Agenda Item 10
April 27, 2010
Robert H. Drummer, Senior Legislative Attorney
Expedited Bil116-1 0, Personnel- Retirement - Imputed
Expedited Bill 16-10, Personnel - Retirement Imputed Compensation Limit, sponsored
by Councilmember Andrews, was introduced on April 6, 2010. A Management and Fiscal
Policy Committee worksession is tentatively scheduled for April 29 at 2:00 p.m.
Although the general wage adjustments for FYI0 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 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 Bil116-1O 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. Mr. Lowman currently estimates
that the actual savings from limiting this imputed compensation to FYIO is $7.2 million for
FYIl. Annual savings would continue for a total of 40 years.
1. How would this Bill affect employees in the 3 bargaining units?
The County has three different retirement plans for its employees.
All public safety
employees (police, fire, corrections, and deputy sheriffs) are members of the Employees'
Employees of the Montgomery County Public Schools also agreed to "postpone" a negotiated general wage
adjustment for FY 10, but did not receive this imputed compensation.
The County has a separate Elected Officials Retirement Plan that would not be affected by this Bill.