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Week-end edition What?
When going broke.... what else do you do? Spend, spend, spend... Idiots all.
Detroit's pension boards pay $22K to send 4 trustees to Hawaii
By Joe Guillen
Four trustees of Detroit’s two public pension funds are heading to a
Hawaiian beach resort this weekend with their $22,000 tab paid for by
the funds, which are mired in claims of mismanagement and said to be at
least $600 million underfunded.
Trustees say the conference provides the education they need to manage complex investments for the funds’ retirees and beneficiaries. But other major public pension systems, including the Los Angeles Fire and Police Pensions, avoided sending their officials to Hawaii because of concerns the exotic locale sends the wrong message at a time when pensions nationwide are contemplating or implementing reduced benefits to cope with rising retirement costs and shaky investment returns.
Records obtained by the Free Press under the Freedom of Information Act show the expenses cover airfare — including a first-class flight for one trustee — lodging at the Hilton Hawaiian Village Waikiki Beach Resort in Honolulu, registration fees, meals and a per diem for miscellaneous expenses.
The city’s two public pension funds — the General Retirement System and the Police and Fire Retirement System — each are sending two trustees to the six-day National Conference on Public Employee Retirement Systems (NCPERS) conference, which starts Saturday. The retirement systems, which are funded by contributions from workers and the city, have combined assets valued at more than $5 billion and provide benefits to about 20,000 retirees and beneficiaries.
Stanford University professor Joe Nation, who specializes in public employee pensions, criticized the trip.
“Trustees don’t need to go to Waikiki to learn about best practices,” he told the Free Press. “Everyone knows they go there and they don’t work very hard. That’s just the nature of it.”
Ray Ciranna, interim general manager of the Los Angeles Fire and Police Pensions, said the fund urged its delegates not to attend the Hawaii conference — and none are attending — because it tries to keep administrative costs low on behalf of beneficiaries.
“Because of this standard, the system looks for prudent and economical training opportunities for staff development, as it is important for staff to maintain their skill set,” Ciranna said in an e-mail.
Detroit pension officials say the conference is no vacation, even though the 22-acre oceanfront resort boasts Waikiki’s widest stretch of beach and plentiful swimming pools and water slides.
“That just happens to be where the conference is this year,” said General Retirement System Trustee John Riehl, who will be attending. “We have to stay on top. We have to know what we’re doing.”
Changes could be on the way
In Detroit — a city on the brink of municipal bankruptcy in which leaders increasingly make financial decisions with an every-dollar-counts philosophy — public pension funds soon could be facing changes.
Emergency manager Kevyn Orr’s financial report to the state on Monday said the city’s pension funds are underfunded by at least $600 million, although the funds consistently have said they are adequately funded. Orr’s evaluation of the funds’ assets and whether any changes are coming to future benefits is ongoing, he said Monday in a wide-ranging interview with the Free Press.
“Right now, sitting here today, I would tell current pensioners that for the near-term future, it is status quo,” Orr said. “Part of our analysis as to what’s going to be in jeopardy, if anything, will depend upon an assessment that we get as to the valuations that are currently being done.”
Detroit’s pension fund boards have a combined 25 trustees. The General Retirement System’s nine trustees are paid stipends based on their years of service. Citizen trustees are eligible for a weekly meeting stipend between $67 and $200. Active employee trustees are eligible for a quarterly service stipend between $833 and $2,500. The 16 police and fire retirement system trustees are not paid a stipend.
The trustees, including three of those going to Honolulu, approved travel expenses months ago for the Hawaii conference and various other conferences scheduled this year, including a one-day seminar the Michigan Association of Public Employee Retirement Systems held in February in Novi. The General Retirement System approved travel costs in December, and the Police and Fire Retirement System approved the costs in February.
A state law passed last year limits the amount public pension funds can spend on education, including travel expenses, to $150,000 a year. The Detroit pension funds pay for travel and education from their operating budgets. The Police and Fire Retirement System has spent about $45,000 on trustee education so far this year, and the General Retirement System has spent about $30,000.
Cynthia Thomas, who serves as executive director for both funds, said the expenses fall within the systems’ travel and expense policies. She also said the conferences provide the trustees with an important education on public pensions. This year’s conference in Honolulu includes sessions on social media, pension actuarial science and trustee ethics.
“You do know that we don’t pick the locations for these conferences, right?” Thomas said. “The way conferences are set up, there’s not too many of them happening in Indiana or Kansas.”
In its response to the Free Press’ request for travel records, a General Retirement System official said it is sometimes necessary to travel because pension groups won’t stage conferences in Detroit.
“It is also noted that the NCPERS Board has indicated that they will NOT be bringing this national conference to Detroit at any time in the near future because of the negative press coverage provided by the Detroit media outlets in the past,” assistant executive director Marilyn Roc Berdijo wrote in the FOIA response.
Officials with the National Conference on Public Employee Retirement Systems Board could not be reached for comment.
A 'justification tool kit'
The annual NCPERS conference attracts more 1,000 pension officials each year for a variety of educational activities, according to the organization, a nonprofit trade association based in Washington, D.C. Last year’s conference was in New York City, and the 2011 meeting was in Miami.
For this year’s conference in Hawaii, NCPERS provided officials with a “justification tool kit” to convince their pension fund to pay for the trip. The organization also prepared a lengthy statement in response to those who question the location. Among the NCPERS’ reasons for picking Hawaii: President Barack Obama grew up there, and hotel and food prices are cheaper than in other mainland cities.
Detroit General Retirement System Trustee Riehl’s expenses are $5,245:a $1,278 flight, $2,967 for his hotel stay and $1,000 in registration fees. He’ll be joined by General Retirement System Trustee Cedric Cook, whose expenses total $3,874: $719 for a plane ticket, $2,505 for hotel stay and $650 in registration fees. Cook’s registration fees are smaller because he’s not attending all of the conference’s programs.
From the Police and Fire Retirement System, Honolulu expenses for Trustee Edsel Jenkins, a deputy fire commissioner, are $5,957: a $1,138 plane ticket, $2,769 for lodging, $1,000 in registration fees, $900 for meals and $150 for miscellaneous expenses. PFRS Trustee Angela James’ expenses total 6,871: a first-class plane ticket for $2,052, lodging costs of $2,769, registration fees of $1,000, $900 for meals and $150 for miscellaneous costs.
Bruce Babiarz of Bloomfield Hills public relations firm BAB Associates spoke on James’ behalf and said her first-class airfare is covered under the board’s travel policy. It states “business class or its equivalent on flights having a scheduled flight time of six hours or more” is covered.
“She has some medical reasons,” Babiarz said. “She has severe back problems.”
Jenkins did not return messages left at his office, and Cook could not be reached for comment.
James and Jenkins are staying in Honolulu until May 26, although the conference ends Thursday. When the Free Press asked Thomas, the funds’ executive director, about the extra stay, she said the trustees’ hotel expenses are only supposed to be covered until May 25.
The travel policy covers one day after the conference’s conclusion, plus an extra day for every four hours of time change encountered. Thomas said the trustees will be expected to pay the funds back for the extra day.
“We got a new person that does travel, so I’ll make sure she knows,” Thomas said.
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