Agenda Item 9
May 18, 2010
Management and Fiscal Policy Committee
Drummer, Senior Legislative
Expedited Bill 16-10, Personnel - Retirement - Imputed Compensation
Management and Fiscal Policy Committee recommended (3-0) to approve Expedited Bill
16-10 without amendment.
Expedited Bill 16-10, Personnel - Retirement - Imputed Compensation Limit, sponsored
by Councilmember Andrews, was introduced on April 6, 2010. A public hearing was held on
April 27 and a Management and Fiscal Policy Committee worksession was held on April 29.
Although the Executive and each of the 3 County employee unions representing police,
fire, and general government workers agreed to "postpone"
the previously negotiated general
wage adjustments for FYlO last year, Expedited Bill 18-09 required that the calculation of
regular earnings used to determine a retirement benefit include the FYlO general wage
adjustment as if the employee had received it on July 1, 2009.
This imputed compensation is
scheduled to carry over into the calculation of regular earnings used to calculate a defined benefit
pension for the rest of an employee's County career. Expedited Bill 16-10 would amend the
retirement laws to limit the effect of the imputed compensation to the calculation of regular
earnings for FYlO only.
Last year, the County's actuary, Mercer, estimated that this imputed compensation would
require the County to increase its annual contribution to the Employees' Retirement System
Trust Fund by $8.589 million per year for the next 40 years. A copy of Mercer's April 27, 2009
report is at ©5-7 and a memorandum reviewing it from the Council's actuarial advisor, Thomas
Lowman of Bolton Partners, Inc. dated May 6, 2009, is at ©8. The Fiscal Impact Statement,
based upon a 2010 actuarial report prepared by Mercer, estimates that the actual savings from
limiting this imputed compensation to FYlO is $7.025 million for FYI
See 18-22. Annual
savings would continue for a total of 40 years.
Although the collective bargaining agreements use the term "postpone," the Council did not fund these wage
adjustments in the Approved FY 11 Operating Budget.
Employees of the Montgomery County Public Schools also agreed to "postpone" a negotiated general wage
adjustment for FY l 0, but did not receive this imputed compensation.