Months ago, Roselyn Spencer left her post as the longtime head of the city’s retirement system after the inspector general found she misspent more than $218,000 on renovations to the agency’s 12th and 13th floor offices on E. Redwood Street. Today, the the same watchdog released new findings indicating she spent even more–nearly $300,000–including expenses on furniture for her own office and cosmetic improvements for the agency’s board room.
Some of that sum was also used for security systems, due to a “perceived lack of security” and, according to Employee Retirement System employees, Spencer’s fears about “disgruntled” current or former city employees being “upset about their benefits” and wanting to get into the offices.
But Inspector General Isabel Mercedes Cumming found that neither the ERS nor its property management company, Cushman and Wakefield, recollected “a single instance of a security concern,” and the office’s security hadn’t been changed since its lease began in 2004.
Expenses on furniture totaled $26,685, according to the addendum report released today. While most of it was for common areas, Spencer herself “was the only employee to receive new furniture for their private office, including a sofa and lounge chair.”
An additional $15,579 was spent on “change orders” for cosmetic alterations to the offices, including replacing crown moldings in the board room and reception areas ($4,500), new chair rail moldings for private offices and the board room ($2,900) and a $1,704 hallway sign.
The ERS is based on the 12th and 13th floors at 7 E. Redwood St. It covers all permanent city employees except for police and fire department employees, as well as elected officials.
Spencer left her post directing the agency in September after Cumming released her initial findings that the former ERS director, who’d served there since 1998, misspent $218,213 in city funds from retirement forfeiture accounts on renovations without using the proper legal channels. Today’s addendum was based on additional complaints received since then, Cumming wrote.
The source of the funds cited in the addendum was the ERS’ cash reserve account, which holds money from investment income and the city’s annual allocations from its general fund. The Baltimore City Charter dictates that expenses from the account must be approved by the ERS’ board of trustees, and be used to provide benefits to beneficiaries and members and cover “reasonable expenses” for administration.
While Cumming found the board unanimously approved all of the renovations, Spencer was still required by law to submit the expenses to the Board of Estimates for approval, since they exceeded $50,000 and included contracts for more than $25,000. Rather than going through the correct channel, however, she circumvented the process by having Cushman and Wakefield arrange for contracts with companies to do the renovations.
“The OIG did not find any record of the ERS presenting the renovation to the [Board of Estimates], and records indicate that [Spencer] purposefully went around the BOE,” Cumming wrote.
Mayor Catherine Pugh responded to the report with a letter dated Dec. 7, saying she concurred with the findings that Spencer circumvented the city’s spending board (of which Pugh is a member). The mayor said she has advised the ERS board to assess the definition of “reasonable expenses” and, if needed, to formally clarify what it means. She also agreed with Cumming’s recommendations that the agency begin fully documenting and justifying any expenses over $25,000, and follow the rules by sending them to the Board of Estimates approval.
Pugh noted the recent departures of Spencer and the ERS’ former legal counsel, Ian Berger. (The Brew reported that ERS Board Chair Jerome Sanders and Chief Investment Officer Eliot Powell also recently left after a separate report released in October found an ERS board member recruited his business partner to join the agency.)
Officials are now searching for their replacements.
“The ERS Board of Trustees will ensure those hired fully appreciate fiscal restraint and responsibility,” Pugh wrote.
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