Florida SBA pool restructured

TALLAHASSEE, Fla. — Coleman Stipanovich, executive director of the $187.5 billion State Board of Administration, resigned his post after local government authorities investing in the SBA’s internally managed cash pool caused a run of withdrawals in the fund.

The local executives pulled a lot of their money because of concerns about defaults in structured investment vehicles and other debt backed by subprime loans and downgrades in more of them.

The pool, with assets valued at $27.3 billion as of Sept. 30, fell to $14 billion following the withdrawals. It was closed for redemptions Nov. 29.

Under a restructuring, the pool has since been split into two funds: A and B.

Fund A consists of $12 billion in high-quality money market instruments, as valued Dec. 4. The fund was reopened for limited withdrawals on Dec. 6, and its value fell to $10.29 billion at its close of business Dec. 7. Only a total of $8.5 million was deposited into Fund A on Dec. 6 and Dec. 7.

Fund B consists of $867 million face value of subprime-related investments in default and $1.2 billion in financial distress.

The pool manages operating assets for Florida municipalities and other local governmental units, as well as managing $756 million in subprime-related investments that are under financial stress for the $138 billion Florida Retirement System.

Trustees directed the SBA to issue an RFP for investment management firms to manage the local government investment pool. They named BlackRock (BLK) Inc, (BLK) New York, which trustees had hired to advise on restructuring the pool, as interim manager of the pool for 90 days in expectation that the search process will be completed by then. No further details about the RFP were available.

In giving his resignation Dec. 4, Mr. Stipanovich said he would discuss a timetable for his departure with SBA trustees at another time.

His announcement came near the conclusion of the meeting of the SBA’s trustees: Gov. Charlie Crist, Chief Financial Officer Alex Sink and Attorney General Bill McCollum. Mr. Crist asked, “Coleman, do you have any final comments for us?”

Mr. Stipanovich said he had given thought to “doing the right thing” and “the decision is to step down as executive director of the State Board of Administration.”

“There is nothing more important to me, except my family and friends, than to restore the confidence of the people in the State Board of Administration,” Mr. Stipanovich said. “I hope my actions today help the State Board of Administration to move forward.”

Mr. Stipanovich has been executive director of the SBA — whose assets include the $138 billion Florida Retirement System — for seven years.

Nothing was said at the meeting about naming an interim executive director or initiating a search for a replacement.