Retirement Fund Audit Gets Review : Report: The study of how the county employees’ pension fund is being managed was ordered before controversy over European trip.

A management audit ordered late last year by the county employee pension board, under fire for its extensive travel, will provide a “fair assessment” of how the pension fund is being managed and will offer recommendations for improvements, officials said Wednesday.

Details of the audit are contained in a draft report, which is now in the hands of the pension board’s oversight committee. A final report is expected as early as next week.

“I think it’s going to be a fair assessment of the system, which is all we ask for--what works and what doesn’t,” said pension board Chairman Patrick Brunner. “The intent of the board was to see if we’re doing what we should be doing, if we can do anything to improve the system. That’s the directive we gave the company.”

Brunner also issued a statement Wednesday concerning the board’s commitment to reviewing its travel policies after the criticism over a European trip and to emphasize support of fund administrator Mary-Jean Hackwood.

The management audit, which is being conducted by the accounting firm KPMG Peat Marwick, was ordered in December to review the Orange County Employee Retirement System’s operations and management.

While several pension board members said the audit was not ordered exclusively to examine Hackwood’s performance, it will look at her role as manager of the 26-member staff that oversees the $1.5-billion pension fund.

“I wouldn’t suggest that the motivation behind having that audit done was predicated on anything she had or had not done,” said pension board member Thomas Lightvoet. “I would assume, however, that a big part (of) the report addresses the issues she’s directly involved in.”

Lightvoet and other board members have praised Hackwood for improving the pension fund for its members. However, several have said that some of her office procedures might have led to the controversy over the recent trip to Europe that Hackwood and four board members took. After their return from the 26-day trip, county Auditor-Controller Steven E. Lewis rejected $5,000 in personal expenses.

The European trip set off a barrage of criticism from county officials and has forced the pension board to reexamine its travel policy. Many of the complaints have focused on Hackwood, the fund administrator since 1987.

“She (Hackwood) does a magnificent job on the investment side,” said Lightvoet, a private financial investor. “But I’m sure there are areas that need improving.

“I would like to have had it (the audit) ready a month ago because maybe we could have avoided all this pain and aggravation we’re going through now,” Lightvoet said.

Brunner and other board members said the audit was prompted by the pension fund’s rapid growth in the past five years or so, both in terms of its value and in how many people it serves. It has about 20,000 active members and 4,800 retired members, according to Thomas Bogdan, assistant administrator.

In his statement issued Wednesday, Brunner said:

“Issues have been raised regarding travel by board and staff at the expense of (the employees retirement system), inappropriate expenses sent to the auditor-controller for payment and the administrator’s past work history,” he said in the statement.

Brunner said that while board members believed the trips are “important and necessary” in the management of the pension fund’s holdings, they would “address the issues raised in the past several weeks in a positive and decisive manner.”

On the subject of Hackwood’s performance, Brunner said: “The board’s decision to employ the current administrator was based on over 30 years of pension fund experience. It is important to note that positive financial and organizational changes benefiting both the membership and the County of Orange have been brought about during her administration.”