Auditor, council wrangle over level of pension funding Actuarial audit showed deficiency

September 01, 1993|By John Rivera | John Rivera,Staff Writer

It wasn't the effect of a 1989 bill that drained Anne Arundel County's pension fund for elected and appointed officials, but all the appointees County Executive Robert R. Neall brought with him the next year, Joseph H. Novotny, the county auditor, argued yesterday.

And he didn't tell the County Council in 1989 that the bill, which increased benefits and lowered the retirement age, would empty the fund because he didn't believe that it would, Mr. Novotny angrily told the current council during a tense 90-minute session.

"This pension plan has not been affected as far as under-funding by this pension bill," said Mr. Novotny, responding to charges from Councilwoman Diane Evans that he neglected to warn council members that passing the 1989 bill would drain the fund.

During a hearing on the pension bill May 15, 1989, then-Personnel Officer Richard F. Mayer testified that the changes would cost the county $275,000 a year.

Mr. Novotny said yesterday he didn't testify because he agreed with those figures and still does.

"The role I played in 1989 was knowing a figure that was presented to the council," he said, adding, however, that he told council members privately that he opposed certain provisions of the bill.

"No, I didn't say so on the record, but I certainly did [inform the council]," Mr. Novotny said. "I've got witnesses who have heard me saying this."

"This council is different," Mrs. Evans shot back. "I think we expect something a little bit different."

The uproar began in January when an actuarial audit revealed that the elected and appointed officials fund had only half the money it should, while the pension funds for other county employees are financed at 100 percent or above.

While some said the drain was caused by the 1989 changes, Mr. Novotny argued that the addition of Mr. Neall's appointees, many of whom transferred from state government and were allowed by law to bring along their years of service without contributing financially to the fund, brought on the trouble.

"The appointed and elected officials pension plan was as well-funded as the pension plans of the state of Maryland until the Neall administration arrived on the scene," he said.

A bill the council passed in June raised the minimum retirement age and reduced the benefits.

Two weeks ago, Mrs. Evans demanded that Mr. Novotny explain to the council his role in the 1989 deliberations.

Yesterday, she accused him of "serving more as a power broker than an auditor," and of tailoring his recommendations to the council to fit the will of the majority of votes on the seven-member council.

"You can count to four, I can count to four," Mrs. Evans said. "And if I can count to four, why do I need your assistance with anything?"

Mr. Novotny accused the Arnold Republican of waging a campaign of "malicious personal attacks" designed to "get me to resign or to neutralize my impact on future important pension legislation.

"The facts speak for themselves," he insisted. "I did not fail to be vigilant in 1989 and I will be vigilant as always, in the future."

As the meeting wore on Mrs. Evans grilled Mr. Novotny on his work ethic.

"Are you a full-time auditor?" she snapped at one point. "How do you spend your days?"

She angrily accused him of political interference and manipulation for meeting two years ago with a group of her constituents opposed to the East West Boulevard, a project she favors.

"I think you're paranoid," Mr. Novotny countered.

Later, Louise Hayman, a spokeswoman for Mr. Neall, said the administration's calculations show that the most significant impact on the pension fund came from lowering the retirement age from 60 to 50 in 1989, because benefits would be paid 10 years earlier at a higher rate. And she added that Mr. Neall appointed only seven people who are eligible for the pension.

"Just a quick calculation would show that the fiscal impact of the bill of 1989 is much greater than the county executive hiring seven people," Ms. Hayman said.

Ironically, Mr. Novotny noted that Mr. Neall's political aspirations may keep his appointees from qualifying for the plan, which requires officials to work for the county for five years before they are vested.

If the executive runs for governor, as he has hinted he might, the appointees could leave with only four years of service. And the pension fund would be one of the best funded in the state, he said.

Ms. Hayman agreed. If that happens, "It's a bit of a moot point," she said.

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