“Everybody does it.” Those who steal music and movies online through file sharing use the phrase. In their minds no one gets hurt ? except maybe some big nameless corporation.
All but one member of the Baltimore City Employees? Retirement System board uses the same reasoning to justify their penchant for lavish travel and meals.
Members have jetted to Paris, Monte Carlo and India, among other locales, to “educate” themselves about investment opportunities. They each receive $10,000 per year for the travel ? which would only cover a portion of the trips, which are heavily subsidized by advisers eager to win city business. Care for a conflict of interest, anyone?
The city ethics code forbids employees from accepting gifts directly or indirectly from people or companies that want to do business with the city.
As a result of a series of articles in The Examiner earlier this year detailing the travel policy and how it has not benefited fund performance, City Councilman Ken Harris called for an investigation of board practices.
But a new report by the Calvert Institute for Policy Research shows that nothing has changed. Board members voted this summer to keep their $10,000 per year travel allowance instead of reducing it and placed only minor restrictions on travel. They limited themselves to one international trip per person and the number of trustees who could attend a conference to three at a time.
The O?Malley Administration and the City Council commissioned a $10,000 report designed to show that ERS trustees act like other trustees around the country.
But how does showing that other trustees abuse their position justify ERS? board members abusing the trust of city employees?
Reports show that unfunded health and pension benefits for public employees could be over $1 trillion nationally.
The $1.3 billion ERS fund has faltered in recent years. One of the reasons is the performance of its fund of funds manager, Fiduciary Investment Services.
A comparison of its peers places it in the 59th percentile for the three years ending in June and in the 72nd percentile for the past year. If those rankings were grades, the fund would earn a D for the past three years and a C for the past year.
So obviously the expensive educational trips have not paid off in terms of helping trustees choose good financial advisers. Without those perks the boardmembers of the city Fire and Police Fund have chosen fund managers who have exceeded their goals.
In fact, the Fire and Police Fund fired fund managers in 2002 still used by the ERS for poor performance. Those managers have been criticized throughout the country for their poor performance. Yet ERS still holds onto them. Why?
At the very least Roselyn Spencer, the executive director of the ERS, must make public the reasons for retaining pension consulting firm Callan Associates Inc., which recommends money managers, and Fiduciary Investment Services.
The city of San Diego is suing Callan for recommending lousy managers. It is also suing the San Francisco-based consulting firm for recommending fund managers, to San Diego from which it received undisclosed fees.
City employees deserve to know their retirement funds are in capable hands.
