County errs in pension fund contributions

Audit shows $2.6 million unpaid in last fiscal year

`This ... is going to hurt us'

New payroll process may be a cause, controller says

January 07, 2003|By Ryan Davis | Ryan Davis,SUN STAFF

For at least a year, Anne Arundel County government contributed less than it should have to its employee pension plans, shortchanging the trust funds by $2.6 million, county auditor Teresa Sutherland said yesterday.

County officials said the financial loss will be "very minimal" and fix-it money is readily available. But the mistake is cause for concern, employee union officials said.

"This little black eye here is going to hurt us," said O'Brien Atkinson, president of the Anne Arundel County Fraternal Order of Police. "It makes everybody real cautious about the pension itself. It makes people unsure about something we should be sure about."

For now, the question remains: How did this happen for so long?

"We didn't get that far," Sutherland said.

Sutherland discovered the error last month during the county's routine year-end audit, she said. The county makes contributions to the employee pension fund on a monthly basis. For 10 of the months between July 1, 2001, and June 30, the contributions were miscalculated by the county personnel office, Sutherland said.

She said she suspects the contributions also were miscalculated from June until last month, though that has not been determined.

Adequate money to fund the pension contributions was in the county budget for the fiscal year that ended June 30, said Matt Diehl, a spokesman for County Executive Janet S. Owens. When the money wasn't spent, it went into a surplus fund, he said. But officials didn't immediately notice the mistake, county Controller William R. Brown Jr. said.

Now that the mistake has been uncovered, the council will be asked to earmark the money again for the pension fund.

The error means that the money the county should have contributed will not be invested until it gets council approval.

"Obviously we lost the investment money," Sutherland said. "How much that is, I don't know."

Brown said it would be a "very minimal" amount.

In all, the pension funds have net assets of about $925 million, Sutherland said.

"The $2.6 million is a lot of money," Sutherland said, "but not in the context of $1 billion in assets."

As recently as last year, the fire and police pension plans were a point of contention in negotiations between the county and employee unions. Union officials said they will keep a close eye on the recently discovered mistake.

"I'm certainly concerned that it happened, but not in a sense that makes me suspicious," said Keith W. Wright, the president of the Anne Arundel County Professional Firefighters Local 1563. "I'll wait and see exactly what happened before I determine the level of concern."

Brown said the error was likely tied to the installation of a new payroll process during the 2002 fiscal year.

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