Lee Zurik Investigation: Playing With Fire

Richard Hampton, board member for the New Orleans Firefighters Pension and Relief Fund
Richard Hampton, board member for the New Orleans Firefighters Pension and Relief Fund

You may not know it, but decisions by one public board could cost New Orleans taxpayers millions of dollars every year. And the head of the Metropolitan Crime Commission says he's baffled by some of their decisions.

"If they can't govern the conduct of their board members, how can they be entrusted to manage business deeds and the business interests of their membership?" wonders MCC President Rafael Goyeneche.

This group manages the New Orleans Firefighters Pension and Relief Fund -- retirement money paid to former New Orleans firefighters.  It's made up of five current firefighters, including three who have retired, the fire superintendent and the city's director of finance.

Richard Hampton serves as a board member.  He's secretary-treasurer and also acts as the chief executive officer, and he receives a hefty salary.

That's what caught our eye as we started digging into this public board's business.

Hampton spent 33 years as a New Orleans firefighter, retiring as a district chief in 2009.  Hampton's been CEO of the Fire Pension Board since 1995, and each year he received a minimal raise, until 2010.  That's when the board awarded him a new contract and raised his salary from $87,000 to $156,000, signing him to a four-year contract.  During the same time period, the fund suffered through a tough stock market and some questionable investments.

When we asked Hampton why he got such a big raise, he replied, "Well, there were a number of different factors."

"How that fund could actually lose money and have a former firefighter in charge of managing their investments, doesn't have a background in investments or financial matters, yet he still received a $70,000 increase in one year… It really defies logic," says Goyeneche.

Hampton told us the board gave him a raise, mainly because of the extra workload involving pension recalculations for hundreds of firefighters.

"[It] caused enormous additional burden on our administrative efforts as well as mine, because I oversee each and every one of those calculations," explains Hampton.  "So the workload was extraordinary.  The board recognized the fact that, while I was working 30 to 40 hours a week prior to this time, it was necessary and only fair that they increase my salary for the additional workload."

Hampton's assistant, Pam Meyer, also got a raise for the additional workload -- about $15,000.  But board minutes show that raise would only be temporary, "to compensate her for the additional time and work that was added."

So, records show Pam Meyer got a temporary $15,000 raise, while Richie Hampton received a permanent $70,000 raise that goes up three percent each year.  According to the contract, this year he's set to make $165,500.

"That raise was long past overdue," Hampton insists.

But according to our research, the raise and resulting pay are much more than similar retirement systems.

"The board had done a number of researches in executive directors of public pension plans, not only locally , statewide and federal, before we even looked at any additional type of raise," says Hampton.  "They looked at what the average salary was, with the highest and lowest, and for someone who had the amount of time and experience invested in the system that I had, most of them were compensated much higher than what I was compensated."

"You're sure about that?" we asked him.

"Yes," Hampton replied.

"What examples did they use?"

"They used examples from executive directors, chief executive officers, chief administrative officers from around the country."

But we looked at executive directors around the state.  Stephen Stockstill ($151,857) runs the retirement system for all firefighters outside of New Orleans.  He has a dual role, also serving as attorney for the fund.   That system is more than three times larger than New Orleans -- but Stockstill makes less than Hampton.

Kathy Borque, who runs the retirement system for all police in the state, makes $92,232, compared to Hampton's $165,500.  And Jesse Evans ($78,024) leads the retirement system for all City of New Orleans employees – again, a much larger system.  But Hampton makes more -- more than double, actually.

The board gave Hampton a raise based on a recommendation from the board's personnel committee.

"Was there a personnel committee meeting to decide your raise?" we asked Hampton.

"Oh yeah, he replied, "they met  for a long period of time. In fact they probably met for over six months before they implemented the raise."

"There are no minutes to those meetings," we informed Hampton.

"Well, they met and I wasn't part of the personnel committee, because they needed to meet outside."

That personnel committee met behind closed doors for six months.  The only written presentation of their outside meetings is a single sentence at a regular board meeting, one that recommended the raise for Hampton.

By the way, state law requires such committees to keep minutes of meetings.  We requested them and they could not provide us with any.

"Their report was made part of our regular board minutes, and I provided to you," Hampton tells us.

"It's like a paragraph," we told him.  "It doesn't go into the discussion about anything.

"Well, they worked very, very hard, as the trustees always do.  And whether they recorded every second of every minute that they met and talked…"

"They didn't record any second of any minute."

"I don't have that to share with you."

In addition to giving Hampton a hefty raise, the board also wrote into his contract six weeks of annual leave or vacation, and six weeks' sick leave every year.  And if Hampton doesn't use it all, he can cash it in and be paid.

The same month Hampton got that $70,000 raise, he received an even larger payday when he decided to cash out unused vacation and sick leave.  The Fire Pension Board allows its employees to cash out, at anytime, accumulated vacation and sick leave -- leave is rolled over from year to year.  So in 2010, Richie Hampton's hourly rate went from $42 to $75.  And once that happened, he cashed out 140 days of unused leave.  The Fire Pension Board – taxpayers, really -- wrote him a check for $84,000.

"That plan is very, very similar to what the City of New Orleans uses for its own employees." Hampton tells us.

Hampton earned an additional $37,000 because of the pay raise.

"What was the governance provided by the board to allow their employee to accrue sick and vacation time, and then cash it out, not at the rate of pay in which he earned that time, but at a higher rate of pay after they gave him an absurdly high pay raise?" wonders Goyeneche.

Last year, the City of New Orleans – again, taxpayers -- contributed $30 million to the Pension and Relief Fund to help cover costs.  Goyeneche says some of the board decisions have him asking questions, and he thinks firefighters should be doing the same, to the people managing their retirement money.

We should point out that Hampton is correct when he said the payment rate of the accrued time is similar to the City of New Orleans.  In fact, both the city and state civil service tell us they pay accrued vacation and sick at the employee's pay rate at the time they cash out, not at the time it's earned.

One difference though: Both the city and state mostly don't let an employee to cash out vacation and sick leave, until they terminate employment.