VRS Board Responds to JLARC Report

RICHMOND, Va., July 12, 2005—The Virginia Retirement System (VRS) Board of Trustees met today to discuss a report the Joint Legislative Audit and Review Commission (JLARC) staff submitted to commission members Monday, July 11, 2005, during the annual meeting between JLARC and VRS.

Among other issues, the report dealt with the board’s actions related to the agency’s policies on severance and employment. The board responded to the recommendations by taking the following actions on each recommendation:

JLARC Recommendation 1 – Because of the potential for conflicts of interest and the appearance of improper action by the board, the Board of Trustees should adopt a policy prohibiting members of the board or the Investment Advisory Committee (IAC) from being eligible for employment to any full-time position at VRS for one year after the end of service on the board or the committee. If the board chooses not to enact such a policy, the General Assembly may wish to restrict the practice by statute.
Board Response: The board approved a change to the board governance policy to make any board member or IAC member ineligible for employment at VRS until five years after termination from either the board or IAC.
JLARC Recommendation 2 – The members of the Board of Trustees and the Investment Advisory Committee should commit to ongoing training by the VRS counsel on the requirements of the Conflicts of Interest Act and the Board of Trustee’s Governance Policy. Counsel and senior VRS staff must also exercise their professional responsibility to ensure board compliance with the act.
Board Response: The board agreed that more in-depth training was needed and would examine ways to make the training more meaningful. Staff, in cooperation with counsel, will develop a recommendation.
JLARC Recommendation 3 – The Board of Trustees of the Virginia Retirement System should act promptly to either recover the funds paid to the former director but never authorized by the board, or authorize the severance benefits as provided in the termination agreement dated December 1, 2004.
Board Response: The board rejected the two-year severance payment that was provided to the former director. The board did authorize a severance provided under the Workforce Transition Act (WTA) equivalent to six weeks salary.
JLARC Recommendation 4 – The Board of Trustees should adopt a policy on the use of severance pay for VRS employees. The policy should establish the purpose of severance, when severance may be offered, and the appropriate amounts that may be offered.
Board Response: The Administration and Personnel Committee of the board will work on this recommendation and propose a policy to the full board for review.
JLARC Recommendation 5 – The members of the Board of Trustees, the Investment Advisory Committee, and the VRS staff should be trained by the VRS counsel on the requirements of the Freedom of Information Act (FOIA). The board should express its sense by resolution that the board, its committees, and the VRS staff will always comply with the requirements of the act. Whenever Board or committee actions could conflict with FOIA, the VRS director, the CIO and counsel should promptly advise the board or committee of the requirements of the act.
Board Response: This issue will be taken up with JLARC Recommendation 2.

“I believe the actions the board took today will rectify the situation at hand, strengthen our corporate governance, and ensure that we are fully aware of the policies that guide our actions,” said Paul W. Timmreck, chair of the VRS board.

The Virginia Retirement System serves more than 540,000 members and retirees. With $43.9 billion in assets, VRS is the 27th largest public or private system in the United States.

News is archived every four months.