City pension officials spend nearly $100,000 on trips

Baltimore's spending panel agreed Wednesday to send a city pension director to London for a week — the latest of nearly $100,000 in travel expenses for top pension officials since 2013.

The Board of Estimates authorized municipal pension director Roselyn H. Spencer to spend up to $600 a day for hotel expenses and $150 a day for meals and other items while attending the African Private Equity Venture Capital Association meeting in late April. In board documents, the $750 daily allowance is described as "both reasonable and economical."


Pension officials defended the $5,600 trip as a way to potentially improve investment decisions for the municipal pension system, which is currently funded at 70 percent of long-term liabilities. But some questioned whether pension managers should be charging overseas trips from a struggling fund at a time when benefits for rank-and-file employees have been cut.

"It may be minimal expenses in the big picture, but my constituents live in the small picture, where they're trying to make ends meet," said City Councilwoman Mary Pat Clarke. "Expensive trips while benefits are being cut into regularly? It's bad politics and it's bad government."


Over the past two years, Spencer has charged the pension system about $20,000 for eight trips to conferences in Palm Beach, Fla., San Francisco and Chicago, among other places.

In an email, she said she has not decided in which London hotel she will stay or on which airline she will fly. A search of travel sites shows she could stay at the DoubleTree for $194 a night or at the Ritz near Buckingham Palace for $465 a night.

Spencer, whose salary is $148,000, said she was invited to speak at the conference, which she called a "prestigious, international" event. She said she plans to meet with one of the pension fund's investment managers while in London. She pointed out that the dollar is weaker than the British pound and prices in England are higher than in the United States.

She said the trip is being paid for through the pension system, not the city's general fund. The pension system is funded with both taxpayer and employee contributions.

"I complied with all City rules in seeking approval by the City's Board of Estimates," she wrote.

Mayor Stephanie Rawlings-Blake, who voted to authorize the trip, emphasized that she has taken several steps to lower the city's pension costs, including pushing legislation to require city workers to pay 5 percent of their salaries. Firefighters and police officers, who are in a different pension fund, pay 10 percent of their salaries.

"If I had my way, every conference would be held at our convention center or our Hilton hotel," Rawlings-Blake said. "I do not control that. Pension conferences and meetings happen all over the world. My assumption is we want access to best information that's out there."

Overseas travel of pension officials has raised concerns before. In 2006, then-Mayor Martin O'Malley and some City Council members urged tighter rules on such travel after pension officials took trips to Paris and Monte Carlo. In 2011, the council passed a bill pushed by Rawlings-Blake that forced pension officials to seek waivers from the ethics board before they could receive such trips as gifts.

A review of records since 2013 shows the London trip is the first overseas conference during that time.

Lester Davis, a spokesman for City Council President Bernard C. "Jack" Young, said Young voted for the travel because he was "comfortable that this was a trip worth supporting."

"There's definitely a sensitivity on his part to making sure a balance is achieved in terms of looking at global best practices," Davis said. "He's never going to support junkets for the sake of junkets. If you're looking at a case where individuals can go and get the latest information, he's going to be receptive to exploring that."

Comptroller Joan M. Pratt also defended the travel as a way to deliver on the city's promise that Baltimore employees would receive fully funded retirements. Pratt abstained from the vote authorizing the expense.


"The employees want us to have our money managers obtain a certain return on investment. Otherwise, they wouldn't get the return on their pensions," said Pratt, who chairs the municipal pension board. "It helps all of us who will, hopefully, one day retire from the city of Baltimore."

Pratt said Spencer's trip to London is important for several reasons: the educational opportunity, her invitation to speak and her chance to visit some of the city's European-based investment managers. The city's international manager is based in London and responsible for making nearly $120 million in annual investments for all three systems, Pratt said.

She said such research is key to making investments that will yield strong returns.

"You're not going to get it on bonds, you're not getting much on your savings," she said. "We invest in equities, hedge funds. … There is an array of investment classes, and international is one of them."

The Board of Estimates voted 4-0 to approve Spencer's trip. City Solicitor George Nilson and Public Works director Rudy Chow, who both work for the mayor, joined Rawlings-Blake and Young in support.

The pension fund for municipal employees has more than 18,000 members and net assets of nearly $1.5 billion. Officials from that pension fund have spent nearly $40,000 on trips since 2013, a review of records shows. Representatives of the pension system for firefighters and police have spent about $55,000 during that time on such conferences.

At the same time, Rawlings-Blake and the City Council have taken steps to delay some benefits and require employees to pay in more.

In 2010, the council delayed retirement for many police and fire employees, and increased their contributions to the pension system while cutting benefits. In 2013, the council passed an administration bill that requires current city workers to start contributing part of their salaries to their pension fund. Last year, the council approved another Rawlings-Blake plan to switch new city employees from a traditional pension system to a hybrid approach that includes a 401(k)-style plan.

Rawlings-Blake has said the pension overhauls were necessary to stave off a looming fiscal crisis from millions in unfunded liabilities from the two pension plans. A third pension system for elected officials is fully funded.

Jennifer Bevan-Dangel, director of the watchdog group Common Cause Maryland, said the city should do more to explain to the public the reasons for the trips.

"Is it travel for legitimate purposes, and when does it become a junket?" Bevan-Dangel said. "There have to be alternatives that don't involve leaving the country and traveling through several time zones. It's the burden on the city government to make sure they are being responsible."

Bevan-Dangel said the cost of the travel seems high.


"There is certainly a sense of unfairness when the cumulative of these trips cost more than the salary for a city worker," she said.


But Jeff Hooke, an investment banker and a visiting fellow at the Maryland Public Policy Institute, said the city would likely benefit if Spencer traveled more. Doing so would allow her to meet more people in the business who might have different theories on investment styles and schedules, he said.

Hooke said travel for the retirement systems seems "average" compared to other cities.

"This is nickel-and-dime stuff for a pension fund," Hooke said. "Flying to London or Chicago is chump change."

Some economists in recent years have predicted that Africa will be the next continent to see rapid financial growth, as the boom in Asia slows down. Nigeria, for instance, recently grew to become the 26th-largest economy in the world. But relatively little of the world's capital is invested there.

Don Kettl, a University of Maryland public policy professor, said Baltimore's retirement systems are participating in an international market — and that involves international travel.

"Managers need to understand the opportunities and risks in the global financial market," he said. "It's very hard to do that if you're sitting in your office, staring at your own walls. Nothing stands alone anymore. A failure to understand that can cost millions and millions of dollars."



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