee since 2007, will take over as chairman. Last weekend, the American-Statesman reported that Kelly would replace Linus Wright as chairman less than a year after Wright, a retired superintendent, took the helm. Wright said he was given no reason for the abrupt change.
Though no longer chairman, Wright will remain a trustee on the nine-member board until his term ends in 2011.
The new trustees, who will each serve a six-year term, are:
—Todd Barth of Houston, a real estate investor and a former appointee to the state board that manages the real estate portion of the Permanent School Fund;
—Seth Crone of Beaumont, the vice president of business development for The Bank of New York Mellon Trust Company N.A.; and
—Nanette Sissney of Whitesboro, a school counselor for the Whitesboro Independent School District and member of the Texas Classroom Teachers Association executive board.
Kelly and Barth are both members of the finance team for Perry’s re-election effort.
The new trustees replace financial professionals Dory Wiley of Dallas and John Graham Jr. of Fredericksburg as well as Mark Henry, the superintendent of the Galena Park school district. The terms of all three outgoing trustees expired in August.
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September 21, 2009
Former TRS deputy blasted for hefty contract
The San Diego Union-Tribune took a dig at the Teacher Retirement System of Texas in an editorial last week blasting the hiring of Lee Partridge, the former deputy chief investment officer for TRS, to serve as the new outside investment chief for San Diego County’s employee retirement system.
The editorial refers to TRS’ performance over the past year as “less-than-mediocre” as it called into question whether Partridge’s contract, from which he could reap more than $1 million as an independent contract, was justified.
Partridge recently resigned from TRS to start a new firm, Integrity Capital LLC. The San Diego County system is the firm’s only client at this point.
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September 11, 2009
Deputy CIO leaving Teachers Fund
The number two investment official at the Teacher Retirement System of Texas is striking out on his own and has already landed a major client.
Lee Partridge, deputy chief investment officer, will leave TRS later this month to launch Integrity Capital LLC. His first investor is the San Diego County Employees Retirement Association, which has outsourced its primary investment responsibilities to Partridge.
San Diego County’s $6.5 billion pension system had a tough time landing someone to fill its in-house chief investment officer job due to salary constraints, according to news accounts. Its previous CIO resigned under fire in March after the fund took a major hit from its investment in hedge funds.
In a statement released by TRS, Partidge said the following about his new endeavor:
The long-term vision is to create a cooperative organization that shares investment personnel and resources amongst sophisticated institutional investors.
In the near term my focus will be positioning SDCERA’s portfolio to take full advantage of current market conditions and for the secular forces that will be impacting the market for the next five to ten years.
I will not be seeking any additional assignments until I am comfortable with SDCERA’s strategic portfolio positioning and SDCERA is happy with the results we achieve.
Integrity Capital’s contract with San Diego could pay as much as $1.2 million with performance incentives.
Britt Harris, the TRS chief investment officer, offered ample praise to Partridge, who has been with TRS for the past eight years.
“Lee is a wonderful friend and a very high character person, as well as a strong and wise investor,” Harris said. “San Diego is very fortunate to have him, and we at Texas Teachers will miss him.”
No word yet on the TRS plans to replace Partridge.
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August 21, 2009
TRS keeps incentive plan requiring positive return
The investment team at the Teacher Retirement System of Texas will not be getting any incentive payments until the fund produces a positive return, the Board of Trustees reiterated on Thursday.
In February, the board members modified the pension fund’s incentive policy — making the incentive payments contingent upon a positive annual return — amid a legislative firestorm over bonuses paid at the University of Texas Investment Management Company as the market plunged last fall.
The decision on Thursday keeps in place that policy.
More than 80 investment team employees were due a piece of the $2.5 million incentive pie based on the fund’s performance as of Aug. 31, 2008, even though the fund balance had fallen 27 percent.
The payments would have been delayed until 2010 anyway but, without the change, would have been paid out next year regardless of the fund’s condition.
Eventually, the employees will get last year’s share — assuming they stick around — as well anything earned based on the the 2009 performance.
Most likely, the earliest they could see that money, however, will be in 2011 given the unprecedented market declines over the past year.
The $82 billion fund as of the end of June was down about 22 percent compared to last year at the same time.
Investment results have been on the upswing of late with a 12.3 percent positive return in the second quarter of the year.
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August 11, 2009
Texas Teachers fund keeps hands off toxic assets for now
The Teacher Retirement System of Texas will not be gobbling up any toxic bank assets at this point but it might have the appetite for such investments later.
Spokesman Howard Goldman said TRS had looked at proposals by all the money managers that have been selected by the Treasury Department to help banks sell off their toxic assets and met with several of the managers.
“We do not plan to participate in this particular investment program at this time,” Goldman said. “However, we are continuing to monitor developments closely and will continue to look for opportunities to participate in what we perceive to be attractive investment opportunities in this area.”
Earlier this summer, TRS had been among the public pension funds and private equity firms invited to meet with the Federal Deposit Insurance Corp. about investing in failed banks.
And TRS recently committed $400 million to one of the firms that has been tapped by the Treasury Department as a money manager under the Public-Private Investment Program that is intended to help banks off-load some of their toxic assets.
At that time, TRS mentioned the possibility of the firm, Marathon Asset Management LP, using some TRS money to invest in the federal program.
But Goldman said there were several reasons for not investing in the federal program right now:
— TRS saw better opportunities for using their available capital;
— There was a concern about over-exposing the fund to risk since some of its existing investments are indirectly connected to the federal program; and
— The costs were relatively high compared to the expected returns.
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July 24, 2009
UPDATED: Lawsuit dismissed over TRS derivative investments
A Harris County judge has dismissed a lawsuit filed against the Teacher Retirement System of Texas over its investment in derivatives.
A group of TRS members, both retirees and working teachers, had filed the suit claiming the investment in derivatives was risky and led to significant losses.
TRS responded that members did not have standing to sue since their pension benefits are not affected by the losses.
The judge issued a one-sentence order on Friday dismissing the case.
UPDATE: Plaintiff’s lawyer Donald Wilhelm said he will appeal the decision.
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June 26, 2009
TRS derivatives' investment draws lawsuit
A group of retired and active teachers has sued the Teacher Retirement System of Texas and some members of the Board of Trustees over the fund’s investment in derivatives.
The TRS trust fund lost more than $400 million as of last August stemming from investments in derivatives, which the teachers’ lawyer likened to “betting on black or red in Las Vegas at the roulette table.”
“These million of dollars should have been invested in a secure investment such as U.S. Treasury bonds, and accordingly would have never been lost forever,” wrote Pearland lawyer Donald Wilhelm.
The Legislature in 2007 granted TRS the authority to invest in derivatives as part of its portfolio overhaul. For an interesting discussion on derivatives, check out this New York Times piece from Friday.
TRS argues in its response that the members have no standing to sue because they have not been harmed.
“The premise of the suit is that because the net value of assets of TRS trust fund has declined as a result of the historic upheaval in the world economy that plaintiffs have somehow been damaged. That is simply not the case,” TRS lawyers wrote.
“Members and annuitants have no investment account or interest in the pension fund; their interest is in the benefits as defined by law,” and those benefits have not been threatened, the brief says.
A hearing on the lawsuit is scheduled for Monday in Harris County. The Texas Attorney General, which represents TRS, has asked for the case to be dismissed.
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June 19, 2009
Perry nixes revamp of TRS board
Gov. Rick Perry vetoed a bill that would have given more voice to retirees on the board of the Teacher Retirement System of Texas.
That additional voice for retirees would have meant one less financial professional on the nine-member board, which would have been “an inappropriate adjustment in these uncertain economic times,” Perry said in his veto statement.
“The significance and ramifications of the board’s decisions on the futures of those who steward our children’s education make it imprudent to dilute the board’s financial expertise with House Bill No. 2656,” Perry continued.
The final House Bill 2656 was a much more watered-down version of the measure that easily cleared the House. That version would have stripped Perry of much of his authority to appoint members of the nine-member board.
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June 12, 2009
Teachers Fund hires key legal adviser after two false starts
The board members of the Teacher Retirement System of Texas Friday found themselves once again weighing replacements for a key legal adviser they had jettisoned last year in a divided vote.
And once again, the board split over hiring as fiduciary counsel the Groom Law Group of Washington, D.C., which had served the mammoth pension fund for 12 years before losing the job last July.
Instead, the board voted 5-4 to select Reinhart Boerner Van Deuren S.C., of Milwaukee, Wisc., to advise them on ethics and governance issues. The firm also represents the state teacher retirement systems in New York, Kentucky and Pennsylvania.
The fiduciary counsel position is viewed as a critically important and more complex job, as pension funds such as the Teacher Retirement System invest more in private equity, venture capital, natural resources and other alternatives to stocks and bonds.
This was the board’s third try in the past 11 months to fill the jobs. Conflicts of interest - both real and potential - had scuttled the hiring of two other law firms.
In that time, some legislators and other critics had questioned why the board had ended the tenure of Ian Lanoff, the Groom lawyer who served the teacher fund.
On Friday, Lanoff was once again before the board and the fraught history was palpable during the 45-minute public interview.
Lanoff laid out the treacherous legal and investment landscape facing public pension funds in the wake of the last fall’s economic upheaval and several high-profile scandals at other funds.
He said the board members needed a legal adviser who understands they “operate in a fish bowl.”
Legislators, teachers, retirees and the media are “all watching what you do, all watching your decisions…all watching that you’re operating on the up and up,” Lanoff said.
Trustee R. David Kelly of Dallas said the board needed someone with “humility” who would not proffer his own opinions as law.
The question was never Lanoff’s qualifications. He represents many of the country’s major public pension funds, including the Employee Retirement System of Texas.
TRS Executive Director Ronnie Jung argued in favor of Lanoff and said he had the most practical experience.
One of the member representatives on the board, Galena Park Superintendent Mark Henry, said Lanoff was the one person he would choose to watch over his retirement fund.
But it was the board’s newest member who succinctly expressed the narrow majority’s view.
“There just seems to be a whole lot of consternation about the gentleman,” said Eric McDonald, who was appointed in March by Gov. Rick Perry and had not worked with Lanoff.
The new firm will now negotiate its contract and fee, which will need the approval of the Texas Attorney General.
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May 26, 2009
Governor to keep TRS appointment powers
Retired members would get one more voice on the nine-member board of the Teacher Retirement System of Texas under a bill passed by the Senate Tuesday.
But the governor retains the ability to appoint that person and the other trustees as well, under the Senate version of House Bill 2656.
The bill that cleared the House allowed active members and retired members to directly elect representatives to the board.
Tim Lee, executive director of Texas Retired Teachers Association, said there was a good chance that Gov. Rick Perry would veto a bill that stripped him of so much authority.
“You pick your battles,” Lee said, adding that that he was happy to get an additional voice for retirees on the board.
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May 11, 2009
AG oversight of TRS counsel affirmed
Last summer’s kerfuffle over the hiring of new outside counsel at the Teacher Retirement System of Texas led the House on Monday to affirm that the attorney general has the authority to approve or reject such a hiring.
House 1259 by Rep. Lois Kolkhorst, R-Brenham, clarified that the TRS cannot circumvent the attorney general’s oversight authority even though the system would pay for the legal contract out of trust fund money and not from appropriated state dollars.
The oversight question surfaced last summer when TRS sought to hire a new fiduciary counsel whose hourly rates and potential conflicts of interest had raised concerns among legislative leaders and the attorney general.
“We were all concerned about what happened and the intent of your bill is to eliminate that sort of circumstance again,” said Rep. Vicki Truitt, R-Keller, chairwoman of the committee that oversees the state’s pension systems.
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May 8, 2009
More say for members on Teacher Fund board
Active and retired members of the Teacher Retirement System of Texas would get a direct say in who represents them on the pension system board under a bill that breezed through a preliminary House vote Friday.
House Bill 2656 diminishes the voice of the governor in determining who serves on nine-member board that oversees one of the largest retirement funds in the world.
The governor, who now has a say in all of the appointments, would have his or her influence reduced to only four of the spots under the bill carried by Rep. Doug Miller, R-New Braunfels.
The remaining five positions would be filled by people directly elected by TRS members: — two seats for active members working in public education; — two seats for retired members; and — one seat for an active member working in higher education.
Under the current system, the governor would appoint the members’ representatives from a slate of people elected by the membership.
The State Board of Education also would lose a bit of clout. It now recommends people to the governor to fill two positions on the TRS board but the Miller bill gives the Board of Education only one spot.
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April 15, 2009
No hitches for TRS nominations
The four trustees of the Teacher Retirement System of Texas who need Senate confirmation got a warm welcome from the Nominations Committee Wednesday.
Sen. Eliot Shapleigh, D-El Paso, fired off a couple of questions about compensation for the fund’s investment team but otherwise the trustees — Charlotte Clifton, R. David Kelly, Robert Gauntt and Eric McDonald — got only thanks for their service.
The committee voted unanimously to recommend their confirmations and Chairman Mike Jackson, R-La Porte, said the full Senate should take up the issue next week.
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March 27, 2009
Perry names Lubbock financial analyst to TRS board
Lubbock financial analyst Eric McDonald has been named to the Teacher Retirement System of Texas Board of Trustees.
McDonald, who owns McDonald Capital Management, was appointed by Gov. Rick Perry to fill the position left vacant when Chairman Jim Lee resigned in January. He is also an advisor to the Texas Tech Student Managed Investment Fund and the State Board of Education on Permanent School Fund investments.
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March 25, 2009
TRS, other pensions seek to lead lawsuit against Bank of America
The Teacher Retirement System of Texas and four other large public pension systems from across the globe will seek to lead a class action lawsuit against Bank of America, which is accused of misstating and withholding critical information from shareholders during its acquisition of Merrill Lynch last year.
The five pensions, including national funds from the Netherlands and Sweden, announced on Wednesday they will together pursue lead plaintiff status in the federal lawsuit against Bank of America.
In total, the funds lost $274 million from their Bank of America holdings from July to late January as the company’s common stock fell more than 80 percent since the merger was announced.
“The alleged material misstatements and nondisclosures inflated Bank of America’s stock price and facilitated a new offering of $10 billion of company stock. On Dec. 5, 2008 shareholders voted to approve the merger based on a proxy statement that allegedly did not disclose material facts,” according to a joint statement.
This lawsuit would be the first in which the Texas teachers fund has sought lead plaintiff status.
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March 13, 2009
TRS fund will need a lot more from state, maybe teachers
The Teacher Retirement System of Texas trust fund balance has fallen almost 32 percent since Aug. 31 to $70.6 billion and will need a significant financial infusion from the Legislature - and perhaps teachers - to restore the health of the fund.
The fund’s actuary recommends a “stair step increase” in the contribution rate. But how much of a step and who will be stepping will be up to the legislators.
The actuarial report released Friday as a guide is based on the fund’s condition as of Feb. 28.
There is money enough in the trust fund now to pay for benefits through 2040 assuming contribution rates - now at 6.58 percent for the state and 6.4 percent for members - stay the same and the fund gets an annual 8 percent investment return.
But to return the fund to a position of long-term health, the actuary offered a couple of illustrations:
— If the state contribution rises to 11.25 percent and the member contribution stays the same, the state would need to chip in an additional $2.5 billion in the upcoming 2010-2011 budget.
— If each side shared the pain and both contribution rates were increased to 9.07 percent, the price tag for a $1.5 billion price tag for the state.
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March 3, 2009
TRS office space still irks senators
The Congress Avenue office space leased for the investment staff of the Teacher Retirement System of Texas is still causing senators heartburn.
Sen. Robert Duncan, R-Lubbock, said the mood among key members of the Senate Finance Committee right now is not to approve the $4.5 million needed for the lease and renovation of the space even though TRS has already signed the lease.
“The Legislature never had an opportunity to weigh in on that” lease because it was done outside the typical budget process, Duncan said.
The TRS Board of Trustees approved a budget change last year that allowed TRS to spend $18 million more than had been appropriated by the Legislature in 2007.
That decision has not sat well with budget writers in the Senate now that TRS has come back to ask for approval of the ongoing expense in its 2010-2011 budget.
In an effort to smooth things over with the senators, the trustees voted last week to reduce its budget by $13.7 million. They did not, however, remove the money for the office space because TRS has already signed a contract.
Duncan said he appreciated TRS re-examining its budget actions but the lease still appears to be a sticking point.
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February 27, 2009
TRS seeks peace with Lege with budget change
The Teacher Retirement System of Texas on Friday undid part of an $18 million budget move from last year that had put the pension system at odds with some key members of the Senate Finance Committee.
The senators, including State Affairs Committee Chairman Robert Duncan, R-Lubbock, had taken issue with the board’s decision to spend $18 million more than had been approved by the Legislature in 2007.
Among other items, that money paid for the lease and renovation for Congress Avenue office space to house TRS’ expanding investment staff.
TRS covers all its administrative expenses with money from the trust fund but the Legislature still gets to oversee the TRS budget.
Only in rare circumstances has TRS pulled from the trust fund to pay for something not approved by the Legislature, and the board must find that the expense is in the best interest of the trust fund’s beneficiaries.
So at a recent hearing, Duncan had strong words for TRS officials about making spending decisions outside the legislative budget process and then coming back and asking for approval for the ongoing costs in the upcoming budget. The issue has also come up more recently in the Finance Committee budget work group and the senators asked TRS to look again at its 2009 budget.
Friday’s decision at the special-called board meeting reduced the TRS 2009 administrative budget by $13.7 million — including $1.5 million for the office space. It was intended to keep the peace with the Legislature.
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February 18, 2009
Bill aims to ensure AG oversight of legal counsel hiring
Last summer’s ouster of the fiduciary counsel at the Teacher Retirement System of Texas has prompted state Rep. Lois Kolkhorst, R-Brenham, to file a bill requiring the Office of the Attorney General to approve the hiring of all TRS’ outside legal advisers — regardless of how TRS will pay them.
The attorney general already has oversight over the hiring of legal advisers paid for by money appropriated by the Legislature.
And that oversight was exercised last year when the attorney general blocked a contract for a new TRS fiduciary counsel with a firm that had potential conflicts of interest.
TRS is in a fiscal limbo because its administrative budget, including legal services, must get legislative approval but is paid for with money earned from the trust fund, not appropriated dollars.
That situation left open the question of whether TRS really needed the attorney general’s approval.
Kolkhorst said the objective of the bill is to ensure legal oversight over the state’s largest pension fund.
“We have a duty to the public more so than ever to make sure we have every safeguard in place,” Kolkhorst said.
There are other areas of state government, such as the Employee Retirement System of Texas and the university systems, that do not have to run their outside legal contracts by the attorney general.
Kolkhorst said the bill was a specific response to the TRS situation but she would be open to looking at expanding the scope beyond TRS.
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February 17, 2009
Stimulating idea for teachers' 13th check
State money freed up by the federal stimulus money coming to Texas should be used to give retired teachers a one-time financial boost, state Rep. Craig Eiland, D-Galveston, said Tuesday.
A sudden infusion of new federal money for Medicaid, education and more could make some general revenue available for a 13th check for members of the Teacher Retirement System of Texas at a cost of $400 million, Eiland said.
An additional payment to payment for retired state employees was not part of Eiland’s cost estimate, but he said it is worth exploring as well.
The concern among state leaders is that the one-time federal money will be used for ongoing expenses, thus digging a hole for future state budgets.
But Eiland argues that the 13th check would be a one-time expense and inject money directly into the local economy.
Many retired teachers are living on a fixed-income and have seen their purchasing power dwindle by the day, Eiland said.
“They need the money and they will most likely spend the money in our local economy,” Eiland said.
There are multiple bills already filed to provide increases for retired teachers. But the money cannot come from the trust fund because it does meet a certain funding threshold.
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February 13, 2009
CIO of Teachers fund forfeits incentive pay
The chief investment officer of the Teacher Retirement System of Texas will forgo his incentive pay in the wake of last week’s brouhaha at the Legislature over investment bonuses.
Britt Harris, the CIO of the $81 billion pension fund, offered Friday morning to forfeit the $167,835 that would be due to him based on the trust fund’s 2008 performance.
In addition, payment of the $2.5 million in incentives due to more than 80 employees in the investment will be deferred until the fund generates a positive return. Under the existing policy, all payments were delayed until 2010 because of the losses in the fund.
The Board of Trustees accepted the changes to the incentive policy offered by Harris with a 6 to 2 vote.
Last week, the board chairman of the University of Texas Investment Management Company resigned from the volunteer position after senators harshly criticized the $3 million in bonuses paid to the endowment’s fund managers as the fund balance was plummeting.
Senate Finance Chairman Steve Ogden said he intended to hold a hearing within a month about the compensation packages at all the state’s trust funds, including TRS and the Employee Retirement System of Texas.
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February 12, 2009
TRS says new strategy would have saved money
University of Texas finance professor Keith Brown offered to the Teacher Retirement System of Texas Board of Trustees three investment tips for managing risk in today’s unpredictable market:
“Diversify, diversify, diversify,” Brown said on Thursday.
That approach is one that TRS has whole-heartedly embraced in recent years. It has been moving more money into private equity, hedge funds and emerging markets while reducing its reliance large public equities.
And if that approach had been fully implemented by the end of 2008, the trust fund would have lost less money when the bottom fell out of the market this past fall, Chief Investment Officer Britt Harris said.
The trust fund, which had a balance of $81 billion at the end of 2008, lost 27 percent of its value in 2008. Under the new policy, the loss would have been 23.5 percent, a difference of $1.5 billion to $2 billion, Harris said.
“Diversification has worked for TRS in the past, is working currently and will continue to work in the future,” said Nigel Lewis, managing director of strategic research and risk management for TRS.
Senate Finance Chairman Steve Ogden, R-Bryan, said in an interview this week that he has some doubts about diversification and is quite concerned about the condition of the trust funds.
Given the enormous hit the state’s trust funds took this fall, Ogden suspects they would have been better off had they taken a more conservative investing approach over the past 10 years.
TRS will likely seize the opportunity to convince Ogden otherwise at some point this session.
Harris said TRS, which is the 17th largest pension fund in the world, is in an ideal position to take advantage of the market upswing - whenever that happens - because it is investing today for decades down the road and has the resources to buy.
Those investment decisions need to made prudently and professionally and not in response to emotion and political rhetoric, Harris said.
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February 11, 2009
TRS quest for legal counsel continues
The Teacher Retirement System of Texas will once again go fishing for a new fiduciary counsel after the past two selections had to be cast back due to conflicts both real and potential.
The TRS Board of Trustee voted on Wednesday to go out for bid to fill the job rather than choosing from its existing list of firms that responded to last year’s request for bids.
Executive Director Ronnie Jung said the aim would be to have a new list ready for the board when it meets again in April.
There was some discussion of returning to the Groom Law Group, which had represented TRS for over a decade. But General Counsel Connie Brennan said even that firm would run up against a state rule that caps the hourly rate of outside legal counsel.
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January 9, 2009
Lee leaves Teacher Retirement System board
James Lee, the forceful board chairman of the state’s $80 billion teacher retirement system, has stepped down less than a year after taking the helm.
Gov. Rick Perry on Friday appointed Linus Wright, the board’s current vice chairman and a retired educator, to lead the Board of Trustees of one of the country’s largest public pension systems.
The moves will leave one seat for Perry to fill on the nine-member board.
Lee, a pioneer of the day trading industry, said he is buying a company and could no longer make the necessary time commitment to the board.
“I don’t think there is a more important agency or system in the state in terms of what we do or how many people rely on us,” Lee said. “I feel good about where we are, and it’s time to move on to my business interests full-time.”
He would provide no specifics about his new endeavor other than to say it is in the “professional services” industry and a public announcement should come later this month.
Lee has been a board trustee since 2006. Perry named him chairman last spring, and the state Senate was expected to hold a confirmation hearing soon.
As chairman, Lee initiated a series of major organizational changes, some of which led to controversial and divisive board votes.
Lee characterized the changes, such as the replacement of a long-time outside legal adviser, as necessary to shake up the system operating under a “broken strategy.” His detractors say they were heavy-handed moves to advance Perry’s political agenda, a charge that Lee disputes.
Lee’s most vocal critic on the board, Galena Park school superintendent Mark Henry, said the handful of controversial decisions over the past year should not overshadow the vast majority of issues on which the board has agreed.
And as a member of the retirement system, Henry said he appreciates the investment expertise and commitment that Lee brought to board.
“Jim has done a lot of good things to help move us forward,” Henry said, citing the broader investment strategy that Lee championed and improved communication with the system’s 1.2 million members.
Wright’s appointment will be well received because he is respected by educators and business people alike, Henry said.
Wright, 81, worked in education for 40 years as a teacher, coach, principal, superintendent of the Dallas school district and undersecretary for education under President Ronald Reagan.
“My main goal would be to stay the course that we have already established over the past 12 to 24 months,” Wright said. “Jim has established a course that we’re going to stay with.”
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December 22, 2008
TRS legal advisor out -- again
The Teacher Retirement System of Texas cut ties last week with the law firm hired in November to be its independent legal adviser for ethics and governance issues.
Morgan, Lewis & Bockius LLP recently represented Credit Suisse in an investment deal with TRS, a relationship that ran afoul of state contracting guidelines, TRS said in a statement Monday.
The retirement system was not harmed by the conflict because the “firm’s error was relatively minor and occurred early in the new engagement,” according to the statement.
It was the second time in recent months that the hiring of the outside legal counsel has imploded.
In July, the Board of Trustees ousted the previous fiduciary counsel, who had served the retirement system for the past 12 years, in a closely divided vote.
The trustees then hired the law firm of Cooley Godward Kronish LLP in another split vote. But the Office of Attorney General Greg Abbott refused to sign off on that contract this fall because of concerns about potential conflicts of interest. Cooley Godward withdrew from consideration.
The Morgan Lewis hiring in November was supposed to put an end to the ordeal. Instead, it has left TRS pondering its next step.
The board was scheduled to consider revising its ethics and disclosure rules in February, a process that was delayed recently so that Morgan Lewis could get up to speed.
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November 25, 2008
Featherston out at TRS
The job of the chief operating officer at the Teachers Retirement System of Texas has gone away, and so has Pattie Featherston, who served in that role since 2005.
Following the September hiring of Brian Guthrie as the deputy executive director, Featherston’s job responsibilities were transferred to Guthrie and her position was eliminated as of Oct. 31.
Guthrie, who was hired in a 5-4 vote by the TRS Board of Trustees, was a longtime aide to Gov. Rick Perry. Featherston had also competed for the deputy director position.
Featherston will remain as a consultant for a few months at her same monthly pay of about $16,300, according to a TRS response released on Tuesday to questions submitted almost two weeks ago.
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