Sunday, October 11, 2009

"It's a concern to us that the governor is developing a pattern...It's a put-down to teachers."


Perry to replace teacher retirement board chairman after less than a year


By Kate Alexander
Austin American-Statesman
Copyright 2009

Gov. Rick Perry plans to reshuffle the board leadership of the state's $88 billion teacher retirement system, an unexpected move that has reignited concerns among the members that Perry is meddling with their pension fund.

Linus Wright, a retired school superintendent who was appointed in January to lead the Board of Trustees of the Teacher Retirement System of Texas, said he has been notified by the governor's office that he will soon be replaced as chairman. Wright said he was given no reason for the change.

He will be succeeded by Dallas real estate investor R. David Kelly, a board trustee since 2007, Perry spokeswoman Allison Castle said.

Kelly is also a member of the finance team for Perry's re-election campaign, according to a June news release.

In the past, Perry has looked to the teachers' fund as a potential source of investment dollars for state transportation infrastructure and the Emerging Technology Fund, which invests in startup companies in fields such as biotechnology. The board, which sets the investment strategy for one of the country's largest public pension funds, has not yet backed an investment policy to do so.

Wright's predecessor, Jim Lee, was a forceful leader who muscled through decisions about hiring and investment strategy that created a rift on the board and prompted questions by some board members and teachers' groups about Perry's intentions for the fund.

The fund is undergoing a long-term shift in investment strategy to put more assets into alternatives to stocks and bonds, such as real estate and private equity, with the aim of increasing returns.

Wright has been a "very calming influence," which was needed after the contentious Lee era, said outgoing Trustee Mark Henry, the superintendent of the Galena Park school district.

He was "the perfect combination" of leader who had the trust of both educators and business people alike, Henry said.

The change is being made now because a transition is under way, with three new trustees soon joining the board, Castle said. The terms of Henry and two of the board's financial professionals, Dory Wiley of Dallas and John Graham Jr. of Fredericksburg, expired in August. The names of the new appointees have not been made public.

But the change comes on the heels of Perry's veto in June of a bill that would have added another retiree voice to the nine-member board. The governor appoints all of the members of the board, which is made up of five financial professionals and four retired or active Teacher Retirement System members who are nominated by the membership.

Together, these moves have retirees worried that politics is the real motivation, said Tim Lee of the Texas Retired Teachers Association.

"It's a concern to us that the governor is developing a pattern that really is minimizing the voice of retirees in their own pension fund," Lee said.

Castle said the change will not affect the balance of the board because Wright, who has been on the board for 10 years, will continue to serve until his term expires in 2011.

But Wright said he shared Tim Lee's concerns that educators are being overlooked to lead their own retirement system, which serves 1.2 million active and retired public school employees. The last time an educator led the Board of Trustees, before Wright's short tenure, was 15 years ago, he said.

"It's a put-down to teachers," Wright said.

Critics of the governor's decision to change the board's leadership are quick to add that Kelly is smart and talented and they have no issue with him. He could not be reached Saturday for comment.

Kelly, 45, is a partner at Carleton Residential Properties, a Dallas company that develops and manages multifamily properties. Before joining the retirement system board, Kelly served as chairman of the Texas Public Finance Authority, which provides financing for the construction and purchasing of state buildings.

The Legislature will hold confirmation hearings on Kelly when it convenes in 2011.

Perry tapped Wright when then-Chairman Jim Lee suddenly resigned shortly before the legislative session began in January. A pioneer of the day-trading industry and a Houston investor, Lee is now one of Perry's statewide campaign finance chairmen.

Jim Lee said he was stepping down to launch a new business. But Sen. Robert Duncan, R-Lubbock, said at the time that a lawsuit claiming that Lee owed a $110,000 "gaming debt" to the Bellagio casino and hotel in Las Vegas would have been an issue at his confirmation hearings.

Wright was the "most reputable and dependable" trustee to help smooth over troubles within the board and with the Legislature during a contentious period, said Tim Lee, who is not related to Jim Lee.

"He got them through the legislative session, and now it just seems that we're abandoning the retiree to look for someone else," Tim Lee said.; 445-3618

© 2009 Austin American-Statesman:

To search TTC News Archives click HERE

To view the Trans-Texas Corridor Blog click HERE