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August 29, 2013

Retirement system gets favorable audit

DANVERS — The last time the state audited the Essex Regional Retirement System, it revealed lavish spending, secret meetings and mismanagement of funds.

Three years later, the system is being painted in a much more favorable light. The towns of Essex, Rockport and Manchester, the Manchester Essex Regional School District and the Rockport Housing Authority are members.

An audit released last month by the Public Employee Retirement Administration Commission gave the Essex Regional Retirement System a generally favorable review.

The audit cited three deficiencies — a far cry from the 23 noted in the last audit in 2010. Joseph Connarton, executive director of PERAC, described the problems this time around as “minor.”

“We’re pleased with the leadership of the board and the administrator they hired,” Connarton said. “He has certainly delved into the problems of the past and done an excellent job of addressing those.”

That administrator is Charles Kostro, a former state transportation official and town administrator in Newbury who took over as executive director of the retirement system in March of 2011.

Along with a new board of directors, Kostro was charged with cleaning up a scandal-plagued agency whose misdeeds led to the ouster of its former board and management.

“Even though we still have work to do to get where we want to be, I think this (audit) is tangible evidence that the system has turned itself around and is doing the things it is supposed to be doing to properly manage the money that’s entrusted to us,” Kostro said.

Essex Regional oversees public pensions for 48 local entities, including 19 towns and six school districts, with a total of more than 3,000 public employees and retirees. The money for their pensions comes from contributions from both employees and taxpayers.

Kostro said the regional retirement system has cut operating expenses by 30 percent, sliced its legal expenses by more than half, and trimmed salaries from more than $500,000 to $451,000.

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