Thursday, October 25, 2012
Chicago Tribune
by Melissa Harris

Kurt Summers Jr., chief of staff to Cook County President Toni Preckwinkle, will leave his post in early November to join Chicago-based investment firm Grosvenor Capital Management as senior vice president, Summers said in an interview this week.

The politically connected investment firm is run by World Business Chicago Vice ChairmanMichael Sacks, a close adviser to and friend of Mayor Rahm Emanuel. Grosvenor is considered a hedge fund of funds because its primary business is to invest in multiple hedge funds on behalf of large investors, such as pension funds, corporations and sovereign wealth funds.

Sacks, reached via email from Tokyo, declined to describe what Summers will be doing in his new role but wrote, "We look forward to Kurt joining our senior management team and are confident he will have a positive impact for our clients and for our firm."

Preckwinkle, who was elected in November 2010, is expected to announce a replacement for Summers on Thursday. As part of this transition, Summers will step down as trustee of Cook County's pension plans.

Summers declined to share details about his new role, saying it's still being determined.

Grosvenor does not release any details about its performance or size, but Pensions & Investments ranked it fourth in size among hedge funds of funds as of June with $21.5 billion in managed assets, down 10.6 percent from last year. Hedge funds of funds have generally struggled to hold on to clients in recent years as pension fund leaders grow weary of the extra layer of fees these funds charge on top of the fees levied by the underlying hedge funds in their portfolios, Pensions & Investments said.

For instance, in September, the Illinois State Board of Investment, which oversees pensions for state employees, members of the Illinois General Assembly and state judges, shifted about $237 million away from Grosvenor's control and assigned that money to two other firms following a disagreement over fees, said William Atwood, the executive director of the investment board.

Grosvenor's hiring of Summers, 33, is considered a coup. Despite his young age, he has amassed stellar credentials, especially in the finance and insurance sectors. A Harvard Business School graduate, Summers has worked for investment bank Goldman Sachs, consulting firm McKinsey & Co., as chief of staff to the Chicago 2016 Olympic bid committee and as managing director of Patrick Ryan's Ryan Specialty Group, which is in the insurance industry. (Ryan also led the Olympic effort.)

As Preckwinkle's chief of staff, Summers has served as something like the head of air traffic control — all hot-button issues cross his desk. In addition, he has primary responsibility for hiring, firing and coordination among departments on massive efforts, such as the annual budget. Preckwinkle's first budget passed unanimously and the second with one dissenting vote. She proposed her third annual budget last week.

Preckwinkle has generally been given high marks for getting Cook County's fiscal house in order as well as overhauling beleaguered departments, including the medical examiner's office and the county's workforce training programs. She credited Summers with helping her close budget gaps, gathering support for the budget, doing "performance management" and cleaning up the county's procurement process.

"Those things provided the sort of credibility for me to talk about other things, like the failure of the war on drugs," Preckwinkle said. "I always say the jail is the intersection of racism and poverty in this country. And the fact that the machinery is running well, it enables you to say things like that and be taken seriously, rather than be considered some kind of wacko. And those are fairly challenging things to say."

It wasn't a coincidence that Preckwinkle didn't begin speaking out on issues such as jail overcrowding, the decriminalization of marijuana and taxes on guns and bullets until after her second budget had passed and she had locked in her commitment to roll back the unpopular sales tax increase passed under her predecessor, Todd Stroger.

"Policy is now informed by data," Summers said. "It's informed by how we have goals for our administration and for each department. ... So what does that mean for people every day? We need to be able to measure and know, how are you doing?"

The wood-paneled walls of Summers' drab government office downtown reflect this wonky expertise. He has two charts predicting ballooning employee pension deficits posted next to his door — so that anyone walking out of the room sees them. Summers said pension reform is the most important issue left undone.

"This is what the future looks like if we don't address structural change," he said. "This is what drives me every day. This is, you know, generations of folks in the future. This is what happens."

Also on that wall hangs a July 2011 New Yorker cartoon, given to him by a former, longtime county employee. It shows a Trojan Horse waiting outside a walled city. One guard sitting atop the wall says to another, "How do we know it's not full of consultants?"

Summers said he has brought in more than 30 "partners" — from management consulting firms to accounting firms — to provide more than $6 million in pro bono services to the county. Leveraging their knowledge has resulted in "better answers," he said. I suggested that it also resulted in "consultant fatigue."

"Having been a consultant, I know how to manage consultants," Summers argued. "What are the common problems? It becomes their agenda, not your agenda. You don't get firm deliverables that you want to get done. And there's a way to manage against that. So I know all of the tricks. I know the Trojan Horse. And I think that helped me manage 30 different partners in this process."

Summers also has a relic on the wall from the "toughest vote" of Preckwinkle's administration — a 12-5 vote approving a tax increase on wholesale alcohol.

"And the five 'no' votes are on that roll call on my wall," Summers said, pointing to a white sheet of paper with commissioners' names listed in the first column and five check marks in the "no" column.

"I was on a staycation downtown with my wife," Summers said. "A surprise staycation. ... And the entire time, my phone was ringing off the hook with lobbyists, associations, (bar) owners. And you get commissioners who get letters from Grover Norquist about no-tax pledges, and you have to shore up support. When it gets to something that becomes that seminal, it ... becomes the chief of staff's job to bring it across the line."

He said he doesn't keep the roll call on the wall to remind him which commissioners to punish.

"I kept it up since last year because you got to work on that year-round," he said. "That vote wasn't about this single issue" — Summers snaps his fingers — "that single ask." He snaps again. "It's a relationship that you manage over time. Sometimes people just can't be there, and you get that. But what are the things I can be doing around the year to be in a better position to have that conversation with them the next time?"