MFP Item 3
April 29, 2010
Management and Fiscal Policy Committee
Robert H. Drummer, Senior Legislative Attorney
Worksession: Expedited Bill 16-10, Personnel
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
Although the general wage adjustments for FY 10 negotiated with each of the 3 County
employee unions representing police, fire, and general government workers were "postponed"
last year, Expedited Bill 18-09 required that the calculation of regular earnings used to determine
a retirement benefit include the FYIO 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 FYIO 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 FYIO is $7.025 million for FYIl. See ©18-22. Annual
savings would continue for a total of 40 years.
There were 5 speakers at the public hearing. Joan Fidler, President of the Montgomery
County Taxpayers League (©23), Margaret Greene (©24-25), and Marvin Weinman testified in
support of the Bill based upon the County's decreasing revenue. John Sparks, President of the
Employees of the Montgomery County Public Schools also agreed to "postpone" a negotiated general wage
adjustment for FYIO, but did not receive this imputed compensation.