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MAYOR UNDER FIRE

Patterson, AFGE say Williams not focused on pension problems

(Published June 14, 1999)

By KATHRYN SINZINGER

Staff Writer

City officials are being criticized for moving too slowly to fix serious deficiencies in the primary pension plan covering D.C. government workers.

Among the critics is the chairman of the D.C. City Council committee that oversees government operations, Ward 3 Democrat Kathleen Patterson, who has added her voice to the growing chorus that now faults Mayor Anthony A. Williams for failing to focus on resolving an issue they feel contributes mightily to the local government's problems in attracting and retaining top-flight workers.

"We need a new pension system...this is not a good plan," Patterson said in a recent interview, one day after the council gave voice vote approval to a new three-year $4.2 million contract that replaces the companies currently providing record-keeping and investment services for the plan.

The new contract contains provisions to fix some of the plan's administrative deficiencies, which were recently highlighted in a study commissioned by the Office of the Chief Financial Officer. The financial control board consolidated oversight of the city’s pension plans under the CFO’s office in January 1998, when Mayor Williams occupied that post, as part of its management reform initiatives for the D.C. government.

But Patterson and union officials say they see nothing being done to correct the major structural and policy-related problems with a pension plan that was hastily created in 1986 as a stopgap measure when Congress decreed it would no longer cover newly hired D.C. government workers under the Federal Employee Retirement System.

"City workers are getting shortchanged on their pension plan due to misadministration by the city," charges David Schlein, national vice president of the American Federation of Government Employees, which represents 4,500 employees in some of the most-maligned D.C. government agencies, such as the Department of Public Works. Schlein said D.C. workers hired after 1987 have "the worst pension program of any public employees in the metropolitan region," a situation that was exacerbated in 1996 when former Mayor Marion Barry’s administration reduced the city’s contribution to the pension fund from 7 to 5 percent of most workers’ base pay. It remains at that level.

"We recognize the mayor has a lot on his plate, and we've been very patient, but if we don't see something happen by this fall, I don't think we can wait forever," said Schlein. He said AFGE has warned city officials it is prepared to file suit against the city "for failing in its fiduciary responsibility to oversee the pension funds."

Among major problems cited by Schlein and the so-called "Mercer Report," prepared in December 1998 for the CFO’s office, are the city’s failure to appoint trustees for the pension fund and the lack of any clear guidelines for investing those funds, now totaling about $210 million. They also note that the retirement system, which currently covers almost 13,000 past and present D.C. employees, has never been audited. And there is no plan for how to deal with $20.7 million that has been forfeited by former city workers who left the pension plan, either voluntarily or involuntarily, before they reached the required five years of city employment to qualify for benefits.

Mayor Williams, acknowledging that "we should have moved faster on the pension system," said he views fixing the retirement plan as part of his administration’s efforts to produce a broader labor strategy for the city government.

"I have not heard people say we have to work on the pension system in an emphatic way," he said during a June 10 meeting with reporters. "We’re getting a handle on this issue as we’re getting a handle on other issues facing this city."

Patterson and Schlein both say they have spoken with the mayor about the problem since he took office in January. Patterson said she suggested in a Jan. 21 meeting with the mayor that he convene a "pension summit" to get moving on resolving the outstanding issues and, in a memo to Williams, noted the city’s "major financial risk" in not moving quickly to fix the oversight problems.

"At this point, I don’t think the mayor – in spite of the fact that we have brought this to his attention – has made any decisions about what he is prepared or willing to do to fix this problem," Schlein said.

Copyright 1999, The Common Denominator