HARTFORD, Conn. - State Treasurer Christopher Burnham last week restructured the investment division of the $11.1 billion State of Connecticut Trust Funds, eliminating 15 of 42 upper and middle management and administrative staff positions.
Ten people in total have been dismissed, although one will remain with the fund during the transition. Four positions were vacant, and one person whose position was being eliminated retired, according to Karen Jannetty, deputy chief of staff to Mr. Burnham.
As part of the restructuring, Mr. Burnham closed the treasury's internal trading desk, and will put out for external management $835 million of fixed-income assets.
Mr. Burnham said a request for proposals will be issued this week for two fixed-income managers to manage the $835 million. Only the state's short-term investment fund will be managed internally, said Mr. Burnham.
The layoffs and the restructuring of the fund's operations were made to save money, said Mr. Burnham. No one was dismissed on the basis of performance, he said.
"We did a management study of the staff needs of the treasurer's office, and we no longer needed those 15 positions," said Mr. Burnham. "Unfortunately 11 of those were filled," he said, explaining the criteria used to determine who was laid off.
The layoffs will save more than $5 million in salaries and benefits over the next four years, said Mr. Burnham.
Among those laid off were: John Winchester, principal investment officer-pension analysis; Robert Olmstead, investment officer-pension analysis; Guy Garcia, principal investment officer-operations and trading; Cheryl Little, investment officer-operations and trading; Suzanne West and Annette Sanders, investment officers-real estate; and James Mullen, investment officer-fixed income.
Terry Helming, principal investment officer-fixed income, will remain during the transition, but will be laid off once the restructuring is completed.
Mr. Winchester had been serving as acting chief investment officer, succeeding Frank McDermott, who retired in June. A search for a permanent CIO is under way.
The treasury's internal trading desk was closed because it was "inefficient, expensive and a patronage system," said Mr. Burnham, who added Connecticut was the only U.S. pension fund that had its own trading desk.
"It cost us up to 200 basis points a year through poor order execution."
According to Mr. Burnham, when a Connecticut money manager bought shares of a stock for its account, Connecticut's portion had to be peeled off and executed through the treasury's trading desk.
The state's trading desk then directed the trades through its network of 160 brokers, said Mr. Burnham.
"I know how third-party orders can be mishandled," said Mr. Burnham, a former futures commodity broker. "The pension manager is under incredible performance pressure, so he's going to work that order."
As part of the restructuring, the subdivisions of pension management, accounting and control, and alternative investments now report to Chief Operating Officer Gary Carter, a holdover from the previous administration. Mr. Burnham promoted Mr. Carter from principal investment officer-pension accounting; he also had been the acting chief administrative officer.
The three subdivisions previously operated independently, said Ms. Jannetty.
Everett Miller, a Burnham appointee, is in charge of alternative investments, which includes real estate.
The remainder of the layoffs include two people from investor and corporate relations and one from communications. The vacant positions eliminated are two legal interns, an investor technician and a secretary.
Mr. Burnham was elected treasurer in November, defeating Joseph Suggs, who was appointed to fill the vacancy created when Francisco Borges resigned in 1993. He ran on a platform of reducing costs to the pension fund and eliminating some of the money managers.
Mr. Burnham said the Connecticut Trust Funds had more money managers - 61 - than any other fund in the United States.
Ms. Jannetty said Mr. Burnham is reviewing the number of managers used by the fund. He put on hold the hiring of Chicago-based Brinson Partners as a venture capital manager because the appointment was made by Mr. Suggs during the transition period.