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Politics Have No Place in Decisions
Posted 01-14-1998
The final days of December saw county government making several important decisions that
made the daily newspapers. Though they received coverage, more background information
should be shared with the citizens of Westmoreland County to better understand the
significance of these decisions. One big decision we made was the diversification of our
county pension fund by hiring two managers to join our current manager, C.S. McKee of
Pittsburgh, to manage the $190 million fund. Another important decision was to hire a new
director of our Public Safety Department to replace Richard Hunger, who retired in
September.
Diversifying the pension fund was long
overdue. Last summer we agreed to pay our consultant Yanni-Bilkey, of Pittsburgh $20,000
to conduct a search to identify the most qualified candidates for large-cap growth and
small-cap growth styles of management. The reason we wanted to diversify is that it is
sound financial management to have multiple managers with a fund as large as our pension
fund. The reason we agreed to let them conduct a search was that the Retirement Board felt
we should use their professional expertise to find the most qualified managers to best
serve our pension fund. While we asked for five small-cap and five large-cap growth
managers, Yanni-Bilkey gave us five small-cap candidates but six large-cap managers.
After interviewing all of the firms, we
asked Yanni-Bilkey to rank the top three candidates in each category. Their top candidate
for the small-cap growth style was a firm from New York that the Retirement Board
unanimously accepted. They will manage approximately $19 million. However, when it came
time to hire a large-cap manager, Controller Pavetti and myself supported the
recommendation of Yanni-Bilkey to hire a firm from Atlanta. Yet my two colleagues and
Treasurer O'Brien ignored the recommendation of Yanni-Bilkey and voted for Russell, Rea,
and Zappala (RRZ) of Pittsburgh to manage approximately $25 million. They took this action
despite the fact that RRZ did not rank in the top three candidates. The significance of
the matter is that we paid our consultant for their professional expertise and then, three
individuals chose to disregard the consultant's advice. I will not support any further
diversification of the pension fund if members of the Retirement Board are going to vote
to hire managers for reasons other than merit.
Later the same day, a similar event
occurred when it was time to hire a new Director of Public Safety. When Mr. Hunger
retired, I pushed to hire a consultant (we paid $5000) that would conduct a search to
bring us the best possible candidate for the job. After screening candidates down to a
list of ten or twelve, they were ranked according to a scoring methodology the consultant
uses when providing service to many private sector firms in the area. In this case, the
top ranked candidate was a resident of North Huntingdon, who is the head of emergency
management for the Pennsylvania National Guard. After interviewing the top five
candidates, it was the consensus of most people involved in the process, that this
individual presented himself the best during the interview process. But when it came time
to select the candidate, my colleagues chose to ignore the professional efforts of our
consultant and selected an individual that has been a close personal friend of one
Commissioner. While I in no way begrudge the new Director's desire for the job, I find it
highly objectionable that my colleagues would ignore the professional recommendation of
our consultant, and hire a candidate for some other reason.
The taxpayers should be concerned when we
spend their money to hire consultants to provide expertise. Then when the professional
advice isn't to certain elected officials liking, they waste public dollars and take
action for some other motive. My goal continues to be, bring cost-effective public service
to the citizens of Westmoreland County and operate government in a way that allows
everyone to participate, not just the politically well-connected. |
