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Sunday, August 14, 2005

Ind. Gov't. - PERF back in the news

The Fort Wayne Journal Gazette had this item yesterday in its "Cheers & Jeers" column:

JEERS to Indiana Public Employee Retirement Fund officials for approving a secret $212,000 settlement with a former investment officer they fired in 2003. More JEERS to the fund’s trustees for finally taking “public” action on the settlement in February in a way that still hid the payment. According to the Indianapolis Star, after state auditors noted that the trustees had failed to approve the settlement in a public meeting, the trustees in February acted to approve actions related to “any and all litigation, proceedings, claims and/or disputes.”

State lawmakers contributed to this culture of secrecy in 2004 by outrageously making secret the pension records of nearly 20,000 state employees – including their own.

The secret settlement was reported in an Indianapolis Star story by Michele McNeil last Friday, August 12. Some quotes:
The state's public pension fund paid its former chief investment officer $212,000 to leave in a secret settlement brokered two years ago that's only now become public.

Patricia J. Gerrick, who was hired in 2001 and left in 2003, was in charge of investing $10 billion in public money on behalf of the 250,000 members of the Public Employees' Retirement Fund.

The settlement is becoming public now because the State Board of Accounts earlier this year took issue with the secrecy surrounding the payout in an audit of the pension fund. The Indianapolis Star obtained a copy of the settlement after repeated requests under the state's public records law.

Auditors found that the fund violated state law by failing to ratify the settlement at a public meeting of the board of trustees. Although public officials can discuss personnel matters in private, state law calls for final decisions to be made at a public meeting. * * *

Gerrick was lured to Indiana's public sector from New York in 2001 with a contract unusual for state workers, promising at least $150,000 a year, relative job security and a lucrative severance package. The pension fund is a quasi-public agency that has more latitude in hiring and salaries than a traditional government agency.

Her departure in 2003 wasn't a smooth one. The fund was embroiled in a criminal investigation that started when state officials learned the fund had unknowingly hired a convicted identity thief for a top job. The scandals didn't involve Gerrick's department, which was credited with boosting investment returns during her tenure.

Former Executive Director Craig Hartzer, hired to reform the fund, started building his own team and forced many top officials out. On Oct. 16, 2003, according to a termination letter, he fired Gerrick.

Two weeks later, [Gerrick] filed a discrimination complaint with the federal Equal Employment Opportunity Commission. On Nov. 7, 2003, she agreed to withdraw her complaint and never seek a job at the fund again. In exchange, she resigned instead of being fired and was paid $212,000, according to the agreement. * * *

Gerrick, now the investment officer at North Carolina's public pension fund, didn't return calls for comment.

When auditors noted the law violation, the trustees approved the settlement in a manner that was no more enlightening for the public. At a February 2005 meeting, more than a year after the settlement was signed, the board approved a sweeping motion that ratified actions regarding "any and all litigation, proceedings, claims and/or disputes." * * *

But because the pension fund is a quasi-public agency that operates outside many of the rules and bureaucracy of state government, the settlement went largely unnoticed. The personnel department doesn't handle the fund's employees. The state auditor, for the most part, doesn't cut the fund's checks. And the board didn't approve the settlement, at the time, at a public meeting.

As for the General Assembly making their pension records secret in 2004, the ILB has had a number of items on this 2004 incident, beginning with this 3/11/04 entry ("Questions rasied about PERF privacty matter"), and ending with this 2/10/05 entry ("What is being done to resolve the 'PERF privacy'issue from last session?") that includes links to all the earlier entries on the matter. Plus this 3/15/05 entry ("Prerogatives of legislators and their staffs.")

Posted by Marcia Oddi on August 14, 2005 07:25 AM
Posted to Indiana Government