Report No. 2010-165
December 2010
Complete Audit Report

Findings in the audit of Missouri State Employees' Retirement System

Salary Issues
The Missouri State Employees' Retirement System (system) Board of Trustees (Board) provides its employees significant pay raises and lump-sum incentive payments. The Board's three system-wide compensation programs (market-based salary adjustments, cost-of-living salary adjustments, and incentive compensation) provide additional compensation over and above promotion or probationary pay increases. As a result, system salary and incentive payments have increased significantly, from $4.4 million in fiscal year 2006 to $5.8 million (32 percent) in fiscal year 2010. Effective fiscal year 2011, the Board discontinued the operations staff incentive program, modified the investment staff incentive program, and provided employees with salary increases based on the amount of incentive payments they would no longer receive.

Travel Expenditures
Travel expenses are incurred for various purposes including Board meetings, Board member and employee training, conferences, retiree seminars, and due diligence monitoring visits. Travel expenses totaled approximately $1 million during the 3 years ended June 30, 2009. As noted in the prior audit report, although the Board has established general policies for Board member and employee reimbursement of travel expenses, the policies do not provide limits on the amounts that will be reimbursed for certain travel expenses. Our review noted instances where lodging and meal costs appeared excessive and/or exceeded federal employee per diem maximums established by the federal government. We also noted instances where Board members and employees rented vehicles when a more economical means of travel, such as a shuttle, cab, or shared rental vehicle, could possibly have been used, and some rental car reimbursements exceeded limits per the Board's travel policies. Adequate procedures for monitoring Board member travel expenses have not been established and some Board member travel expenses were not allowed by policy. In addition, the costs associated with the Board's annual educational conference appear excessive.

Gifts and Travel Expenses from Third Parties
As similarly noted in the prior audit report, the Board has not established a system for reporting and monitoring gifts and paid travel expenses accepted by Board members and employees.

Complete Audit Report
Missouri State Auditor's Office
moaudit@auditor.mo.gov