"Secret" Settlement at IPERF Comes to Light

August 15, 2005 (PLANSPONSOR.com) - Indiana's Public Employees' Retirement Fund paid its former chief investment officer $212,000 to leave in a secret settlement brokered two years ago that has only just come to light.

According to the online version of the Indianapolis Star, Patricia J. Gerrick, who was hired in 2001 and left in 2003, was in charge of investing the $10 billion IPERF.   The Star reports that Gerrick was fired in 2003 after a new executive director, Craig Hartzer, began bringing in his own team, but that she promptly filed a discrimination complaint with the federal Equal Employment Opportunity Commission.   The settlement allowed Gerrick to resign instead of being fired, handing her the severance package in question.   She eventually wound up in a similar position at North Carolina’s $60 billion fund (see  Tar Heel Fund Gets New CIO ).  

According to the Indy Star report, the Indiana settlement is becoming public now because the State Board of Accounts earlier this year took issue with the secrecy surrounding the payout in an audit of the pension fund.   The Indianapolis Star obtained a copy of the settlement after repeated requests under the state’s public records law.

What’s at issue now is not the settlement itself, or the actions behind it, but the fact that auditors found that the fund violated state law by failing to ratify the settlement at a public meeting of the board of trustees.   When auditors noted the violation, the trustees at a February 2005 meeting, more than a year after the settlement was signed, approved a sweeping motion that ratified actions regarding “any and all litigation, proceedings, claims, and/or disputes.”

PERF Problems

The controversy is the latest in what has been a series of embarassments for IPERF, including the hiring of a chief benefits officer who was a convicted identity thief, temporary staff who stole money and Social Security numbers related to their employment at the fund (see  Audit Finds 23 ‘Significant’ Problems at PERF ), and a series of issues uncovered in the ensuing fund audits (see  Audit: Indiana Fund Still Beset With Problems ).  

Hartzer, whose actions triggered Gerrick’s departure, was brought on board by then-Governor Frank O’Bannon to address problems at the fund.   He resigned after the 2004 elections, and David Adams was appointed by now-Governor Mitch Daniels to replace Hartzer in March (see  Indiana Taps New Pension Fund Chief ).