Documents show pension fund official ordered state, counties to overpay by $62m

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.

The

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

this year.

Kaplin recounted that Shimabukuro rationalized the overcharges,

but he “could not remember how it came about,” according to Schraff’s

letter.

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

was owed.

That means the pension fund was overcharging the state and

counties, Schraff said.

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