The Truth About LACERS - The LACERS Board - Part 2

April 16 2020

Written by Tom Moutes.

(PART OF AN ONGOING SERIES)-“I can’t fit this into my head”. . .“My head hurts”. . .“I just completely do not get it!”

These are quotes from a couple of members of the LACERS Board. Yes, the LACERS board that is charged with investing $18 billion to help ensure the retirement security of over 46,000 active and retired LA City employees.

It’s not entirely these Board Members’ fault. Perhaps they should never have been appointed by the Mayor to serve on the LACERS Board. Or, perhaps, the City Council should have done a better job of vetting them before approving their appointments.

A reporter should investigate the very thin resumes of the Mayor’s appointees to the LACERS Board. Currently, there is one economist serving on the board. Arguably, that is a good background. Former board member, Jaime Lee had a very good background to serve as a LACERS Board Member.

But what about the other appointed Board Members? Are they really qualified to make investment decisions for over $18 billion and to deal with a $6.5 billion funding hole? Are they qualified to make difficult decisions that will have significant impacts on the City’s ability to provide services to its residents and the promised pension benefits to over 46,000 active and retired members? If they are unable to perform well in their Board positions, it puts LACERS and the City at risk.

You would hope that the Mayor might appoint a retired investment attorney or a former high-level pension executive as past mayors have. Maybe an auditor or an actuary to help make sure the pension system is being run appropriately. Maybe, at least someone who has run a large enterprise or company. Perhaps, the Mayor doesn’t want Board Members with relevant experience. If that is the case, wouldn’t you wonder why?

Well-qualified Board Members can make smart decisions to help secure the retirement benefits City employees have been promised. Those same smart decisions will help tax-paying City residents in the long run as they can help minimize the annual City contribution through well-informed investment decisions, thus preserving needed funds for City services.

Perhaps, the City Charter should be changed to reduce the number of LACERS Board Members the Mayor can appoint if the Mayor is not willing to or capable of appointing well-qualified candidates.

Perhaps the City Council could do a better job of vetting pension board appointments to ensure that only well-qualified Board Members are confirmed. Perhaps, the Neighborhood Councils could appoint one of the Board Members instead of the Mayor. That would give the citizens a voice and ensure the Mayor can’t stack the deck, which can put both pensions and City services at risk.