CALPERS AUDIT REQUESTED RICHMAN CITES CONFLICT-OF-INTEREST REPORTS.

Byline: Troy Anderson Staff Writer

Assemblyman Keith Richman on Monday called for an audit of CalPERS - the nation's largest public pension fund - citing reports of conflict of interest that may have cost taxpayers billions of dollars.

Richman, R-Granada Hills, wants auditors to find out whether California Public Employees Retirement System actuaries - responsible for assessing the soundness and return of investments - were subjected to undue political influence by CalPERS board members.

Richman also wants to know whether the projections CalPERS actuaries gave to cities and counties on how much it would cost to sweeten pension benefits were developed objectively and independently.

``At the beginning of this decade, agencies were literally told that enhanced pension benefits were not going to cost them anything,'' Richman said. ``And now we're faced with a situation where cumulatively we have tens of billions, if not hundreds of billions of dollars, in unfunded liabilities.''

CalPERS spokeswoman Patricia Macht said allegations that their actuarial office deviated from industry standards are false, noting that two independent audits are performed on CalPERS annually.

``Our system financial audit for last fiscal year was delivered to the state controller and will be included in the state's financial statements,'' Macht said.

The request for the audit comes amid growing concern about how cities and counties are going to pay for public-employee pensions and benefits. The Daily News recently reported that government agencies are expected to have to set aside at least $110 billion and perhaps as much as $185 billion to pay for these benefits.

In October, Marcia Fritz, a former CalPERS consultant who has worked on pension-reform proposals with Richman, said state pension officials gave misleading information to local governments statewide that led to huge increases in pension benefits for public employees.

She alleged that changes in Governmental Accounting Standards Board guidelines a decade ago set the stage for California's ballooning unfunded pension liabilities by allowing officials to obscure the long-term costs.

In a letter to CalPERS Chief Executive Officer Fred Buenrostro, Richman wrote that the agency has a responsibility to show that it is a responsible guardian of the $200 billion in funds it manages.

He asked for the agency's help in drafting a request for a state audit next year and for legislation requiring audits of CalPERS every three years.

Jon Coupal, president of the Howard Jarvis Taxpayers Association, applauded the request.

``Clearly, we think CalPERS needs more oversight and I think his request for an external audit is not only warranted, but long overdue,'' Coupal said.

Troy Anderson, [phone]

troy.anderson(at)dailynews.com