HONOLULU May 25 The city of Detroit may be
facing a deepening financial crisis but that hasn't stopped four
trustees of its public pension funds from spending $22,000 of
retirement system funds to attend a conference in Hawaii this
The trip 4,500 miles west to a four-star resort on the
world-famous Waikiki Beach in Honolulu doesn't sit well with the
top officials now running Detroit's finances under an emergency
order from the state of Michigan. Emergency Manager Kevyn Orr
has not ruled out a bankruptcy as the city struggles under a $15
billion debt burden, which is being strained further by its
hefty pension obligations.
"It especially doesn't look good when you have city
employees, police, firefighters having taken pay cuts," said
Bill Nowling, spokesman for Orr. "Middle-class, blue-collar
workers, their dream vacation when they retire may be a two-week
trip to Hawaii - they don't associate Hawaii with a place you go
The four trustees from Detroit were among hundreds of
pension officials from around the country who traveled in the
past week to Honolulu for the annual convention of the National
Conference on Public Employee Retirement Systems. Nowling said
that Orr's team did not think they had the power to prevent the
John Riehl, a senior sewage plant operator and 34-year
Detroit employee, is one of the four. The cost fell within
continuing education guidelines set by the legislature, he said.
"It's one of these things we trustees must do to stay on top
of the field," Riehl said. "It's important that we participate
in these conferences. The stakes are too high."
Of the three other trustees from Detroit, one declined to
comment and two others could not be reached for comment.
NOT A VACATION
The two delegates from the Detroit Police and Fire
Retirement System attended for business, not pleasure, the
fund's spokesman Bruce Babiarz told Reuters. "These are
intelligent folks there to do a job, not there to vacation."
The two trustees from Detroit's General Retirement System,
including Riehl, attended because the knowledge gained "will
assist them in prudently executing their fiduciary
responsibilities/obligations," spokeswoman Andrea Kenski said in
Usually the conference captures little outside attention.
This year, though, it has faced criticism for its choice of
venue, the Hilton Hawaiian Village Waikiki Beach Resort with its
five-acre salt-water lagoon, five swimming pools, and flamingos,
penguins and turtles.
Some funds boycotted the event, saying it sent the wrong
message, particularly at a time when many pension systems face
funding shortfalls and the finances of the cities and states
that sponsor them remain on shaky ground.
BOOKED BEFORE THE CRISIS
The criticism irks Hank Kim, the conference organizer's
"It was completely unfair," Kim said. "The coverage was,
'It's Hawaii.' It's blatantly inappropriate."
The decision to hold it in Hawaii was made before the
financial crisis thrashed the portfolios of the nation's public
pensions and raised continuing concerns about their long-term
obligations, how to meet them and who should pay.
Last year, the group held the conference in New York, where
room costs were nearly twice the Honolulu rate, Kim said.
Among those attending is Shawn Curry, a homicide detective
and trustee for the $144 million Peoria Police Pension Fund in
Illinois, who said it was cheaper than New York. "Our fund
decided last year not to send anyone because the costs in New
York were so high. When we looked at this year, there was so
much of a cost savings we decided to come."
"The only negative is the airfare," said George Mitchell,
chairman of Florida's Pompano Beach General Employees'
Retirement System, with $139 million in assets. "The hotel is
very reasonable and has everything you need, so you don't have
rent a car and get everywhere in taxis."
Not everyone came on their fund's dime.
Michael Grodi, chairman of Michigan's $183 million Monroe
County Employees Retirement System, attended thanks to a grant
from the organizers because the fund would not cover the cost.
"The appearance was just not good," Monroe County
Administrator Michael Bosanac said of the decision not to send
Grodi at the fund's expense. "It doesn't conjure up the image of
a hard-working conference."
"These are not junkets," Grodi countered. "We are getting
educated to make decisions and have huge responsibilities."
Among the conference's sessions were panels to help reframe
the pension funding debate and justify the assumptions that
dictate funding levels, which have come under increasing
scrutiny in recent years.
One well-attended session covered how to avoid front-page
scandals. According to presenter Lydia Lee, a pension attorney
from Oklahoma, the session touched on a topic familiar back in
Detroit: The indictment this spring of two former city pension
officials for an alleged $200 million bribery and kickback
scheme, in a case that will come to trial next March.