Katie Moore / EyewitnessNews
NEW ORLEANS -- Harbor police patrol the riverfront and help secure the Port of New Orleans.
Monday, the Louisiana Legislative Auditor released a scathing report warning the retirement system will be bankrupt in eight years if nothing is done to fix it.
The Harbor Police Department is a 62-person operation designed to keep the riverfront and the Port secure.
But the Auditor warns that, without drastic action, the retirement system for Harbor police is anything but secure.
The Port of New Orleans requested the audit. They oversee the retirement system.
'They just said that they had uncovered a few errors and that they had some concerns about how things were being run and they wanted an independent person to come in and take a look at what was going on,' said Nicole Edmonson, director of Performance Audit Services for the legislative auditor.
The Port said it had discovered two retirees who were improperly tapping into the system. According to the auditor, one employee, whom police wouldn't name, received more than $140,000 in benefits they weren't qualified for.
'What we decided to do is to make everyone whole and to forgive any amounts that were owed to us, since it was our errors, and to correct any benefits that we were paying that were being overpaid effective July 1, 2011,' said Harbor Police Chief Robert Hecker.
To do that, last spring, they got state lawmakers to pass a law including those two employees in the system. The legislature also upped the maximum that the port could pay into the system to 20 percent of pay.
'Even that is insufficient. They really need something in the order of 94 percent of pay in order to fund this plan,' said Paul Richmond, the auditor's manager of Actuarial Services.
Without radical change, the auditor warned the system would be bankrupt somewhere between the year 2020 and 2030, after years of inadequate contributions and investments that took a dive recently.
'Like most public pension systems, it has experienced some reduction in the investments. In 2008 and 2009, those investments went down,' said Patrick Gallwey, chief operating officer for the Port of New Orleans.
The auditor recommended merging the retirement system with the state employees' retirement system, a move the Port of New Orleans is planning to push for in the upcoming legislative session.
The audit also showed there were inadequate controls over contracts issued by the retirement system, including contracts with no cancellation clauses or benchmarks, for example. The auditor did not find any misuse of funds.