Far-flung resorts draw retirement board

By Chris Cassidy
THE EAGLE-TRIBUNE (NORTH ANDOVER, Mass.)

August 02, 2007 11:58 am

— They dined at Emeril’s steakhouse, slept at a resort casino on the Vegas Strip, even teed off at a PGA Championship golf course in Southern California.
Members of the Essex, Mass., Regional Retirement Board took nine out-of-state trips in the last two years for conferences and meetings with money managers, often staying at luxurious resorts and eating at fancy restaurants as taxpayers helped pick up the bill.
Since 2005, board members spent $37,852 on trips to San Diego, Las Vegas, Fort Lauderdale, Chicago, Washington, D.C., and New York City. Taxpayers helped cover the costs, from a $339-a-night hotel room on Capitol Hill to a $3 ATM transaction fee in Vegas.
Board members say the conferences help them make crucial decisions on the local pension system, which oversees public-employee pensions for 19 towns and six regional school districts North of Boston.
“We haven’t overdone it,” said Timothy Bassett, the executive director and chairman of the Essex board. “If you want to do your job, invest the money well and hit the returns, you have to go out and learn some things.”
But a report last year by the Pioneer Institute questioned the value of travel by board members, given that they hire professional advisers to manage their pension investments. The Boston think tank said board members across the state exploit weak controls on travel expenses for questionable trips to popular tourist destinations.
“The least that can be said,” the report concluded, “is that many board members have taken advantage of these opportunities with what appears to be excessive zeal.”
Barbara Anderson of Citizens for Limited Taxation concurred.
“I can see people wanting to go some place quiet in the middle of nowhere to discuss the complexities of the pension system,” she said. “But Vegas wouldn’t match that description.”
Three Essex board members flew to Las Vegas in May 2005 to attend the annual meeting of the National Conference on Public Employee Retirement Systems — a trip that cost $7,015.
Board members Glenn Morse and Katherine O’Leary spent six nights at the Mandalay Bay Resort and Casino while Bassett stayed four. The Vegas Strip hotel features 135,000 square feet of casino space, a wave pool, a $40 million aquarium, a sand-and-surf beach, two spas and a wedding chapel.
During their stay, the travelers often ate out at fine restaurants. One afternoon, board members spent $112 on lunch at Giorgio Italian Restaurant. A few days later, they dined at Emeril Lagasse’s Delmonico Steakhouse, named “Restaurant of the Year” by Esquire Magazine.
One month earlier, Bassett, Morse and board member William Martineau flew to San Diego for a conference sponsored by the Segal Company, the board’s financial advisers. The trip cost $9,889.
They stayed at the $279-a-night La Costa Resort & Spa and played golf with Segal advisers on one of the resort’s pristine PGA courses, though they paid the $75 tournament fee themselves.
In 2006, three board members flew to Chicago for a health care symposium. The trip cost $8,400 in conference fees, airfare, hotel and restaurant tabs, and cab fare.
During a trip last year to Washington, D.C., Bassett and Morse stayed at the Hyatt Regency, two blocks from the Capitol, at rates of $319 a night (Morse) and $339 a night (Bassett).
On the road, board members also charged minor expenses — a $55 limo ride to Logan Airport, a $29 phone call home, an $11 cheeseburger, a 50-cent copy of the Chicago Tribune, a $5 tip to a bellhop.
In many cases, the board members brought their spouses along, although they were careful not to charge their spouses’ expenses back to the retirement board.
Board members O’Leary and Martineau did not return phone calls seeking comment for this story. Morse deferred all questions to Bassett, citing a board policy that the chairman respond to all press inquiries.
So who pays for the meals, plane tickets and hotel rooms?
In part, taxpayers. Local retirement boards receive money from three basic sources: the public employees who pay into the system, the returns on their investments and payments from local cities and towns that, in many cases, are growing rapidly.
Bassett defended the travel expenses.
“We’ve always had money we’ve spent on board education, and it’s stood the board well,” he said.
He added: “You think doctors don’t go to conferences to learn how to do their job better each year?”
In nearly every case, Bassett said, board members stayed at the hotels hosting the conference, taking advantage of more affordable “conference rates.”
At Mandalay Bay in Vegas, for example, “it was a ridiculously low rate,” Bassett said. “I was shocked.”
And the retirement board doesn’t have any control over where conferences are held, he said.
“We’re hostage to the location,” he said. “Some of the locations were nice. But going to Washington in February — I wouldn’t consider that an exotic location.”
The pension fund’s return on investment — 15.8 percent in 2006 — shows the value of the conferences, he said.
However, the fund’s long-term return has been less impressive — averaging 8.09 percent over the past five years and 10.38 over the past 20 years, according to state retirement board figures. Haverhill’s pension fund, one of the better performers, earned an average 10.19 percent over the last five years and 11.84 over the last 20.
Anderson, the Citizens for Limited Taxation executive director, said the conferences aren’t just a questionable use of taxpayer and pension fund money; they also raise ethical concerns.
“This is party time,” Anderson said. “It’s having fun with people who are trying to urge you to put the local money where they want it to go. That’s a decision better made quietly in your office with your computer, downloading the latest investment advice from professionals that aren’t drinking with you or sitting by the pool with you.”

Chris Cassidy writes for The Eagle-Tribune of North ANdover, Mass. E-mail him at ccassidy@ecnnews.com.

Retirement board on the road
2005

Feb. 2-10
New York and Washington, D.C.
Meetings with money managers in New York and Washington; National Conference on Public Employee Retirement Systems Social Security Conference in Washington
Expenses: Timothy Bassett, board chairman and executive director, $2,239

April 9-14
LaCosta Resort and Spa, Carlsbad, Calif.
Annual conference of Segal Company, financial specialists hired by retirement board
Expenses: Timothy Bassett, $2,979; William Martineau, board member, $2,746; Glenn Morse, board member, $4,163

May 7-13
Mandalay Bay Resort and Casino, Las Vegas, Nevada
National Conference on Public Employee Retirement Systems
Expenses: Timothy Bassett, $2,504; Glenn Morse, $2,620; Katherine O'Leary, board member, $1,889


2006

Feb. 5-8
New York and Washington, D.C.
Meetings with money managers in New York and Washington; National Conference on Public Employee Retirement Systems Social Security Conference in Washington
Expenses: Glenn Morse, $2,273; Timothy Bassett, $2,187

April 29-May 5
Westin Diplomat Resort and Spa, Hollywood, Fla.
National Conference on Public Employee Retirement Systems
Expenses: William Martineau, $2,406; Katherine O'Leary, $2,282

Sept. 12-16
Hyatt Regency McCormack Place, Chicago, Ill.
National Conference on Public Employee Retirement Systems
Expenses: Glenn Morse, $2,698; Katherine O'Leary, $2,036; Timothy Bassett, $3,666 (includes fund manager visit in NYC)

Nov. 29-Dec. 1
Washington, D.C.
National Coalition to Preserve Retirement Security
Expenses: Timothy Bassett, $1,158

Source: Essex Regional Retirement Board

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