Honoring a subpoena averted possible felony charges, but the diversion of$1.5 million is an issue.
A day after a showdown with state auditors, the Minneapolis teachers retirement fund Wednesday released records of a $1.5 million trust that auditors say is an illegal diversion of pension money.
State Auditor Patricia Anderson had demanded the records and issued a subpoena after pension officials Tuesday rebuffed efforts by an Anderson aide to obtain them.
"Nobody has ever said 'forget it' to the state auditor," said Deputy Auditor Carla Heyl. "I think maybe they relooked at all of our statutes and realized this is the right thing to do."
Anderson said the $1.5 million should not have been set aside in a trust but transferred along with nearly $800 million in other pension assets when the Minneapolis teachers fund is merged with the statewide Teachers Retirement Association on July 1. But a lawyer for the trust said it was necessary to withhold money to pay any legal obligations not covered under the merger.
The Minneapolis fund has 45 percent of the money needed to meet obligations to 13,500 current and future retirees, leaving a deficit approaching $1 billion. The merger, approved by the Legislature last month, requires state contributions of $18 million a year for the next three decades.
Auditors have said that the trust is unnecessary and illegal under the merger legislation. And they said failure to comply with the subpoena was a felony. After refusing to turn over all documents Tuesday, the pension fund handed over the documents by noon Wednesday.
Fund executive director Karen Kilberg did not return calls Wednesday seeking comment on why the board gave up the records. Among the obligations the trust could be used to pay is a severance package for Kilberg valued at $330,000.
The board of the pension fund, known formally as the Minneapolis Teachers Retirement Fund Association, met in a closed session Wednesday.
In a news release, fund officials called the auditor's accusation "a distortion of the facts" and defended creation of the trust as a way to bring about the merger. It said the fund board would have no further comment on the dispute until litigation is resolved in Hennepin County District Court.
Heyl said Wednesday that auditors were going over the trust documents but could not comment on what they contained because they are part of an investigation.