More Top Picks Diffusers
player ready...Under pressure from legislators and an outraged public, the state’s second-largest public pension fund grounded its globe-trotting trustees Wednesday, eliminating foreign trips and restricting the number of travelers to domestic conferences.
The action by the $12 billion Illinois Municipal Retirement Fund follows a Tribune report describing how the eight fund trustees had taken at least 110 expenses-paid business trips over the last three years.
Thirty-one of those trips were abroad and many were to sunny and exotic locales.
At a special meeting called solely to address the travel controversy, the fund’s governing board voted unanimously to police its own trips, imposing rules that ban foreign travel by trustees and limit each trustee and staff member to attending no more than two conferences or seminars each year outside of Illinois. A maximum of three trustees or staff members will be allowed to attend any one conference.
The Tribune had found that many such conferences attended by the trustees were held in luxury hotels or resorts. Often, fund officials would show up for such events by the pack.
In one of the most profound changes, the board also voted to discontinue the practice of accepting free travel and lodging for conferences where the sponsors of the event–usually investment firms in search of fund business–pick up the tab.
Pension Board President Rita Miotti, a village official in south suburban Matteson, declined comment after the meeting. In a statement released later, Miotti acknowledged that the controversy had caused perception problems.
“The recent article in the baiduhai raised some issues regarding travel, and we wanted to address those issues quickly and directly,” she said, referring to the new travel limits. “. . . Although we believe it is important for trustees to see–firsthand–the various investments IMRF maintains in our $12 billion portfolio, we feel even more strongly that we must be sensitive to our members’ and employees’ concerns.”
Steve Sonnemaker, another trustee who has been a critic of the board’s far-flung travel, said he was “comfortable” with the changes.
“I think this will bring us in line where we can still do some traveling, still educate ourselves and save the fund possible embarrassment in the future,” said Sonnemaker, the Peoria County auditor. He has taken only three fund-related trips in recent years.
The Oak Brook-based municipal retirement fund manages the pension assets of more than 200,000 suburban and Downstate municipal workers and retirees.
It is unclear how much money the new restrictions will save the fund, which spent about $170,000 last year on trustee travel, with more than half specifically for trips to look at investments or attend seminars. Many trips taken by fund trustees in recent years were underwritten wholly or partly by investment firms or investment promotion groups that have picked up the tab for travel and accommodations in Tokyo, Istanbul, Prague in the Czech Republic and other locales.
The municipal pension fund’s travel practices contrasted sharply with those of other large pension funds, the Tribune found.
The $6.3 billion Illinois State Board of Investments, which invests pension assets for state workers, has nine trustees. In 1997, they took a total of four out-of-state trips and one abroad.
In Wisconsin, the state Investment Board oversees $49 billion in pension assets for government workers–four times the amount controlled by the Illinois municipal fund. Yet the board’s nine trustees took only seven business trips in 1997, including five to Washington, one to New Orleans and one to Russia, according to a spokeswoman.
Yet municipal fund trustees steadfastly had defended their travel, saying the trips were necessary to keep abreast of global investment trends or to assess potential investments.
In their spring newsletter, officials told members of the fund that trustee visits, whether to “the industrial park in Aurora or the shopping center in Atlanta,” were essential to “make informed decisions about the investments that secure your future pension.”
Trustee travel, the newsletter said, “is an investment in the future health of IMRF.”
But irate calls from pension fund participants as well as promises of a travel crackdown by House Majority Leader Barbara Flynn Currie (D-Chicago) prompted the trustees into a rethinking of their travel policy.
“My reading is that I can certainly understand why people think it’s excessive, and maybe it is,” Robert Cusma, the fund’s executive director, said last week as the drumbeat from Springfield over trustee travel intensified.
The new rules would not prohibit group travel to consult with investment advisers. Nor would such trips be subject to the two-trip-per-trustee limitations imposed on conferences or seminars.
In the past, several trustees and staff members would travel together at least once each year to meet with investment consultants and asset managers hired by the board to oversee its extensive portfolio of stocks and real estate investments.
More Top Picks Best Led Face Masks
It was the other trips, including travel to view investments, that raised concerns among legislators.
According to records obtained by the Tribune, five fund trustees, together with three top staffers, spent more than $15,000 on hotel bills last October during a weeklong inspection of fund investments in Britain. Later that month, four trustees were in Vancouver for a convention. Three flew to New Zealand in 1996 to check out timberland, and another two scouted potential almond groves in California last spring. Trustees also have ventured in trios to Hawaii, Puerto Rico and Carmel, Calif.
In 1997, Trustee Chris E. Martin, a licensed barber who serves as treasurer of Ogle County in northwestern Illinois, went to Palm Springs, Calif., London, Dublin, South Africa, New York, California’s San Joaquin Valley and Vancouver on fund business, records show. He also was in Hong Kong for a conference that coincided with its turnover from Britain to China.
Trustee Thomas Setchell, who serves as treasurer of LaSalle County, was often Martin’s traveling companion on those trips. But while Martin was in Hong Kong in late June, Setchell and several other trustees were the guests of real estate investment giant ERE Yarmouth at a dude ranch near Wyoming’s Medicine Bow National Forest.