The Los Angeles County Board of Supervisors voted Tuesday to direct the county's auditor-controller to conduct an audit of LACERA's processes and controls over its administrative operations, including travel and training, cost increases and its overall administrative expenses.
The motion also seeks directs the auditor-controller to seek a similar audit by the California’s Joint Legislative Audit Committee.
The Board of Supervisor's motion noted that the $54 billion Los Angeles County Employees Retirement Association's administrative expenditures for fiscal year 2018 were about $78 million, and its total travel expenditures was about $900,000.
"LACERA's own audit of its spending on education and travel found it spends significantly more than its peer organizations do," said Supervisor Mark Ridley-Thomas, who made the motion along with Supervisor Hilda L. Solis, in a written statement.
"The county should conduct an external review to ensure LACERA's policies and practices are fiscally prudent, transparent and ensure accountability," he said.
The auditor-controller is to report back to the Board of Supervisors within 60 days. “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,” Ms. Solis said in a written statement. “This was a necessary step to safeguard the commitment the county has made to its past, current, and future employees.”
According to a June 20 LACERA internal audit, Pasadena, Calif.-based LACERA's travel and expense budget has increased 38% to $569,000 for fiscal year 2020 and $529,000 for fiscal year 2019, from $411,000 in 2018.
Meanwhile, actual education travel for board members increased to $403,267 in fiscal year 2018 from $269,861 in fiscal year 2016. During the same time period, staff education travel dropped to $381,671 in fiscal year 2018 from $497,918 in fiscal year 2016. Board members and staff also travel for administrative purposes, but LACERA's audit did not provide the cost of that travel.
LACERA's audit identified practices within the bounds of its travel and education policy including individual board members incurring annual travel costs as high as $55,000, individual board members spending as much as $12,500 for a single international trip and individual board members attending up to 16 educational events a year.
"LACERA is a significant outlier in costs incurred for board educational (non-administrative) travel," its audit found. Indeed, LACERA's educational travel expenses in fiscal year 2018 were higher than either the $372.8 billion California Public Employees Retirement System, Sacramento, or the $236.9 billion California State Teachers' Retirement System, West Sacramento. What's more, LACERA officials did not identify any peer pension fund whose board educational travel expenses exceeded CalPERS or CalSTRS.
"LACERA maintains the highest regard for transparency, and is an organization dedicated to integrity on behalf of its members. LACERA publicly releases externally audited financial statements every year, and performs many scheduled internal audits, including the most recent education and travel audit, which are also released publicly," according to a written statement from LACERA. "LACERA understands and respects the county Board of Supervisors' statutory right to perform an audit, and we will cooperate to the fullest extent."