LA WATCHDOG--On July 9, the members of the Board of Administration of the Los Angeles City Employees Retirement Systems (“LACERS”) unanimously approved the expenditure of $7,500 to send Board President Cynthia Ruiz to Paris, France to attend the Principles in Responsible Investment in Person 2019 conference.
The purpose of this conference is to discuss the role that environmental, social, and (corporate) governance (“ESG”) issues play in investment performance.
While the cost of this $7,500 junket is less than chump change for the $17 billion pension plan, nevertheless it sets a bad example for this retirement plan that is an increasing drag on the City’s budget, crowding out basic services such as the maintenance of our urban forest, streets, and parks. LACERS is also underfunded by over $9 billion, resulting in a funded ratio of only 65%, a dangerously low level, especially given the 10 year bull market. (Note: This assumes a more realistic, but still optimistic investment rate assumption of 6.25%.)
During the meeting, the respected and now retired previous General Manager of LACERS told the Board that this trip was essentially a waste of money and that there were better and cheaper alternatives here in the United States.
It also appears that in September, Ruiz attended a San Francisco conference sponsored by the same organization that only cost $1,140.
And if anybody from LACERS should attend this conference, it is its investment professionals, not Ruiz who does not have the investment knowledge or experience to analyze the financial impact of ESG investing.
But more importantly, Ruiz would be well advised to consider that impact of ESG investing had on CalPERS, the State’s $366 billion underfunded pension plan, which lost billions by divesting from “socially unacceptable” stocks.
Rather than flying off to Paris to hobnob with all the swells in the environmental and social justice community, Ruiz would be well advised to spend more time at home listening to LACERS investment professionals. And if the Garcetti appointed Ruiz, a long time veteran of City politics and its shenanigans, does not have the good graces to blow off her Paris boondoggle, Mayor Garcetti should step up and veto this expensive junket.
(Jack Humphreville writes LA Watchdog for CityWatch. He is the President of the DWP Advocacy Committee and is the Budget and DWP representative for the Greater Wilshire Neighborhood Council. He is a Neighborhood Council Budget Advocate. He can be reached at: firstname.lastname@example.org.)