The Municipal Police Employees Retirement System lost nearly $860,000 last fiscal year as a result of its ownership of two northwest Louisiana golf courses.
The golf courses have been a continuing drain for years on the system, which has been relying more and more financially on increased contributions by local governments — the employer of police employee system members.
The golf courses losses are included in the latest financial statement, Municipal Police Employees Retirement System which also shows net investment losses of $30.1 million in the fiscal year that ended June 30, 2012. The rate of return on system investments was a negative 2.1 percent on the market value, according to the report.
“It pretty much continues the trend we have been seeing for the last 12 years. It gets worse,” said Tom Ed McHugh, executive director of Louisiana Municipal Association.
McHugh said municipalities costs continue to rise with employer contribution hitting 31 percent of police payroll. Back in 2007, cities were paying 13.75 percent of payroll. Cities cannot continue to “write bigger checks” to pay pension system costs, he said, because it’s taking money away from other community needs.
Randy Roche, MPERS executive counsel, said the system is trying to get out of the golf course business but has been having difficulty.
“In the last 18 months the golf courses have been under new management and the losses have been reduced but they are still losing money,” Roche said.
The board voted to sell the golf courses — Olde Oaks in Haughton and The Golf Club at StoneBridge in Bossier City — in 2007, but nothing happened.
Last fall MPERS attempted to auction off the golf courses but there were “no acceptable bids,” Roche said.
Since the beginning of 2013 there have been some purchase inquiries which are being handled by the retirement board’s real estate agent who conducted the auction, he said.
“He’s authorized to negotiate a sales price for the courses” which would have to be approved by the MPERS board, Roche said. “We are trying to get the appraised value.”
According to the financial analysis, MPERS has spent $10.9 million on the Olde Oaks course including initial cost and improvements. As of June 30, 2012, the golf course was appraised at $1.85 million, less fixed assets and selling costs.
The Golf Club at StoneBridge purchase cost plus improvements cost MPERS $4.73 million through June 30, the report said. As of that date the golf course was appraised at $1.35 million, less fixed assets and selling costs.
The report was done by the CPA firm of Duplantier, Hrapmann, Hogan & Maher, of New Orleans.
“We got into golf courses right after they were at their peak,” Roche said. “They have been tons of trouble. I would love to see them sold.”
He said they represent less than 5 percent of the system’s total investments but take up 90 percent of his and MPERS Director Kathy Bourque’s time.
MPERS also has purchased 210 acres of land at Olde Oaks for $5.9 million for a golf course community development, but that hasn’t gone anywhere either. The project had an investment loss of $376,129 during the last fiscal year, the audit report said.
McHugh said the golf course investments proved to be poor ones. “A lot of people questioned it even back then,” he said.
“They probably shouldn’t have gotten in the golf course business,” Louisiana Legislative Auditor Daryl Purpera said. “Hopefully, they will get them sold.”
Purpera said MPERS audit also found problems with keeping track of revenues and expenses generated by the golf courses, the same findings in the prior fiscal year audit. “If your finances aren’t correct, you don’t have anything,” Purpera said.
The problems included not keeping track of gift cards and failure to properly account for liquor sales at the courses.
“This office would encourage management to listen to their auditor and make the adjustments as quickly as possible,” Purpera said. “In retirement there’s already enough stress.”