State Audit: Free Meals Abound at LSERS

February 23, 2005 ( - An internal audit requested by the Louisiana School Employees' Retirement System (LSERS) has shown that potential conflicts of interest exist within the fund due to numerous instances of trustees and staff accepting meals from investment managers and consultants.

According to the Associated Press (AP), the audit identified $8,135 in meals that such employees took over the past 15 months from investment advisors an apparent conflict of interest because it is often the job of such employees to hire people to manage the fund’s money. The audit also said the number might be higher, because some people failed to respond to the inquiry and LSERS does not usually keep records of such meals.

The meals weren’t cheap, either: the AP reports that three of the meals came at a price tag of over $1,000 each.

“The policies and procedures of LSERS may not always ensure that primary decisionmakers avoid conflicts of interest as well as the appearance of conflicts of interest,” the report said, according to the AP.

The acceptance of meals from money managers does not violate state ethics laws, according to the AP, and as long as this is the case, LSERS Director Patrick Cosper said that employees can continue to eat free.

The fund provides retirement benefits for noninstructional personnel at public schools, including bus drivers and janitors, according to the AP. It has about 26,000 members and manages assets of $1.4 billion. The system is run by a staff of about 45 in Baton Rouge and is supervised by 11 trustees.

This audit follows a similar one in the State Police Pension and Retirement System conducted last month, which found similar practices in place. This audit said that board members of the state’s pension system for state police employees and their families accepted gifts totaling $290 during a 14-month period, including holiday gift baskets and investment-related books (See  LA State Police Fund Grapples with Gift-Giving Questions ).

The Louisiana State Police Pension and Retirement System handles investments for 2,128 current and former State Police employees and their beneficiaries. The fund has assets of about $338 million.