L.A. County Supervisors Call for More Audits of Pasadena-Based County Employees Retirement Association

Published : Thursday, August 1, 2019 | 4:42 AM

The Los Angeles County Board of Supervisors has voted to audit travel and training expenses at the Los Angeles County Employees Retirement Association or LACERA, the Pasadena-based agency that administers and invests a $56 billion fund for the benefit of more than 171,000 Los Angeles County employees and retirees.

The Board, upon a motion by District 1 Supervisor Hilda Solis and District 2 Supervisor Mark Ridley-Thomas, voted Tuesday to direct the county’s Auditor-Controller to conduct an audit of LACERA’s travel and training operations, including the processes and controls for reviewing and approving travel and training expenses.

LACERA’s administrative operations costs totaled $78 million in 2018. Solis and Ridley-Thomas’ motion was believed to have been triggered by an internal LACERA audit which found expenses were far beyond those of other public employee funds. A recent Los Angeles Times story said LACERA spent three times as much on education travel as the California Public Employees’ Retirement System or CalPERS.

In 2018, LACERA spent $403,267 to attend a total of 116 events, meetings and conferences. CalPERS spent $136,860 in 59 events, and CalSTRS, the California State Teachers’ Retirement System, spent $119,980 in 42 events and meetings, the LACERA audit showed.

“Because LACERA’s travel expenses are charged against investment earnings, the Board of Supervisors has a vested interest in ensuring LACERA’s continued fiduciary responsibility to our workforce” Solis said in a statement. “By directing the Auditor-Controller to review LACERA’s processes and controls over all of their administrative operations including, but not limited to, training and travel, and by seeking a similar audit by the State’s Joint Legislative Audit Committee, we can reassure LACERA’s members that their retirement plans and health benefits are secure. This was a necessary step to safeguard the commitment the County has made to its past, current, and future employees.”

The internal audit also found travel expenses by LACERA board members for conferences and the like have ballooned from $269,861 in fiscal year 2016 to $403,267 in 2018. This is despite the finding that LACERA staff members have substantially dropped their education-related spending during the same period, from $497,918 in 2016 to $381,671 last year.

A story in the Institutional Investor, a leading international business to business publisher, pointed out that business-class travel was a significant contributor to the high expense incurred.

In one instance, a LACERA board member charged a $12,500 international first-class flight to the pension fund – on the member’s preferred airline – because business-class wasn’t available.

The LA Times also reported about a board member who tacked personal travel onto a LACERA trip and paid with a fund credit card, and another who charged LACERA $400 for a lost pair of prescription sunglasses.

Last week, LACERA released a statement defending board spending on education and travel.

“Trustees are legally required to educate themselves on topics relevant to today’s complex public pension environment, including benefits, healthcare, investments, governance and plan administration,” the statement said. “Trustees also travel to connect with state and federal legislators and regulators to advocate on behalf of member interests and to serve in leadership positions in statewide and national pension organizations.”

LACERA, whose offices are at 300 N. Lake Avenue in Pasadena, has two boards – a Board of Retirement and a Board of Investments – whose members are a total of 20.

Last week, the two Boards’ Joint Organizational Governance Committee (JOGC) voted unanimously to recommend policy revisions that would “enhance the program’s administrative efficiency and cost-effectiveness, without compromising the trustees’ ability to receive their needed education,” according to a LACERA statement.

Results of the County audit are expected in 60 days.

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