Abercrombie defends group meeting here

Gov. Neil Abercrombie and members of Hawaii’s visitor industry defended the state’s reputation Monday as a serious place for business meetings in the wake of recent criticisms levied against the National Conference on Public Employee Retirement Systems for its decision to bring its annual meeting to Waikiki.

NCPERS officials, who booked the conference in 2006 before the financial crisis left millions in public pension shortfalls, said negative attention reduced attendance. Hank Kim, executive director of the NCPERS, said only about 650 delegates came to Hawaii this week compared with the 1,000 delegates who attended the more expensive meeting that the NCPERS held in New York last year.

"(Delegates) know that economically (the conference in Hawaii) makes sense," Kim said. "They realize that this headline risk is silly, but it’s something that if they felt they could avoid it, they would avoid the headline risk."

Kim said organizers chose Hawaii because it could accommodate the group and because it offered strong value. Last year, the association gathered in New York City, where the hotel nightly rate was $360, about 44 percent higher than the $200 per night that is being paid for this year’s meeting at Hilton Hawaiian Village, he said. Altogether, Kim said, the organization paid about $500,000 less to hold its conference in Waikiki.

While critics of holding the meeting in Waikiki have raised price objections, more often they make their point by citing Hawaii’s reputation as an "exotic" destination and use words like "junket" and "boondoggle."

Hawaii Tourism Authority President and CEO Mike McCartney and others in Hawaii’s visitor industry take exception to these labels.

"Our unique culture, the aloha spirit of our people and the beauty of our islands differentiates us from other destinations, making the Hawaiian Islands an ideal place for business and leisure," McCartney said. "We have a diverse array of facilities and infrastructure and a proven track record as a business host for high-level meetings."

Still, administrators of the Los Angeles Fire and Police Pensions and the School Employees Retirement System of Ohio were among those who skipped the conference. While all but one member of the Detroit delegation came to the conference, the decision might have put their jobs in jeopardy. Detroit Emergency Manager Kevyn Orr is researching whether some of the pension trustees should be fired, according to the Detroit Free Press.

Abercrombie, who gave the opening remarks for the four-day event, said in an interview afterward that Hawaii is an "easy target" for naysayers who want to divert attention from their own issues.

"For those who have responsibility in this area and have failed, it’s an easy way to divert attention for themselves and make them appear as if they are really concerned about the stability of their pension fund," he said. "The ones criticizing from Detroit have a lot of nerve. They just about wrecked that city. They’d be well advised to come to Hawaii."

Hawaii’s reputation as an island paradise has long interfered with booking business travel. The NCPERS, whose members manage nearly $3 trillion in pension assets in the U.S. and Canada, got some backlash about the state’s sun, sand and surf in 2007 when it held an earlier annual meeting in Hawaii. However, it wasn’t until 2009 after the economic collapse and government bailouts that Hawaii began to experience widespread perception-related business travel cancellations.

The state lost a staggering $97.6 million in revenue in 2009 after lawmakers told companies not to engage in frivolous travel and warned those receiving government loans not to mimic AIG, which took an $85 billion bailout and then spent hundreds of thousands of dollars on events like an overseas hunting party and a golf outing. The ensuing drop in business travel to places like Hawaii — which lost 20 percent of its meetings, conventions and incentives business after the Great Recession — came to be known as the "AIG effect."

Hawaii has made strides in the meetings, conventions and incentives business since playing host in 2011 to the Asia-Pacific Economic Cooperation, which brought President Barack Obama and 21 of the world’s top leaders to the isles. However, judging from the latest backlash, which forced some delegates to boycott the public funds pension conference, the state has further to go in defending its hard-won reputation as a viable place for business. A smattering of newspaper and national wire stories appeared in the months leading up to the conference, which the NCPERS describes on its website as a "partisan political climate — with public sector pensions the whipping-boy for state budget ills across the country."

Poorly performing pension funds should send delegates to Hawaii even if they face flak, said Tom VanderPloeg, a police officer and trustee for the police and fire systems fund in Grand Rapids, Mich.

"Most of the people who aren’t attending are coming from the worst pensions in the nation," VanderPloeg said. "If you ask me, they should be here. For example, I’m a police officer and

I have to make decisions on millions. If I didn’t get training, it would be a very bumpy ride."

Unfunded liabilities are crippling state and local governments nationwide, Abercrombie said.

U.S. public pension funds’ unfunded liabilities — what is needed to pay future benefits — range from $766 billion to as much as $2.2 trillion, according to national studies. Hawaii’s unfunded liability as of June 30, 2012, was $8.4 billion.

"This is serious business, and Hawaii is a place where serious business is being done, will be done and has been done," Abercrombie told the convention attendees. I can assure you that."