RD165 - Report on Certain Personnel Issues at the Virginia Retirement System (Special Report)


Executive Summary:
The Retirement System Oversight Subcommittee of the Joint Legislative Audit and Review Commission (JLARC) directed staff to complete a special study of two personnel issues at the Virginia Retirement System (VRS). These issues related to the potential conflict of interests of a member of the Board of Trustees relative to his interest in seeking the Chief Investment Officer (CIO) position, and the handling of the former director’s severance agreement.

JLARC staff found that the CIO search committee promptly and appropriately addressed the potential conflict of interests issue.

With regard to the handling of the former director’s severance, this review found that the severance agreement was executed by the former Board chairman without the full knowledge and proper authorization of the Board. The Board also failed to carry out its duty to monitor the final disposition of the terms for the director’s retirement. Therefore, the agreement may be invalid. JLARC staff also found that the terms of the agreement appear excessive in comparison to normal practices, such as those outlined in the Workforce Transition Act (WTA). To avoid the problems identified in this review, every Board member needs to be more actively involved in the decisions and activities of the Board. In addition, staff need to be more proactive in providing guidance to the Board.