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GOVERNOR MAY ASK RETIREMENT-SYSTEM CHIEF TO RESIGN

SHARE GOVERNOR MAY ASK RETIREMENT-SYSTEM CHIEF TO RESIGN

Gov. Norm Bangerter, alarmed by allegations of nepotism and high salaries, wants to meet Monday with leaders of the Utah retirement system.

Sources close to the matter say he will ask that the system's executive director, Bert Hunsaker, resign in the wake of an audit released earlier this week.Hunsaker said Friday he expects someone will resign but that the seven-member board of directors will have to decide who.

"I know I can't abdicate responsibility," he said. However, he said the problems discovered by the audit are not as bad as new accounts have made them look.

The audit, prepared by Legislative Auditor General Wayne Welsh, said several employees of the system are related to administrators and that relatives and friends appear to get preference when jobs are open. It also said payroll records were altered, salaries appeared to be excessively high and the system had paid $243,260 to buy additional years of retirement benefits for its top administrators.

The audit did not question the solvency of the $3.2 billion system, which handles retirement money for about 100,000 state, municipal and county government and school district employees.

Bangerter delivered a letter Thursday to State Treasurer Ed Alter, who is chairman of the retirement board. Bangerter is responsible for appointing six of the board members. Alter is designated by state law to be on the board.

"When you and the other members of the Utah State Retirement Board come to visit with me this Monday, please be prepared to discuss the issues dealt with by the audit and to detail the changes in policy and personnel you deem appropriate," the letter said. "I am particularly alarmed by the allegations of nepotism, excessive compensation and the purchasing of additional retirement benefits."

Bangerter said swift changes are needed to send a message to other agencies that operate independently from the state but are accountable for state money.

"I realize that this is a difficult matter for you but believe that prompt and decisive action is necessary to address the problems at (the Utah retirement system) and to send a message to all other independent agencies that such violations of state policy will not be tolerated," he wrote.

Hunsaker said problems uncovered in the audit could be fixed without major changes in personnel. He already has suspended Administrative Services Director Jean Thomas, saying she was responsible for many of the problems. He also hired a human resources director to reorganize responsibilities.

But he said the resignation of top officials is "probably where it's ending."

Hunsaker said morale is good among the system's 175 employees.

"I feel I have the strong support of the staff," he said.

Some influential state lawmakers have reacted strongly to the report. House Speaker Nolan Karras, R-Roy, slammed his hand on a table during a committee meeting earlier this week and demanded answers to the problems mentioned in the report.

Lawmakers appear to be particularly concerned about the practice of buying years of retirement benefits for top administrators. The practice often has been used when state officials want to get rid of an employee. They typically will offer the employee early retirement benefits and hire a new employee at a lower salary.

However, the retirement system was buying retirement benefits as an incentive for administrators to stay.

Hunsaker, who earns $76,000 annually and receives an $8,700 car allowance, was given four additional years of retirement credit at a cost of $74,829. He also earns $15,000 a year as director of the National Association of State Retirement Administrators.

The practice is legal, but auditors said the law should be changed.

"We believe if the (retirement system) practice were followed by every member of the retirement system, then tens of millions of taxpayers' dollars could be spent," the audit said.

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(Additional information)

Points of the audit:

-Payroll records either altered or missing.

-Seven administrators given up to four years extra retirement credit (cost $243,260).

-Friends and relatives of administrators given top consideration for jobs.

-Unusual employee benefits: four hours of leave for Christmas shopping and up to 26 days off each year (the state allows 19.5).