DENVER -- The state's pension fund that serves more than 300,000 Coloradans is in big financial trouble. It is funded at only about 76 percent of what it should be, meaning future retirees benefits may be at risk, 7NEWS reported.

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State's Pension Fund Staff Spends Thousands On Perks

But as 7NEWS Investigator John Ferrugia has found, that has not stopped top managers at the Public Employees' Retirement Association from spending retirees' money on their own perks.

7NEWS examined PERA's checkbook and found what was described by State Treasurer Mike Coffman as "a culture of excess."

It's a culture where catered breakfasts and lunches add up to more than $1,000 a week, where board parties have included $1,000 liquor bills, and where the director of the fund has paid tens of thousands of dollars annually to an outside public relations firm to help polish PERA's image.

All this comes at a time when the retirement fund is in even worse shape than Social Security, Ferrugia said.

When state workers retire after a career of serving the public in any state agency, their average monthly benefit is about $2,100. So they may be suprised to find out that the people who run their retirement program spent more than 10 times that much -- $23,000 -- on a three-day retreat in 2003 at the beautiful and exclusive Garden of the Gods Club in Colorado Springs.

When Ferrugia asked the Executive Director of PERA, Meredith Williams, if the expense was justified, he said, "Absolutely. (The board) is making huge decisions during the course of that 2½-day meeting."

Williams also told 7NEWS Investigators that he has cut the cost of board meetings.

"We thought we could do it better in 2004 by doing it in Denver and get the same value at a lower cost," he said.

State Treasurer Mike Coffman is, by law, a PERA board member. He has long been a critic, warning that the fund is heading in the wrong direction. Even he was not aware of the spending found by 7NEWS Investigators.

When 7NEWS brought it to his attention he said, "These are your pension dollars that are not working for you, they are working for someone else's enjoyment at your expense."

Examples of the perks include PERA's "working lunches" at some of Denver's most recognized and expensive restaurants, including Strings, The Chophouse, Piatti's and The Cherry Creek Grill. All told, more than $7,500 has been spent in the past two years.

Williams argued the money is well spent, telling 7NEWS, "If you look at the cost of that lunch as compared to the hourly cost normally incurred in meeting with those people, we basically are buying an additional hour of professional time at a very low cost."

When on the road, PERA'S staff has a penchant for the finest hotels, Ferrugia said. For instance, a staff member spent $419 for one night at the Turnberry Isle Resort in Florida. They've also stayed in New York City at the Plaza Hotel for $453 per night, for three nights, along with overnight stays at the swanky Waldorf-Astoria.

In response, Williams said, "The lodging that you refer to, again, is in a minority of instances, and frankly in each and every one of the instances you've mentioned, the lodging is arranged by the organizer of the meeting who is not PERA. We really can't control that."

But what may be most disturbing are bills like one 7NEWS found from the Hearthstone Restaurant in Breckenridge. The bill shows $5,700 for a dinner for 45 staff and board members. That's about $125 each person. On one particular night, more than $1,000 was spent on liquor.

How can PERA justify that kind of money for liquor at a meeting?

Williams said he does not try to justify it and can't justify it.

"When that was brought to my attention and the board's attention, that has now changed and that doesn't occur," he said.

However, 7NEWS Investigators found expenses for a retirement party that did occur one year after the dinner at the Hearthstone. This time the party was at the Traildust Restaurant with a total bill of $1,500. One third of that was spent on liquor, Ferrugia said.

Williams told Ferrugia, "That was the last one ... we don't do those anymore."

How can PERA justify spending more than $25,000 on an outside public relations firm, even though PERA has its own communications department whose director made about $90,000 and manages a staff of 14 people?

Williams believes the money was worth spending but said in the future they may approach it in a very different fashion.

And finally, despite all its recent financial problems, in the past three years, PERA has paid its staff more than $2.2 million in bonuses. Bonuses that Williams said are justified even in a down market.

"I think it's very appropriate that we pay incentives, particularly in the case of our investment professionals. That is the marketplace. We want the best and the brightest," he said.

PERA's executive director said he is committed to making changes that will improve PERA's ability to better serve its members and he rightly points out that PERA manages more than $31 billion in assets, with administrative costs totalling only one-tenth of one percent of that.

The issues that 7NEWS focused on, he said, are rather minor. But to paraphrase a once famous senator from Illinois, "A thousand here and a thousand there, pretty soon you're talking about real money," and it's all real public money, Ferrugia said.

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