AGAWAM — The state commission that oversees public pension systems will hold weekly conference calls with the Hampden County Regional Board of Retirement and approve travel requests and expenses by board members under a set of oversight guidelines developed in the wake of a recent audit.
The Public Employee Retirement Administration Commission adopted and issued a temporary order outlining the steps Wednesday, according to a letter obtained by The Republican. The order “memorializes the preexisting protocols” established by the commission after the Feb. 16 release of the audit.
John Parsons, executive director of the state commission, said the order describes steps that were first put into place informally and provided to the retirement board and its executive director, Julianne Bartley. The letter about the order, which also calls on the board to create an internal control plan within 90 days, was addressed to Richard M. Theroux, the board’s longtime chairman and treasurer.
Parsons described the order as a natural follow-up to the informal conditions, and said it is not an indication of any new issues. The retirement board continues to be “cooperative, available and forthcoming” as they work to address the audit findings, he said.
“The goals of the order are twofold: while the board is addressing the findings in the audit, including establishing sufficient internal controls, PERAC will provide additional oversight, particularly in the areas where there were findings, and secondly; PERAC will be monitoring and advising the Board/staff on its resolution of the findings in the report,” Parsons said in an email. “We also wanted to update the member units on the additional oversight that is in place, and will be until further notice.”
Auditors examining the Hampden County Regional Retirement System’s operations during a three-year period from Jan. 1, 2014, to Dec. 31, 2017, flagged issues that included high bank fees and spending on services for the board’s website, questionable travel expenses and “unusual” contracts that paid over $250,000 in health insurance premiums to two part-time attorneys.
The commission’s order cited state law giving it the authority to impose new oversight conditions “upon reasonable belief that the investment or recordkeeping practices of any retirement board are not being conducted with reasonable care, skill, prudence or diligence.” Under those conditions, the letter said, the commission “may order such retirement board to take or cease from taking any action that in his/her judgment is necessary to protect the integrity of the retirement system.”
Members of the retirement board have said the system is sound, pointing to the system doubling its assets over the past decade.
The retirement board manages a system of more than 3,000 active members and 1,500 retirees and beneficiaries from 35 “member units,” which include employees of municipalities, housing authorities and regional school districts throughout Hampden County.
Under the temporary order, the commission will hold conference calls the retirement board staff to review the status of the audit findings and establish “internal controls relative to those findings.” Each month, the board will provide the commission with a package of financial documents, including copies of invoices and copies of all cash accounts with reconciliations, including bank statements.
The order also requires board members and staff to submit requests for out-of-state or overnight travel to the commission for approval at least one week in advance. “In addition, all requests for reimbursement for expenses related to travel may not be reimbursed until submitted and approved” by the commission, the order reads.
The commission’s letter did not set an end date for the order. Violations are punishable by a fine of up to $1,000 or imprisonment for up to one year.
Interim Hampden Town Administrator Bob Markel and Hampden Select Board Chairman Don Davenport said they both felt that the order was a welcome intervention by the commission, but renewed their calls for Bartley, Theroux and the other board members — Patricia C. Donovan, Karl J. Schmaelzle, Patrick O’Neil and Laurel A. Placzek — to resign.
“We would encourage PERAC to assign a monitoring team as they did in the Essex County Scandal and look forward to speedy investigation by the Attorney General and Ethics Commission,” Davenport wrote in an email, citing a 2011 audit of the Essex County retirement system that prompted a number of reforms.
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