7 Min Read
* 'It comes down to image' - Milwaukee official
* California teachers' fund urges 'non-resort' events
* Honolulu booked before the financial crisis
By Jim Christie
SAN FRANCISCO, March 7 (Reuters) - Budget cuts and austerity may be on the agenda when public pension fund officials hold their annual conference in May, but delegates will be able to take some comfort from their surroundings on the palm-fringed beaches of Waikiki.
The National Conference on Public Employee Retirement Systems' leadership did make the decision to hold their 2013 annual conference at a luxury resort in Hawaii before the financial crisis struck, hammering public pension funds' investments and leaving them with a funding gap of at least $770 billion.
Now that decision has put them in a tough spot, and some NCPERS members say they can not be seen jetting off to Hawaii in such tough economic times as these.
"Hawaii is just not the right message to send at this time," William Raggio, interim general manager of the Los Angeles Fire and Police Pensions, wrote in an email to the fund's proposed delegates.
Public-sector conferences are under scrutiny after the U.S. General Services Administration spent more than $800,000 on a four-day Las Vegas bash in 2010 for 300 employees. At the same time, anxiety is high over public pension funds, which have unfunded liabilities that range from $766 billion, according to the Pew Center on the States, to as much as $2.2 trillion by Moody's estimate.
NCPERS, which pegs itself as the largest trade association for public sector funds, is holding its five-day conference in May about as far as it's possible to go from its home base in Washington, DC, without leaving the United States - at the Hilton Hawaiian Village Beach Resort.
A four-star resort along Waikiki's widest stretch of beach with a deluge of pools and water slides, the resort is surrounded by palm tree gardens that boast South African black-footed penguins, flamingos, sacred ibis, chameleons, macaws and parakeets.
In Wisconsin - a state which boasts its own beaches on the shores of Lake Michigan - the city of Milwaukee employees' retirement system has ruled out participating.
Deputy Director Beth Conradson Cleary said the $4.2 billion fund has issues with "exotic" Hawaii: "The conference is excellent. It comes down to image."
NCPERS said it booked Honolulu in 2006 as "the best, most affordable offer." Had NCPERS canceled, as its leadership considered, the group would have lost $500,000 on the booking, said NCPERS Executive Director Hank Kim.
"Then we would have still had to put on a conference and that would have added costs," Kim said, adding that NCPERS's annual conferences, which draw about 1,000 attendees, typically cost $600,000 to $700,000 to put on.
"Objecting to Honolulu because it has beautiful beaches is like objecting to New York because it has Broadway and Times Square or objecting to New Orleans because it has jazz clubs and great food," NCPERS said in a statement.
In California, where the debate on the public pensions shortfall is a flashpoint, the California Watch website was the first to report on the movement to boycott the conference.
The $161 billion California State Teachers' Retirement System approved sending a board member but she declined to attend and the fund has urged "non-resort" locations for NCPERS conventions, spokesman Michael Sicilia said.
Steve Glazer, a Democrat running for a seat in California's legislature, said "tone deaf is too nice" to describe the choice of Honolulu for the conference for pension fund trustees, administrators and staff whose expenses are footed by their funds.
"It reflects a lack of awareness...It says you're out of touch," said Glazer, Jerry Brown's top political adviser during his successful 2010 campaign for California governor.
The May 19-23 conference's preliminary agenda, which includes a welcome reception and workshops on investment strategies, disaster planning and corporate governance, allows for two hours per day of networking activities.
Registration fees of $650 to $750 for NCPERS members and $850 to $950 for vendors include breakfast, lunch, refreshment breaks and receptions. The program mentions an unspecified show on Wednesday night, while those who choose to stay through Friday can enjoy the hotel's weekly fireworks.
Hawaii may not be as pricey as critics assume, said Douglas Ducate, head of the Center for Exhibition Industry Research, a trade group for the conference industry.
Airfares within the U.S. mainland may be cheaper than flights to Hawaii and the time spent traveling shorter, but lodging costs may be lower in Honolulu than in some other U.S. top-25 destinations.
NCPERS said the Hilton Hawaiian Village Beach Resort in Honolulu cost 44 percent less that the accommodation paid for in New York last year.
In 2011, NCPERS held its annual conference in Miami. The 2010 conference was in Las Vegas and in 2009 the event was in Beverly Hills, California.
A round-trip flight on US Airways from Columbus, Ohio, where the state's school employees' pension fund is located, to Honolulu costs $750.28. Round-trip airfare on Delta Air Lines from Columbus to New York on the same dates would be $380.70, based on an online search run this week.
Lynn Wachtmann, a Republican Ohio House member, pans the School Employees Retirement System of Ohio for approving about $11,200 for three of its board members to attend the conference.
"For most Ohioans, a trip to Hawaii is considered a very, very, very deluxe trip," Wachtmann said.
Fund spokesman Tim Barbour said the $11,200 will cover conference registration, airfare, local transportation, lodging and meals, while the conference will help the Ohio fund's trustees make decisions later this year on asset allocation as well as reviewing actuarial firms seeking the fund's business.
Los Angeles County Employees Retirement Association Chief Executive Gregg Rademacher has no doubts about the value of sending two of his $41 billion fund's trustees to the conference.
"We think it is critical that trustees stay abreast of current trends and best practices in portfolio management," Rademacher said, adding that the conference meets his fund's policy that such events have at least five hours of substantive education daily.
The Fort Lauderdale General Employees' Retirement System will also send two trustees. "The location makes no difference, and it's a heck of a program," said David Desmond, the $511 million fund's administrator.
NCPERS's conferences are slated for San Antonio next year, New Orleans in 2015 and San Diego in 2016, Kim said.
Joe Nation, who researches pension fund finances at Stanford University, suggested more frugal locations. "Why are there never conferences or retreats in Newark?" said Nation, in reference to the gritty New Jersey city. "Do you have to be in Waikiki to learn about public pensions?"