Car allowances for executives, expensive dinners without itemized receipts and generous leave-accrual policies are among the practices the Colorado Public Employees’ Retirement Association needs to reform, according to an audit released Tuesday.
“We did find areas of noncompliance,” said Jim Comisky, a partner at Clifton Gunderson, the Denver accounting firm charged with auditing administrative expenses at the state’s largest pension provider.
The association, the state’s largest public pension fund, manages $32 billion on behalf of about 365,000 current or future retirees. It faces an $11 billion shortfall in its ability to meet future retirement obligations.
Critics have targeted travel expenses, employee benefits and other perks at the pension provider.
“We see audits as an opportunity for improvement,” PERA executive director Meredith Williams told members of the Colorado Legislative Audit Committee, which commissioned the audit.
Williams didn’t dispute any of the 16 recommendations Clifton Gunderson made, and he said PERA had already addressed or was reviewing the practices in question.
“If he (Williams) had said we disagree with that, we would have had a problem,” said Sen. Norma Anderson, R-Lakewood, the committee’s vice chairwoman.
Although the report didn’t find any “smoking guns,” it did uncover some questionable employee spending and lax controls.
In one excess the audit captured, a staff member in 2002 traveled from Denver to London through Chicago for $7,352.
Since PERA updated its travel policies in 2004, Clifton Gunderson didn’t find any instances of employees taking flights in first or business class.
PERA is phasing out its car allowances for executives and requiring itemized receipts to be attached with expense reports, and will set limits on lodging expenses, Williams said.
It also is reviewing how it pays out accumulated leave time to its staff at retirement, one of the costlier items reviewed.
PERA paid out an extra $248,500 between 2002 and 2004 than it would have following state personnel limits, Clifton Gunderson found.
Among the reforms proposed:
When attending vendor- sponsored conferences, PERA should ensure that it isn’t being given any special breaks not available to all attendees.
Investment consultants should disclose any conflicts of interest when bidding for work with the association.
Gift cards worth more than $25 given to employees should be reported as income on W-2 forms.
The amount PERA’s trustees can spend on educational expenses, now at $15,000 every two years, should be reduced after a trustee serves two years.
Incentive-pay packages have been reduced for all the staff except for investment managers, Williams said.
PERA also plans to review the $100 threshold for reporting gifts and other perks external vendors give staff, he said.
Staff writer Aldo Svaldi can be reached at 303-820-1410 or asvaldi@denverpost.com.
