Here is a story showing why taxpayers are really P.O.'d.
The state of Mass has 106 public pension plans for govt employees. That's right, 106!
Unbalanced books
By Steve Bailey, Globe Columnist, 1/28/2004
Markets go up and markets go down, and with them the fortunes of your pension fund. Some manage the ebb and flow of the markets better than others, but along the way we expect every pension fund to balance its books -- keeping track of basic stuff like money coming in and going out -- just as we balance our own checkbooks.
You can bet it happens at Fidelity Investments, down to the penny. The backwater world of the state's 106 public pension systems, however, is a different story. Take, for instance, the Norfolk County Retirement System, which was overseen until a year ago by our current state treasurer, Tim Cahill.
The state agency that regulates pension funds, the Public Employee Retirement Administration Commission, is nearing the end of its regular three-year audit of the Norfolk system from 2000 to 2002 and it will not be awarding any blue ribbons for accounting to the $400 million fund. ''I was shocked myself when I saw the report,'' says Norfolk Treasurer Joseph Connolly, who succeeded Cahill in 2003. What the commission found, says Connolly, is that many of the fund's accounts had not been reconciled for a year and a half. At one point as many as 84,000 checks, representing $20 million, to Norfolk retirees and others had not been cleared, according to Brian Howland, the system's former chief administrative assistant who spent much of last year trying to balance the books. The unaccounted funds have now been whittled down to about $3.1 million, Connolly says, citing a draft of the commission audit. ''We feel strongly the money is there. It is just in accounts we have to find,'' Connolly says. ''We will find the money.''
What went wrong? Connolly says Paula Vignoni, the retirement system's administrative assistant, was charged with reconciling the books, and simply didn't do the job. Vignoni's reward for a job not done: a new $44,000-a-year job at the state Lottery. Vignoni, whose husband, John, was Cahill's campaign treasurer, was among Cahill's early hires after the election. ''It was assigned to me,'' she said yesterday. ''I was never trained for that.''
In a statement, Cahill's office said such issues are common findings in audits. ''He is confident that the Norfolk County board and the staff can resolve these issues to the satisfaction of the auditors,'' the statement said.
The Norfolk problems raise a larger question: What is Massachusetts doing with 106 public pension systems anyway?
In a consolidating financial world where greater scale means lower costs, the towns of Adams and North Adams run separate retirement systems. So do Quincy, Weymouth, Hingham, and Hull. Each has a board, and a lawyer, and a consultant who helps pick the money managers who pick the stocks for each system. Many funds send out their own checks to retirees. And most have someone like Paula Vignoni, who may or may not keep track of the money as it comes and goes.
These are cozy fiefdoms where change is not in the interest of any of those who feed at the trough, including the elected officials who sit atop them. Just ask Treasurer Tim, who used Norfolk as a steppingstone to the State House. But it should matter to the 350,000 people who depend on the funds for benefits. They are paying the costs of our antiquated system in higher money management fees and higher administrative costs -- to say nothing of the dinners and golf outings for all the insiders.
''That is a political issue, way beyond me to determine whether there needs to be 106 systems,'' says the commission's executive director, Joseph Connarton. It is, in fact, just the kind of issue that should be of interest to our governor, who made his name and fortune in the money management business and has staked his political career on making government work more efficiently for those of us who pay the bills.Steve Bailey is a Globe columnist. He can be reached at 617-929-2902 or at bailey@globe.com.
boston.com
This story ran on page D1 of the Boston Globe on 1/28/2004.
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