Earlier reports from the Fort Worth Star-Telegram reveal what appear to be serious flaws in the oversight and safeguards protecting the fund, including a $6 million investment in a hedge fund that eventually collapsed and whose founder pled guilty to fraud. The city pulled out of the fund before its collapse, but overlooked several red flags, according to the Star-Telegram.
Council members said the reports reinforced the need for examining the fund. The fund has a projected $355 million deficit. Plans to review the fund, according to the Star-Telegram, include:
- An internal audit will be conducted by the city’s auditor to review the fund’s internal controls. The fund has not had such an audit since 1997.
- A “second opinion” actuarial assessment will be conducted by the city’s bond adviser. It will evaluate the calculations completed by the pension fund’s actuary, and see whether the assumptions the fund is using to determine how much money it needs to pay future retirees are reasonable.
- A best-practices review would be conducted by a pension-funding expert. That review would consider board governance issues, record-keeping requirements and other facets of pension funding.
“It’s not because we suspect anything is wrong,” Council member Jungus Jordan said of the reviews, in the news report.
Mayor Mike Moncrief zeroed in on the pension board. He said it may be time to make changes. Until now, the council has concentrated on making sure the board has representatives from all of the city’s employee associations. “I don’t think we have sufficient expertise in investments,” Moncrief said.