HONOLULU (AP) — Court documents allege the administrator of the Employees
Retirement System ordered the state and counties be overcharged in the amount
of payments they made to the system this fiscal year.
The overpayments led
to a reimbursement of $62 million this year, providing lawmakers with
additional funds for their budgets.
ERS administrator David Shimabukuro
declined comment Monday on the allegations, saying they are the subject of a
lawsuit. State and county officials also have refused comment.
overpayments were discovered after the City and County of Honolulu hired
consultants to calculate how much the state and counties owed the fund each
year, and how much they were actually contributing.
The Legislature passed
a law last year allowing the state and counties to reduce ERS contributions for
this fiscal year and one that begins July 1. The law required ERS to reimburse
the state and counties money in excess of a 10 percent rate of return on
investments in 1997.
Attorney Paul Schraff said in an April 4 letter to
Mayor Jeremy Harris that he interviewed Michael Kaplin, a consultant who does
work for the ERS. The city had hired Schraff to contest its payment amount for
Kaplin recounted that Shimabukuro rationalized the overcharges,
but he “could not remember how it came about,” according to Schraff’s
An associate of Kaplin told Schraff that Shimabukuro provided
instructions on how much to credit the state and counties.
Schraff said he
learned the state should have provided reimbursements totaling $225 million,
but instead credited the state and counties $163 million, or $62 less than what
That means the pension fund was overcharging the state and
counties, Schraff said.