Pension Board’s Travel Policy to Undergo Review

Travel expenses for the Orange County Retirement Board have increased dramatically over the years--from just $716 in 1978 to more than $47,000 in 1990, an examination of county records show.

On Thursday, meanwhile, in reaction to criticism over a recent 26-day European trip, pension board Vice Chairman Victor Heim asked for an internal review of the panel’s travel policy.

“In view of the circumstances surrounding the recent investment committee’s trip, I believe it important that the public is made aware of this board’s position and proposed action,” Heim said.

But Heim also defended the concept of “due diligence” trips, in which board members travel to various cities around the country and overseas to check on the pension system’s investment funds.

Heim said that with the pension system growing so rapidly, it was important for board members “to be knowledgeable and informed.”

Records in the county auditor’s office show that the nine-member board, which manages a $1.5-billion pension fund for most of the county’s 20,000 employees, has broadened its travel since fiscal year 1978--the earliest for which records are kept--with recent trips to such locales as Lake Tahoe, Philadelphia, Palm Springs, St. Louis and Hawaii.

In 1987, for example, travel expenses reached $34,843, more than double the $14,894 recorded the previous year. In 1990, travel expenses were $47,711.84.

So far this fiscal year, which ends June 30, the board’s travel expenses have been $42,436.09. That does not include the European trip, which cost an estimated $15,000 for four board members, the fund administrator, an investment adviser and two others.

One board member, Keith Concannon, who made the European trip, said the increased travel has been necessary because of the increasing diversity of the pension board’s investments, which require careful monitoring.

In past years, “we weren’t quite aware of our fiduciary responsibilities,” he said, noting that while the board’s travel budget has increased, so has the total worth of the pension fund.

Concannon, however, said he supported a review of the board’s travel policies.

“I’m always willing to take another look,” he said. “I have no problem with it. . . . (But) I’m not going to give up my fiduciary responsibility here.”

Robert L. Citron, the county’s treasurer-tax collector and a pension board member, said members began traveling more extensively at the direction of Mary-Jean Hackwood, the pension system’s administrator, who joined the staff in 1987. Records show that for fiscal year 1988, the pension board spent $43,994 in travel and transportation.

Hackwood, who had worked for public pension systems in Missouri and Alaska, “felt board members should get more involved, and go and visit these people who are managing these funds . . . particularly in regards to real estate investments,” Citron said. “So that involved more trips.”

Hackwood was unavailable for comment Thursday.

Citron, who heads the board’s operations committee which will review the travel policy, has criticized the practice of sending so many board members on each trip.

Thomas Bogdan, assistant retirement administrator, said the trips are necessary because the pension board is investing money with more fund managers than ever before. For example, while at one time, the pension board had only three or so fund managers, it now has at least 23 who manage a variety of portfolios, he said.

Recent reports that pension funds in other cities and states have suffered serious losses, Bogdan said, “puts everybody on notice that they have some liability. . . . I know this board takes its responsibility very seriously.”

Others who have criticized the pension board for the European trip said they were pleased that the travel policy will undergo a review.

“I don’t think anyone in the public buys that these expenses were necessary,” said County Supervisor Roger R. Stanton, who along with his colleagues appoints four of the pension board members to their posts every three years.

But upon hearing of the dramatic increase from 1978 to the present in the panel’s travel budget, Stanton said: “Boy, that’s enlightening. There is absolutely no justification for that.”

Shirley Grindle, a former county planning commissioner who monitors Orange County’s campaign reform laws, was distressed to learn of the tremendous increase in the pension board’s travel budget.

“That’s awful. . . . It is so disappointing to me to see how many people get into the positions and do this,” she said. “I don’t know what’s the matter with people.”

And on hearing that the board members defend the high volume of travel as being part of their fiduciary responsibility, she said: “That is just so much hindsight to justify something now that it has become public knowledge and has put them in an embarrassing position.”

Times staff writers Jim Newton and Matt Lait contributed to this story.