10:00 PM PDT on Friday, October 8, 2010

Cassie MacDuff

An internal battle on the San Bernardino County Employees Retirement Association board burst into the open this week when the executive director and chief counsel both resigned.

One faction is accused of attempting to pack the board with cronies and disband a successful investment team.

The other is accused of paying exorbitant bonuses while the fund lost money.

SBCERA, as the county retirement plan is known, has lost more than $1 billion of its $5 billion-plus portfolio.

County officials say it will take years to recover, and question awarding bonuses during economic losses.

Longtime board members, on the other hand, say the SBCERA fund fared better than average. (The Dow lost 31 percent in 2008, versus SBCERA’s 20 percent.) They also say the bonuses were created to reward good performance and retain top-notch investment officers.

What kind of bonuses?

Tim Barrett, SBCERA executive director and chief investment officer, was eligible for a bonus equaling his $325,000 base pay. He never got the full bonus.

The three investment officers were eligible for bonuses of 70 percent of base pay averaging $187,000.

Last year, he and they got no bonuses; this year, about one-sixth, Barrett said.

Barrett resigned to manage investments at a New York state company. Counsel Lance Kjeldgaard retired to go into private practice.

But the bonuses raised the eyebrows of a new SBCERA trustee, Board of Supervisors Chairman Gary Ovitt.

With outcry over pay in Bell, Ovitt felt the bonuses would come under scrutiny, said Greg Devereaux, San Bernardino County administrative officer. (Ovitt was on vacation and unavailable.)

Ovitt also asked whether the salaries and bonuses were appropriate given layoffs and cutbacks in county ranks, Devereaux said.

SBCERA’s board voted Thursday to survey compensation at other counties’ pension plans. But it also voted to pay the bonuses earned last year. (Ovitt was absent.)

Ovitt’s questioning may not have raised hackles if he hadn’t tried to replace long-serving trustees with acquaintances of slim qualifications. (County supervisors appoint four of the nine trustees; five are elected.)

When a longtime trustee came up for reappointment, Ovitt proposed replacing him with Redlands Councilman Pete Aguilar, until Aguilar’s investment expertise was questioned.

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