Peter Kaminski/Flickr Westin St. Francis hotel in San Francisco's Union Square
Despite staggering pension fund shortfalls, officials overseeing some of the largest public retirement systems in the Bay Area have spent more than $60,000 since the beginning of 2008 to attend conferences just miles from their homes, expense records show.
For example, in May 2009, five trustees and the chief executive overseeing Contra Costa County’s pension system decided it was easier to stay overnight in San Francisco, 28 miles from their office. They billed the pension fund $5,441 for a trip that included three nights at the four-star Hyatt Regency San Francisco, as well as registration, meals and transportation, according to agency records obtained under the California Public Records Act. A sixth trustee canceled at the last minute, costing the fund an additional $353.
“It’s discretionary,” said Jerry R. Holcombe, an alternate member of the county’s Employees’ Retirement Association board who attended the conference. “Sometimes, it is more inconvenient to be commuting late in the evening and then come back in the morning.”
With a $1.3 billion unfunded pension liability – the difference between the retirement benefits owed to public employees and retirees and the funds available to pay for them – the Contra Costa County Employees’ Retirement Association is expected to run out of funds by 2025, according to a 2010 report by researchers from the University of Rochester and Northwestern University.
While San Francisco’s pension board is prohibited from expensing overnight stays at Bay Area hotels, trustees overseeing the retirement systems in Contra Costa, Alameda and San Mateo counties are not.
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Like Contra Costa County, San Mateo and Alameda counties also are grappling with pension shortfalls. Last year, San Mateo County had a shortfall of $841 million and Alameda County’s was more than $1 billion.
Pension trustees say conferences yield crucial investment strategies that help them offset deep investment losses and soaring employee pension costs. They point out that the trustees’ travel expenses, paid for with investment returns from the counties’ pension funds, account for a fraction of the multibillion-dollar funds. Together, the three counties have spent $1.1 million since 2008 on total travel expenses for their retirement board members and top executives.
But government watchdog groups say taxpayers should not be on the hook for retirement fund shortfalls when pension trustees are billing for local hotel stays.
“The signal that this sends to the public is very bad,” said David Kline, spokesman for the California Taxpayers Association, a nonprofit, nonpartisan organization in Sacramento. “It is disappointing to see that they would choose the more expensive route, which is staying in a hotel. Spending like this is certainly not helping the situation or their reputation with taxpayers.”
During another pension conference, two Contra Costa County retirement board trustees, Holcombe and Terry Buck, as well as then-Trustee Jim Remick, billed the pension fund $6,764 for a trip that included three nights at the four-star Westin St. Francis hotel in Union Square in December 2008.
And in 2008 and 2009, David Bailey, CEO of the San Mateo pension system, and five current and former trustees spent more than $8,300 for three separate conferences in San Francisco, including two- and three-night stays at the Westin St. Francis and Hyatt Regency San Francisco.
Five members of the Alameda County Employees’ Retirement Association billed the pension plan about $4,450 to stay overnight at the Hyatt Regency for two to three nights each for the State Association of County Retirement Systems conference in May 2009. Among the group were members of the board, including Keith Carson, an Alameda County supervisor; Liz Koppenhaver; George Wood; alternate member Darryl Walker and then-member Rosie Rios.
Under state law, retirement fund trustees are required to manage assets with “care, skill, prudence, and diligence.” Attending pension conferences helps keep trustees abreast of the recent changes to arcane finance laws, IRS rules and investment strategies, officials say.
Some trustees said the benefits of their local hotel stays manifest in subtle ways.
“Part of it is networking; I wanted to maximize my time,” said Bailey, CEO of the San Mateo County Employees’ Retirement Association. “It is hard to say, 'Here’s how much money we made (in investment returns),' because we attended this or that conference and to come up with a tangible benefit.”