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Pension lawsuit could cost Baltimore County $19M
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Related Topics: Baltimore County
Baltimore County (Map, News) - Baltimore County could be forced to dole out more than $19 million to pay back alleged “excess” pension contributions to older employees, actuaries said.
The estimate came in response to a federal age discrimination lawsuit filed against Baltimore County government for requiring older employees to make higher pension contributions than younger employees. The U.S. Equal Employment Opportunity Commission filed lawsuit in September claiming the county and six labor organizations discriminated against two named retired employees and others at least 40 years old.
Returning “excess” payments for 8,500 county employees from nearly a decade of contributions would cost upward of $19.2 million, according to a report filed in court records by Robert Burros, the county’s investment and debt management administrator.
“The EEOC apparently does not understand the huge economic impact its claims will have upon the employees’ retirement system if successful,” Burros wrote.
EEOC officials allege the pension system has been illegal since its inception more than 60 years ago, requiring employees who are, for example, 20 years old to contribute about 4 percent of their pay and employees who are 50 to contribute 6 percent or more.
Contribution rates are individually tailored based not on age but how long they will likely work for the county before retiring, said county spokesman Don Mohler. Rates ranged from 4.4 percent to 11 percent.
“All of our actuaries say the time value of money is a long recognized principle of budget and finance,” Mohler said. “We are confident that we are right on this issue.”
Mohler qualified his remarks, saying that the county reformed its pension system last spring and that all new county employees contribute at the same 6 percent rate.
But the EEOC wants older employees, who make less take-home pay than their younger counterparts, reimbursed. EEOC attorney Maria Salacuse said the agency unsuccessfully negotiated with the county for a year before filing the lawsuit.
“From the beginning, we’ve always tried to resolve it so it wouldn’t bankrupt the county,” Salacuse said. “It’s not a defense.”
jmalarkey@baltimoreexaminer.com
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10:04 AM MST on Thu., Apr. 17, 2008 re: "Pension lawsuit could cost Baltimore County $19M"
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richard f said:
Maybe the people should start reveiwing the pensions of our leaders.SERVE ONE TERM and get a full pension.I've had to work 40+ years and my pension and won't come close to how much they get for one term in office.But I guess that's easy to do when you get to vote for your pension laws........
5 agree | 1 disagree
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Examiner Reader said:
Baltimore county democrates are eager to pay!They love it!
2 agree | 2 disagree
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Examiner Reader said:
The cost should be tied to how much you make, not how long you work, 5-6% of gross wages toward pension is fair, like state pension system does now the more you make the more you pay.
3 agree | 2 disagree
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Examiner Reader said:
plus the story says the feds tried for over one year to get the county (homan, smith) to resolve this illegal pension problem, to avoid a lawsuit - but no - homan (and sidekick smith) caused this mess too, with arrogance and stubborness, just like the other lawsuits
10 agree | 2 disagree
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Examiner Reader said:
You have to wonder how all the other local jurisdictions have managed to get by with great bond ratings, solid pension plans, nice pay increases and few law suits without Homan?
17 agree | 1 disagree
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Reader said:
Never say never
2 agree | 2 disagree
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Examiner Reader said:
Every major county in Maryland has a AAA bond rating! This is not some Homan revelation.....
7 agree | 2 disagree
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Examiner Reader said:
The system has been illegal since its inception 60 years ago, yet this is all Fred Homan's fault. What a joke, you all need to take a good look at the fiscal strength of the County since Fred Homan has been budget director and most recently administrative officer. Homan's management of the County's spending is a MAJOR reason for its continued AAA bond rating.
2 agree | 15 disagree
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Examiner Reader said:
It seems that every week no matter what the legal problem, lawsuit filed, Court decision Mr. Mohler has the same answer. Some how every other legal or Federal body "Dosent uderstand". The Everyone else is wrong excuse that your children use. I would think that sooner or later we (the tax payer's) have to look at the County administration and say "what in the world is going on in there". I have been in Baltimore Co. since the 80's and I have never seen an administration under such review by outside organizations. I have watched DC, Baltimore City, PG county. all get them selfves in trouble with the Federal Govt. But Baltimore County never..........UNTILL NOW.
6 agree | 2 disagree
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Examiner Reader said:
The EEOC finding is patently ridiculous on its face. The County's funding basis for its defined benefit retirement system is and has been in full compliance with the Federal Employment Retirement Security Income Act of 1974 (ERISA). Weighted percentage of payroll contribution depending on age/projected length of service is a long held actuarially sound and perfectly legal system funding basis. Common sense, something the EEOC has lacked in abundance for many years, would tell anyone with a slightly analytical mind that the longer the period of time available to accumulate the assets for pension benefit, the lower the accumulation rate(percentage of payroll contribution) needs to be. The EECO finding will be overturned by any competent Federal court of juridiction.
4 agree | 13 disagree
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Reader said:
You get what you worked for in this country and tahts the s_it! No work, no job, bo money!
3 agree | 2 disagree
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FrankWhite said:
How in the USA does one allow this sort of thing to happen?!?!!?
2 agree | 1 disagree
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Examiner Reader said:
Glad some taxpayers have some money to spare
2 agree | 1 disagree
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Examiner Reader said:
Tax payers will pick up the tab.They are the only people with money to spare.
3 agree | 3 disagree
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Examiner Reader said:
Any more reason to continue to vote "DEMOCRAT" in this county? Can't ignore the increase in crime because they didn't let the city exterminate the rats when they tore down the public housing a few years back. And Smith might be the biggest criminal we've ever had as executive.
4 agree | 3 disagree
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Examiner Reader said:
Will Baltimore County be forced to pay or will they pass it on to the pension funds to absorb?
2 agree | 3 disagree
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Examiner Reader said:
Wow Baltimore County is going to lose yet another law suit. Enough is enough, its time for Fred Homan to go away!!!
6 agree | 3 disagree
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Examiner Reader said:
“The EEOC apparently does not understand the huge economic impact its claims will have upon the employees’ retirement system if successful,” Burros wrote. Apparently, it's the county (Burris) that still doesn't understand. The very government (and unions)they worked for discriminated against it's older employees. Now, he's (Burris) making veiled threats against those same employees. Making this right will not have a noticeable impact on a county budget that has millions (sometimes 100's) in excess every year. Then again, I'm sure Burris has already figured out that if the county can delay settlement long enough most of the retirees will be dead before they see any return (is that another one of those time value of money things.....). Which brings up another thought; the older employee should have been paying less than their younger counter part. After all, they will probably collect the same benefit for fewer years and consequently, get less.
5 agree | 4 disagree
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Examiner Reader said:
It seems that since Homan/Berger seized control of Baltimore County's defense of lawsuits with the forced departure of County Attorney Jay Liner the County has been sued more often, has lost more often and has paid more often especially when it comes to suits involving employee treatment/benefits. The Council needs to have the Auditor investigate the management, hiring and claims handling practices of the Office of Budget and Finance. Baltimore County now has the absolute worst public employee pension system for new hires in Maryland. No wonder the Feds are getting involved.
27 agree | 3 disagree
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Examiner Reader said:
This just makes things worse. I wonder if the teachers feel they should help pay for this as part of their compensation package or whether just tax payers should pay this burden. Just make sure Joe Hairston gets his raise so we don't lose him. He is worth 500 teachers alone.
3 agree | 3 disagree
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