SDCERA Votes to Outsource Investment Oversight

March 19, 2010 ( – The San Diego County Employees Retirement Association board has voted to seek a contractor to handle its investment oversight needs.

The San Diego Union-Tribune reports that the action would outsource the work of eight in-house investment staffers who select and monitor the money-management firms that invest the county’s $7.3 billion pension fund. Board members said the new model will help the retirement system deal with understaffing problems, as three recent searches for investment executives ended in failure because the top candidates rejected salaries capped by county ordinance.      

The salaries, which have differing ranges based on position, top out at $301,600. However, the board last August approved a compensation plan that could top $1.4 million a year for an outside consultant to manage the fund (see San Diego County Approves $1.4M Comp Plan for Outside Investment Consultant).      

A month later SDCERA contracted with Integrity Capital, led by Lee Partridge, to serve as Portfolio Strategist (see San Diego County Selects Integrity Capital as Outsourced CIO).      

In discussions about its recent action, the board addressed concerns including whether it posed a conflict that Partridge helped craft the plan, and was initially recommended to receive a no-bid contract, according to the news report. Steve Rice, the board’s legal counsel, said there is no conflict for Partridge to discuss the plan with the board, but added that perceived conflicts could be resolved if the board conducts an independent review of the outsourcing model and allows other firms to bid for the contract.