The unfunded liability of the financially troubled pension plan for appointed and elected officials will be cut by more than half by the end of the year, according to testimony at a County Council hearing last night.
The liability, which was estimated at as much as $14 million in a January 1993 audit, has been steadily reduced by two bills passed by the County Council and by an administrative action.
By next January, the pension's deficit could be down to $5.8 million because of an expected payment to the fund by the county and the effect of another council bill passed unanimously last night.
That bill requires that when an employee moves from one county pension plan to another, the pension assets that accrued in one plan must be transferred to the new plan.
As a result of this new law, the county auditor's office estimates that about $1.4 million will be transferred from the employees' pension fund to the more generous officials' fund.
As a sign of how generous the officials' plan is, Teresa Sutherland of the auditor's office pointed out that although the service credits accumulated in the employees plan are only worth $1.4 million -- the amount that will be transferred to the officials' plan -- those employees reaped $5.7 million in benefits by transferring their years of service to the officials' plan.
The Appointed and Elected Officials plan was created in 1973, and was modified by the County Council in 1989 to increase benefits to appointed officials and lower the retirement age for all officials to age 50 or 16 years of service. The previous retirement age was 60.
Those changes, along with the hiring of numerous former state ** employees who were able to transfer service credits into the plan without bringing any assets, contributed to the financial liability.
As of January, the unfunded liability stood at $10.4 million. Several steps will bring it down even further, in addition to the bill passed last night.
* The county has budgeted a $1.7 million payment this fiscal year. Similar payments will have to be included in the county's budget for the next eight years.
* About $1.6 million will be saved because of a bill passed in July that will require retired officials to reduce their monthly pension benefit if they wish surviving spouses to continue receiving benefits after they die.
* An audit conducted by the personnel office revealed errors in calculating either the length of service or the amount of benefit for 14 plan participants. Correcting the errors will save about $800,000.
The council also passed, by a 5-2 vote, a bill that adds council members' legislative assistants, who were mistakenly left out of the revamped pension plan for elected and appointed officials. The new plan deducts money from an official's salary and adds a county match.
The council passed another bill -- also by a 5-2 vote -- that allows most of the 17 present and former county workers mistakenly included in the generous pension plan to keep their benefits.