O.C. Auditor Confounded by Pension Panel

Orange County’s chief auditor said Friday that members of the county pension board, criticized for submitting $5,000 in personal expenses from a recent trip to Europe, are notorious for filing questionable or incomplete travel records.

“We spend more time and energy trying to decipher their expense accounts than on anyone else’s,” Auditor-Controller Steven E. Lewis said.

The Employee Retirement Pension Board, an independent agency that manages a $1.5-billion fund on behalf of 20,000 county employees, has been criticized for its travel practices since Lewis’ office refused to reimburse personal expenses incurred by several board members during a 26-day trip to Europe in April.

Board officials have said charges for opera tickets and alcohol during that trip were mistakenly submitted to the auditor’s office by a new pension agency accountant.

But travel records inspected this week show that county auditors and accountants frequently red-pencil pension board expense accounts with questions about specific charges and have rejected some credit card charges that they believed were not allowable under county rules.

Pension Administrator Mary-Jean Hackwood said Friday that she is unaware of any general problem in the way her agency submits expense accounts for county reimbursement.

“I don’t know how much time they spend on us,” Hackwood said. “But if there are problems, I would hope that they would put it in writing.”

Many of the auditors’ questions are related to personal expenses during out-of-town trips taken by board members in which entire hotel bills are placed on board-issued credit cards. Others have to do with the costs of air fares or meals.

“They don’t live like you or me,” Gary Leach, a manager in the auditor’s claims and disbursements division, said of the board members. “We’re chasing our tails trying to keep up with them.”

For example, records show that auditors have raised questions about several recent board expense reimbursement requests:

* After an Aug. 16 trip that Hackwood made to St. Louis to meet with a financial consultant, the pension administrator submitted an expense of $1,066 for a first-class airline ticket. Auditors rejected the claim but agreed to pay $966 after the travel agency that booked the flight said that was the cost of a standard coach fare.

* After a trip May 9 through 11, 1990, to a conference in Concord in Contra Costa County, Hackwood turned in a credit card charge for $2,226.57, which included hotel bills for herself and two board members. The auditor’s office questioned several long-distance phone charges, room-service fees and other charges on the bill. But the office agreed to pay the tab after pension officials indicated that all costs were related to business.

* After Hackwood and nine board members took a trip to Hawaii for a conference Nov. 10 through 16 last year, auditors questioned why her air fare cost 40% more and her hotel room cost 25% more than anyone else’s. Auditors said Friday that they are still negotiating with pension fund officials over how much of that bill the county will pay.

With less than a month to go until the end of this fiscal year--the new year begins July 1--the pension board has already spent a record $59,000 on travel, with at least $15,000 going to pay for the 26-day European trip. During the 1989-90 fiscal year, panel members spent $47,711 on several trips to such places as Hawaii and Disney World in Orlando, Fla., to attend conferences and educational seminars or check with fund managers in other cities.

Pension fund administrators have said they need to take the trips to monitor investments placed with managers throughout the nation and abroad. But the uproar over the European trip prompted board members Thursday to call for a review of their travel policy.

Auditors said that not only is the volume of pension board travel larger than for other county agencies or departments that process their expense accounts through the auditor’s office, but the board members also do not follow the same expense account procedures that other county figures use.

When questions arose over the April trip to Europe, after pension fund officials submitted nearly $20,000 in total expense, Lewis indeed put some of the auditors’ complaints in writing.

In a letter to Hackwood rejecting $5,000 in personal expenses, Lewis complained about the board’s use of credit cards, which he believes is at the heart of the auditing problems.

“I am extremely concerned by retirement’s submittal of the attached credit card billings for payment,” Lewis wrote. “Because of the above difficulties and others, I am opposed to the use of county credit cards.”

Although they operate as an independent agency with separate travel policies, retirement board members must undergo the same scrutiny that is given to other county government officials.

The pension fund system has a Mastercard account that bears the department’s name as well as Hackwood’s. Three cards are issued on the account, Lewis said, and travel expenses are often charged to them.

No other county officials or employees have access to county-issued credit cards, Lewis said, although some officials have use of county-issued gasoline charge cards.

When other county employees make business-related expenditures, they must file a standard form justifying the cost with Lewis’ office to be reimbursed. If the county business requires travel, which means spending large amounts of money, employees can ask for a cash advance, then file the standard form at the end of the trip to account for spending, Lewis said.

Pension board members and staff, on the other hand, place most travel expenses on the agency’s credit cards, then submit the entire Mastercard bill as an expense claim, without the standard expense form that other county officials must file.

Lewis complained that board members often leave it to his staff to figure out which expenses are related to business because Hackwood and others who use the credit cards often use them to pay for personal services, as well.