transparency | Pension360

Kentucky To Disclose More Details About Alternative Investments, But Some Data Will Remain Secret

About 30 percent of the Kentucky Retirement System’s investment portfolio is allocated towards alternative investments. That kind of investment strategy leads to significant fees and expenses. But much of the data surrounding the fees the System paid to firms to manage those alternative investments were hidden under lock and key…until now.

Yesterday, the KRS Board of Trustees approved a measure designed to increase transparency surrounding the fees the System pays to individual firms to handle its investments. From WFPL:

Kentucky Retirement Systems, which runs the $16 billion pension and health care funds for state, city and county workers and retirees, will be providing more detail about the fees it pays to the managers of its so-called “alternative” investments.

[Interim investment director David Peden] said KRS’ investment committee and the full board warmed to the idea after articles by the Kentucky Center for Investigative Reporting and the Lexington Herald-Leader on the level of transparency about fees paid to hedge funds and private equity firms.

Until now, KRS had disclosed the total amount of fees paid to investment firms — $53.6 million in the year that ended June 30, 2013 — but did not report the fee rates charged by individual firms. That practice will change in coming weeks, Peden said, as KRS staff posts fees for all current holdings on the agency’s website.

So, interested observers will be able to find the fee rates that KRS pays to individual firms.

But KRS still isn’t going to tell the public everything.

Among the information that will still be inaccessible to the public: the total dollar amount of fees paid to individual firms; the fee rates paid to “fund of funds”; and the specific make-up of the alternative funds, which are protected by confidentiality agreements between KRS and the fund managers.

Judge: Florida Violated Open Records Laws When It Stonewalled Pension Record Requests, Sent Investigators To Man’s Home In “Chilling” Incident

Over the last few years, Curtis Lee—Jacksonville resident and retired pension attorney—has filed dozens upon dozens of public record requests relating to the Jacksonville Police and Fire Pension Fund.

But Lee claims that instead of getting access to the public records he requested, he was stonewalled by the State Attorney’s Office for the Fourth Judicial District.

In one instance, says Lee, the Office waited a full year to provide an initial response to his requests. In another, the Office sent investigators to Lee’s home to tell him to stop contacting the Office and to question him as to his purpose for requesting the documents.

So Lee filed a lawsuit against the Office alleging they violated public records laws with their actions.

And the law gave Lee some solace this week when a judge sharply criticized the Office and ruled that they will have to pay for all of Lee’s legal fees. The judge, however, did not rule that the Office intentionally broke public records laws, which would have carried more serious penalties. More from the Florida Times-Union:

A judge ruled State Attorney Angela Corey’s office broke Florida’s public-records law, scolding the prosecutor’s office for sending investigators to question the citizen in his home and never demonstrating why the unusual visit was “necessary and appropriate.”

…

Judge Karen Cole also criticized Corey’s office for refusing to accept Lee’s cash for records and in some cases taking more than a year to provide even an initial response.
The State Attorney’s Office will have to pay Lee’s legal fees for his lawsuit against it. Cole will need to figure out exactly how much that is. Lee’s attorney, Brooks Rathet, said it should be somewhere around $20,000.

The State Attorney’s Office also violated public records laws by requiring the public to pay for records with business checks, cashier’s checks or money orders. Cash and debit cards were not accepted.

To get a money order, Lee and others had to pay a third-party service a fee. That, Cole said, “unlawfully burdens” citizens. From now on, the State Attorney’s Office has to accept cash for records. If the office wants to, the judge said, it can also allow other types of payment.

Cole also described how the State Attorney’s Office violated the law by taking too long with its response to requests.

As one example described, Lee sent Corey’s office six letters with 27 categories of public records requests in February 2011.

About five days later, two State Attorney’s Office investigators came to Lee’s door, according to Judge Karen Cole’s final judgment.

Sending investigators to tell someone to stop calling the State Attorney’s Office “would have a chilling effect,” Cole wrote, for most people. Most people might not have continued requesting records after a visit like that, she wrote.

After the judgment, the Office told Lee that they would produce the records he had requested by Thursday, August 14.

Lee filed a similar lawsuit against the Jacksonville Police and Fire Pension Fund. Lee won certain aspects of that case, but the case is now being appealed to the Supreme Court by the fund.

New Transparency Requirements For Colorado Schools Will Shed Light On Pension Costs

Colorado is known for its Rocky Mountains. But the state’s rocky pension funding situation is well known, too, and lawmakers spent a chunk of the last legislative session trying to smooth out that area.

Colorado recently passed House Bill 14-1292, also called the “Student Success Act.” Most of the law deals with increasing state funding for public schools.

But a small portion of the law imposes stringent, all-encompassing financial reporting and transparency requirements on all public schools. Schools will have to report salary schedules, financial audits, and investment performance reports, among other things.

(The suggested template for all schools to follow can be seen at the bottom of this post.)

Many lawmakers are hoping that new transparency standards help shed light on the state’s pensions funding and cost issues.

Colorado’s largest pension system, the Public Employees’ Retirement Association, was only 63.25 percent funded as of 2013.

There are five sub-sets in the system; of all the sub-sets, the “school division”—the division that caters to almost all the state’s public school employees—is by far the largest. It’s also one of the unhealthiest parts of the system, as it only has enough assets to cover 62 percent of its liabilities.

Screen shot 2014-08-12 at 1.02.30 PM — Credit: Ballotpedia

Critics of the state say that part of the reason for the underfunding issues is that Colorado has been paying less and less of its Actuarially Required Contribution (ARC).

Screen shot 2014-08-12 at 1.52.35 PM — Credit: Ballotpedia

But others say that school districts themselves could be to blame for some of the underfunding, as teacher pensions are too high. Transparency standards, they say, would shed light on those issues and make them available to remedy.

Colorado public school officials are not keen on the new reporting standards. From ChalkBeat:

A wide variety of district officials interviewed by Chalkbeat raised four main concerns about the law:

Implementation – District officials generally agree that compliance will be relatively painless for large districts but presents a greater challenge to some medium-sized and small districts. “It is going to be a lot of work for a lot of people. It depends on how big you are and how many people you have working for you,” Gustafson said.

Comparability – Even with the requirement for greater uniformity, some district officials wonder if district and school data will be fully comparable. They raise the question of likely district differences in how they account for costs borne by multiple schools – things like the salaries of special education teachers, psychologists and other staff who split their time among buildings.

Use & Misuse – District officials say they support transparency as an ideal but are openly skeptical that new financial data will see much use by the public.

“Who’s going to actually look at this website?” asked Tracy John, business manager of the 606-student Peyton School District northeast of Colorado Springs.

Anecdotally, districts say there’s little public use of financial information currently available online. “I don’t receive very many calls about transparency,” said Guy Bellville, chief financial official of the Cherry Creek Schools.

And districts are nervous that advocacy groups will use school-level financial data for their own ends, ignoring the context and nuances of why districts spend money as they do.

“Rather than build confidence in school budgeting decisions, it is more likely to provide ammunition to public education detractors who have no interest in learning the deeper context or complexity that comes with school budgeting,” argues Jason Glass, superintendent of the Eagle County Schools.

Impact on student achievement – “Tell me how this is going to impact student achievement,” Gustafson said. “This is a distraction that takes away from student achievement.” Said Boulder’s Sutter, “I’m fairly certain there are no studies about how one more accountant in the district office is going to affect outcomes.”

Below, you can see the template school districts are being asked to use to comply with the new reporting standards.

[iframe src=”<p style=” margin: 12px auto 6px auto; font-family: Helvetica,Arial,Sans-serif; font-style: normal; font-variant: normal; font-weight: normal; font-size: 14px; line-height: normal; font-size-adjust: none; font-stretch: normal; -x-system-font: none; display: block;”> <a title=”View Colorado Schools Transparency Template on Scribd” href=”http://www.scribd.com/doc/236632574/Colorado-Schools-Transparency-Template” style=”text-decoration: underline;” >Colorado Schools Transparency Template</a></p><iframe class=”scribd_iframe_embed” src=”//www.scribd.com/embeds/236632574/content?start_page=1&view_mode=scroll&show_recommendations=true” data-auto-height=”false” data-aspect-ratio=”undefined” scrolling=”no” id=”doc_62987″ width=”100%” height=”600″ frameborder=”0″></iframe>”]

Photo by TaxRebate.org.uk

Why Did Ontario Lawmakers Wait So Long to Release A Report Critical of Its Pension Systems?

There’s been much concern in Ontario about the sustainability of its public pension systems, particularly in the electricity sector. Ontario Auditor General Bonnie Lysyk warned in 2013 that electricity sector pensions were unsustainable and quite possibly too generous.

Union leaders, taxpayers and other concerned parties agreed that the systems deserved a closer looking-at.

So, last December, Ontario lawmakers appointed Jim Leech—former head of the Ontario Teachers’ Pension Plan—to examine the pension systems inside and out to produce a report and make recommendations to improve their sustainability and affordability.

On March 18, 2014, the report was delivered to Ontario lawmakers. But not to the public.

For over four months it didn’t see the light of day. But last Friday, August 1, the report was finally released to the public. And it was highly critical of the sustainability and cost of the electricity sector’s public pension plans.

[The entire report can be read at the bottom of this page.]

From the Toronto Star:

As reported by the Star’s Rob Ferguson, the 45-pagestudy by former Ontario Teachers’ Pension Plan head Jim Leech finds that Ontario taxpayers contribute $5 for every $1 employees are putting into their pension plans at Hydro One.

Ontario Power Generation isn’t much better, with employees contributing just 24 per cent of contributions compared to 76 per cent by the publicly owned utility.

Meanwhile, compared to other public-sector plans, the ones at Ontario’s four electricity agencies are “generous, expensive and inflexible,” Leech wrote.

What’s more, the study found all four pension plans “are far from sustainable.” Wrote Leech: “Should plans go further into deficit, the sponsors and, ultimately, ratepayers will be required to pay even larger contributions.”

The report has already accomplished part of its purpose: get the government thinking about ways to make these systems more sustainable and less costly.

But new questions are being raised about the transparency issues surrounding the report’s release. Although lawmakers saw the report in March, the public had to wait. Why was it allowed to gather dust for nearly five months?

Other stakeholders are wondering the same thing. Some reactions, as reported by The Star:

“This is awfully suspect,” said Progressive Conservative MPP Vic Fedeli, his party’s finance critic, questioning Wynne’s oft-stated goal of running an “open and transparent” government.

“There was ample opportunity to release this document with good public scrutiny. What are they hiding? What didn’t they want us to know?”

Also:

“Why now, why not before the election so people would have known what’s happening?” said Plamen Petkov, whose lobby group opposes the ORPP as too expensive.

“We’re very worried to see government agencies where employees are paying only 20 cents on the dollar for their pensions when taxpayers pay the other 80 cents. No wonder the government itself expects electricity prices to go up 42 per cent over the next five years,” he told the Star.

“It’s really disappointing. We recommend the government clean its own house first before they ask employers to contribute $3.5 billion a year to the Ontario Retirement Pension Plan.”

Government officials said they originally planned to release the report on May 1, when Ontario’s new budget was passed. But the budget wasn’t passed, and that led to new elections being held.

The report was held as elections played out. The results of those elections weren’t confirmed until June 24^th. Still, the report remained in the hands of the government for another 5 weeks afterward.

Here is the report, which can also be found on Ministry of Finance website.

[iframe src=”<p style=” margin: 12px auto 6px auto; font-family: Helvetica,Arial,Sans-serif; font-style: normal; font-variant: normal; font-weight: normal; font-size: 14px; line-height: normal; font-size-adjust: none; font-stretch: normal; -x-system-font: none; display: block;”> <a title=”View Electricity Sector Report on Scribd” href=”http://www.scribd.com/doc/236071806/Electricity-Sector-Report” style=”text-decoration: underline;” >Electricity Sector Report</a></p><iframe class=”scribd_iframe_embed” src=”//www.scribd.com/embeds/236071806/content?start_page=1&view_mode=scroll&show_recommendations=true” data-auto-height=”false” data-aspect-ratio=”undefined” scrolling=”no” id=”doc_30093″ width=”100%” height=”600″ frameborder=”0″></iframe>”]

Photo: “Ontario-flag-contour” by Qyd. Licensed under Public domain via Wikimedia Commons

Taking Stock of Where Rhode Island’s Candidates for Governor Stand On the Release of Pension Hedge Fund Records

Last month, current Rhode Island Treasurer Gina Raimondo (Democrat) denied the Providence Journal access to records relating to the state pension fund’s hedge fund investments.

The newspaper appealed, but that appeal was denied as well.

In a letter written by Raimondo at the time of the denial, she justified her actions with the following logic (the entire letter can be read at the bottom of this post):

For democracy to work, the public, often through the press, needs oversight over how government is acting on its behalf. At the same time, the government, to fulfill its obligations to the public, needs to be able to function effectively, which often requires a measure of confidentiality, particularly when contracting with private sector entities. Over the years, the law has determined how to balance these two requirements, and the actions of Treasury were consistent with that balance.

With elections only a few months away, and Raimondo in the midst of a bid for governorship of the state, Raimondo’s opponents have seized the opportunity to pounce on her decision to deny access to the hedge fund records.

Providence Mayor Angel Taveras (Democrat), who is now running for governor of the state, had this to say:

“Apparently, the treasurer is more concerned about hedge funds being able to keep their talent than taxpayers knowing how their money is being spent,” Taveras’ spokeswoman Dawn Bergantino said. “The treasurer should be looking out for our interests, not Wall Street and hedge fund billionaires.”

Allan Fung (Republican) is currently the mayor of Cranston, Rhode Island. But he’s in the running for governor of the state as well, so he put his thoughts on the table:

“There is a dramatic difference between what is required legally and what is necessary to do the right thing,” Fung said. “Current and retired state employees depend on the strength of the pension fund for their retirement security, and all Rhode Islanders face the risk of higher taxpayer contributions if these investments come up short. We all face tremendous risk and we deserve to know the basis for these investments.”

According to the latest polls, Taveras is currently up on Raimondo, garnering 33.4 percent of the vote to Raimondo’s 29 percent. Clay Pell remains a distant third with 11.5 percent of the vote.

Raimondo’s position has notably diminished since she chose to withhold the hedge fund records. Although she is drawing in the same percentage of votes, the issue may have swayed undecided voters to side with Taveras.

On the Republican side, the latest poll has Ken Block maintaining a healthy lead over rival Allan Fung.

Screen shot 2014-08-05 at 2.49.57 PM — Credit: Wikipedia

And, as promised, here is the letter that Raimondo wrote when she denied the Providence Journal access to the state pension fund’s hedge fund records.

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Photo by: By Jim Jones (Own work) via Wikimedia Commons

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