Three Candidates Remain For Top Job at Arizona Public Safety Fund

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The Arizona Public Safety Personnel Retirement System is searching for a new director, and the fund has reportedly narrowed the field to three candidates.

The candidates, according to the Arizona Republic:

– Jared Smout, acting administrator at PSPRS. Smout was the organization’s deputy administrator from September 2011 to July 2014, when he was promoted to his current job. He also has done accounting, budgeting and financial consulting. He has a Master of Public Administration degree from Brigham Young University.

– Kevin Olineck, vice president for client services for British Columbia Pension Corp. Olineck has been in this position since May 2009, and he previously was vice president of pension services for the Alberta Pensions Services Corp. He has a bachelor of arts degree in the Advanced Program in Public Administration from the University of Saskatchewan.

– Deric Righter, former chief executive of ThyssenKrupp USA, a Michigan-based holding company for a German conglomerate. Righter also was a vice president of public banking for JPMorgan Chase in Detroit. He has a Master of Business Administration degree from Northwestern University.

More from the Republic:

The pension system is significantly underfunded, and the new director likely will work with the Arizona Legislature on state laws and policy issues for PSPRS members and retirees.

The job, which pays up to $269,000, attracted roughly 70 applicants.

The three finalists were selected from a group of five semifinalists, who recently interviewed with a selection committee. One of those who didn’t advance was Maricopa County Supervisor Andy Kunasek, who withdrew from consideration, according to Palmer.

The job came open when the previous administrator, Jim Hacking, reached a settlement in July to leave the trust after The Arizona Republic uncovered evidence that he had given raises to his investment staff without state Department of Administration approval, as required by law.

The fund plans to hire one of the candidates by the end of January, according to a spokesman.


Photo credit: “Entering Arizona on I-10 Westbound” by Wing-Chi Poon – Own work. Licensed under CC BY-SA 2.5 via Wikimedia Commons

Arizona’s Largest Pension May Boost Retiree Benefits, Lower Employee Contributions

Entering Arizona

The Arizona State Retirement System (ASRS) says there could be a permanent benefit increase on the horizon—the first since 2005. System officials also indicated that public workers could see their contributions decrease.

ASRS is 77 percent funded – but officials say higher investment returns, better cash flow and reduced liabilities have opened the door for the potential benefit increases.

From the Arizona Republic:

Paul Matson, chief executive of the $32 billion Arizona State Retirement System, said he expects retirees could see a permanent benefit increase, of undetermined size, sometime in the next three or four years. The last increase for the pension fund and its more than half-a-million members came in 2005. Benefit hikes are made possible by excess investment earnings, largely from the stock market, he said.

Similarly, an improving financial backdrop for the pension system also could mean that more than 200,000 public-sector workers in Arizona — along with the cities, counties, state agencies, school districts and other entities that employ them — could start paying slightly lower contributions to support the system, Matson added.


At a time when public pension programs including the Arizona State Retirement System remain significantly underfunded, Matson’s assessment was surprisingly upbeat. But recent fixes and long-term trends have put the system in much better shape, he said.

“We have a strong, healthy system that’s fully sustainable on the retirement and health sides,” he said in an interview with The Arizona Republic. The program provides retirement, health and long-term disability benefits.

In an interview with the Arizona Republic, ASRS chief executive Paul Matson expounded on the reasons behind the proposed benefit increase:

Matson cited three main reasons for the improvement:

Changes in certain benefit formulas have reduced the system’s liabilities. Working with the Legislature over the past decade, the Arizona State Retirement System has closed loopholes and made other adjustments. One involved new workers joining the system. In prior years, many new hires were allowed to purchase retirement-service credits at a cost of about 40 cents on the dollar. That unsustainable practice and about a dozen others have been restricted or eliminated, Matson said.

Contribution increases have boosted the system’s cash flow and assets. Employees and their employers each currently make contributions into the system equivalent to 11.6 percent of worker salary. That’s up from an unsustainably low 2.5 percent a dozen years ago. As noted, the recent trend of contribution hikes eventually will be followed by modest decreases, before contributions level out around 6.75 percent many years down the road.

Higher investment returns have bolstered the system’s assets. The stock market has been on a tear, rising about 200 percent between the bottom in early 2009 and the recent peak in September of this year. Although prices have retreated over the past few weeks, the trend for most of the last five years has been favorable. The Arizona State Retirement System generated an average yearly compounded return of 14.2 percent over the five years through June 2014, including a gain of 18.6 percent in the most recent year. Those returns are after expenses.

Matson did say he doesn’t expect investment performance to be quite as good, year in and year out, as it has been the previous 5 years.

ASRS has 551,000 members and manages $32 billion of assets.

American Century Lands $530 Million Investment From Arizona State Retirement System

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The Arizona State Retirement System has invested $530 million with American Century Investments. As reported by the Kansas City Business Journal:

The investment will be placed in the American Century Non-U.S. Growth strategy, which looks for companies with a market capitalization of $3 billion or more, with accelerating growth and improving fundamentals. The overall portfolio typically invests in about 90 to 135 companies.

The investment management team is led by Senior Portfolio Manager Rajesh Gandhi, a 17-year financial services veteran who joined American Century in 2002.

The Arizona State Retirement Systems manage $34 billion in assets for 500,000 members.

Portfolio Manager Rajesh Gandhi explains his investment strategy in this video, courtesy of American Century.

Arizona Fund Gives CIO Retention Bonus, Contract Extension In Midst Of Federal Investigation


An Arizona pension fund, already embroiled in controversy, voted yesterday to sign its Chief Investment Officer to a two-year contract extension and gave him a $50,000 retention bonus. That bonus is in addition to a $75,000 bonus the CIO was already scheduled to receive later this year, on top of his $268,000 annual salary.

The move is controversial because the fund—the Public Safety Personnel Retirement System (PSPRS)—is in the midst of a federal criminal investigation over actions that happened under the CIO’s watch.

The fund’s Chief Investment Officer is Ryan Parham.

In January, the FBI began investigating the fund over suspicions that investment staff were inflating the value of real estate investments to trigger performance bonuses.

A federal subpoena, reluctantly released by the fund this week after a court order, indicates the inflated assets had to do with investments made with Desert Troon Companies.

According to the Arizona Republic, Ryan Parham was directly involved with Desert Troon Companies investments.

The Arizona Department of Administration, which approves state contracts, has already voiced its apprehension about Parham’s contract, especially in light on illegal raises given earlier this year by the fund. From the Arizona Republic:

The Arizona Department of Administration, prior to Monday’s vote, formally raised concerns about the contract. However, the state does not have the power to reject it outright. All employment contracts, however, need formal review from ADOA.

Administration Department Director Brian McNeil in a July 31 letter to the trust said he was not giving any “formal consultation” on the contract until the board clarifies its intention to extend Parham’s contract.

The board by a 3-2 vote (with two members absent) on Jan. 15, authorized Hacking to negotiate a contract extension with Parham, but Hacking did not do so. Hacking was forced out on July 16.

The trust submitted Parham’s amended contract to the state two days later.

McNeil said in the letter his department has concerns about the “significant gap” of time between the board’s action and contract submittal. In addition, McNeil said, he’s concerned about “the circumstances surrounding the days/weeks prior” to receiving the contract.

Phoenix City Councilman Sal DiCiccio is calling for the Attorney General’s Office to investigate the raises given by PSPRS over recent months.

“This is insane. They have the worst financial record of any of the (state) funds, and they are giving him a bonus?” said DiCiccio.

Big Payout, Benefits for Arizona Fund Boss Fired for Misconduct

Pension360 has been closely following the story of Jim Hacking, the recently fired Director of the Public Safety Personnel Retirement System. He’s been embroiled in trouble of late, as his fund is in the midst of an FBI criminal investigation—centered on claims that the staff inflated real estate investment values to trigger bonuses—as well as a workplace investigation spawned from sexual harassment allegations.

When he gave illegal raises to five employees on his investment staff earlier this year, it was the last straw. He was placed on administrative leave and fired shortly after.

But he won’t be leaving without some handsome benefits. Those include a severance package, a pension, and the promise that the Retirement System will pay all Hacking’s legal bills and travel expenses.

From the Arizona Republic:

Jim Hacking, a former Arizona public-safety pension administrator who authorized illegal staff pay raises, will receive a severance of roughly $107,250, an annual pension of $86,704, and a commitment to cover all his bills should he be named in “any legal proceeding.”

Other records the newspaper obtained detail the lifetime annual pension Hacking is projected to receive for his roughly nine years of employment, as well as a $16,406 payout for unused vacation time.

More specifics on the settlement, of which the Arizona Republic obtained a copy:

The settlement calls for:

• Hacking to be paid through Dec. 31.

• Hacking and the retirement system to agree to not sue each other.

• The retirement system to pay all “reasonable” travel expenses should Hacking, who has a home in St. Paul, Minn., be required to attend a meeting, deposition or hearing in Arizona.

• The retirement system to cover all of Hacking’s potential legal costs.

“Should Mr. Hacking be personally named as a defendant in any legal proceeding arising out of or relating to actions taken in the course and scope of his employment, the system agrees to fully defend and indemnify Mr. Hacking against such claim(s), including court costs and attorneys’ fees,” the settlement reads.

Some additional background and context on this case from the Republic, in case you need a refresher:

Hacking’s departure comes after a year in which four high-level staff members quit amid allegations that the trust used inflated real-estate values in annual reports to improve its financial performance and trigger bonuses. Hacking denies the allegations.

The PSPRS board in December unanimously voted to extend Hacking’s contract by one year, even though the four staff members had resigned between June and September because of the real-estate controversy.

Tobin executed Hacking’s extension on March 11. That was four days after the board hired a criminal defense attorney to deal with a federal grand-jury subpoena in relation to an FBI investigation.

Hacking in November sought raises for five employees. He told the board the hikes were to replace a controversial bonus program the board had suspended. And, Hacking noted, his staff was doing more work with the exodus of the other employees.

A divided board approved the raises, but it also needed approval from the state Department of Administration under a 2012 personnel reform law Brewer pushed through the Legislature.

The Department of Administration had held off approving those raises because of the numerous controversies. In early July, The Republic asked PSPRS the status of those raises and was told the ADOA had approved them.

Department officials told the newspaper that the ADOA never approved the raises, then began an investigation. Although Hacking had actively negotiated with the ADOA this year on the raises and led state personnel officials to believe they had not gone into effect, Hacking ordered his human-resources director to implement the raises in December, according to trust records.

Hacking, 68, will receive a five-figure pension because, as PSPRS administrator, he oversaw the Elected Officials’ Retirement Plan and was entitled by law to receive a pension from that system, even though he never was voted into public office.