The Los Angeles County Board of Supervisors voted Tuesday to audit travel and training expenses at the agency that administers and invests $56 billion on behalf of Los Angeles County employees and retirees.
Supervisor Hilda Solis called for the county audit and a push for state auditors to conduct their own review, following an internal audit by the Los Angeles County Employees Retirement Association that found expenses well in excess of comparable public employee funds.
“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,” Solis said.
The board directed the auditor-controller to review all administrative operations costs, which totaled $78 million in 2018. The board will also ask its legislative advocates to request a state audit with similar scope.
The board’s vote was unanimous, except that Supervisor Sheila Kuehl voted no on the request for a state audit.
Based on a review of internal documents, the Los Angeles Times reported that trips across the country and overseas to locations like Abu Dhabi, Tokyo, Hong Kong and Paris had cost the fund more than $1.3 million since 2015.
The internal audit found that LACERA was a “significant outlier” among similar funds, spending three times as much on education travel as the powerful California Public Employees’ Retirement System or CalPERS, the newspaper reported.
Questions arose about a board member who tacked personal travel onto a LACERA trip and paid with a fund credit card and another who charged LACERA $400 for a lost pair of prescription sunglasses, according to The Times.
LACERA defended board spending on education in a statement issued last week.
“Education is a necessary component for the ability of LACERA’s boards to fulfill their fiduciary duty to effectively administer and invest the over $56 billion global fund for the benefit of our more than 165,000 members,” the statement read. “Trustees are legally required to educate themselves on topics relevant to today’s complex public pension environment, including benefits, healthcare, investments, governance and plan administration. Trustees also travel to connect with state and federal legislators and regulators to advocate on behalf of member interests and to serve in leadership positions in statewide and national pension organizations.”
The governance committee for the two LACERA boards voted unanimously last week to recommend policy revisions that it said would impose cost efficiencies without compromising education. That committee will meet again Aug. 14.
The internal auditors recommended reevaluating the use of business class airfare and prohibiting the purchase of more expensive refundable tickets.
The boards are also working to hire a national executive search firm to help recruit a new CEO after the termination of Lou Lazatin in June.
Results of the county audit, including a comparison with other industry benchmarks and an assessment of administrative controls, are expected in 60 days.