Tuesday, June 21, 2011

Ohio pension directors question the need (and expense) for an additional audit

From John Curry, June 21, 2011
Ohio public-pension review seen as useless, wasteful
Systems' directors say that legislative proposal would delay necessary reforms
Columbus Dispatch, June 20, 2011
Darrel Rowland
A plan for an independent review of Ohio's five public pension systems would cost taxpayers millions and duplicate work that's already been done, as well as delay change that is needed now, the heads of those five systems said in separate letters today.

The remarks came on the deadline for comments about a legislative plan for an outside actuarial review of the retirement systems. The Ohio Retirement Study Council's draft request for proposals to conduct that review was unanimously panned.

The proposal "duplicates studies already completed and millions of dollars already spent to comply with existing reporting or regulatory requirements at both the state and federal levels," said Michael J. Nehf, executive director of the State Teachers Retirement System, which he said has laid out $2.2 million on such studies during the past five years.

"We believe undertaking a study of the magnitude proposed in this (request for proposals) for all five systems could take years and run into millions of dollars."

Karen Carraher, interim executive director of the Ohio Public Employees Retirement System, said her system "has already spent in excess of $700,000 to develop its current recommendations. The draft (request for proposals) seems to suggest that the independent consultant will re-create that process and expense."

Lisa J. Morris, executive director of the School Employees Retirement System, wrote: "Without a fixed fee, every hour and additional question posed by interested parties (and we agree that this should be a highly public process) will drive up the cost with no barrier to cost." The school employees system already has spent more than $150,000 in actuarial costs.

Several of the pension system leaders noted that they submitted plans to restore fiscal solvency almost two years ago - with updates to some at the beginning of 2011 - but the legislature has done nothing to implement the changes.

"This plan was presented to the Ohio Retirement Study Council in September 2009 with an expectation of prompt legislative action," said Dan Weiss, executive director and chief investment officer of the Highway Patrol Retirement System, who said the patrol's proposal cost $60,000.

"Almost two years later, in spite of a record-breaking stock market recovery, long-term solvency is evasive, because it requires deliberate plan modifications. Further delays in enacting pension reforms will only necessitate more drastic changes at a later date."

William J. Estabrook, executive director of the Ohio Police & Fire Pension Fund, balked at turning over retirement system information, including confidential material.

"We will provide our materials to (the study council), but not to the vendor," he said. "OP&F would like an explanation on why the contractor needs to be on our premises. Who will determine what data and information is public information? Additionally, who is responsible for leaks of proprietary information?"


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