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YELLOW SHEET Office of the State Auditor of Missouri |
Report No. 2004-57
August 13, 2004
The following finding was noted as a result of a review conducted by our office of the Public School and Non-Teacher School Employee Retirement Systems of Missouri.
The Missouri Public School and Non-Teacher School Employee Retirement Systems' (systems) Board of Trustees (board) has not solicited proposals for investment custodian services since 1995. While the systems pay fees directly to the investment custodian of over $1 million per year, the investment custodian earns additional revenues from other sources related to services provided by contract, which generates approximately $10 million annually in revenues for the investment custodian. In 2003, the systems contracted with a consulting firm to perform a "best market practices" analysis of the investment custodian's fees. Based on the analysis results, the systems negotiated a new agreement with the investment custodian with projected future savings of just over $1 million annually.
In addition to the investment custodian, the systems have not formally solicited proposals for investment consulting, actuarial consulting, legislative consulting, and legal counsel services in recent years. While the systems performed periodic comparisons of fees paid for some professional services to other available sources to assess reasonableness, similar analyses were not performed or documented for some services. Without periodically requesting proposals for all professional services, the board may be missing the opportunity to obtain similar or improved service at a better price, either from existing or new firms.
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