Government and People
Monday, 19 October 1998, 9 a.m.
Contact: Philip Blair, Jr.
THE RAID ON THE DISTRICT OF COLUMBIA PENSION FUND
It is now two weeks before the election, a time when parties and politicians are expected to be stressing their differences. But we, the chairs of four political parties in the District of Columbia, stand before you united, with one unanimous message: Uncle Sam's surprise raid on the Pension Fund administered by the District of Columbia Retirement Board must be stopped!
We are (alphabetically) Julie Finley of the Republican Party; John Gloster of the D.C. Statehood party; Scott McLarty of the Green Party; and Louanner Peters of the Umoja Party.
Under the omnibus budget bill to be voted on Tuesday, $2.4 billion currently invested by the D.C. Retirement Board will become a windfall for the Federal budget for this fiscal year. Until now, this fund has been dedicated to the District's pension obligations to our teachers, policemen, firemen, and judges.
A senior and respected Member of Congress, John Mica of Florida, Chairman of the Civil Service Subcommittee, calls the proposals to be voted on Tuesday a raid by the Treasury on the District of Columbias retirement funds. He goes on to use terms like blatantly misrepresent, deceptive accounting, and duplicitous description to describe the arguments made in favor of this scheme.
We agree with Mr. Mica, and urge Congress and the President to reject this scheme.
Even if it is true that pensioners should feel no concern about whether their pensions will be paid, this deal will have immense collateral damage to the District. Rep. Tom Davis of Virginia has been frank about this. He has admitted to the Washington Post that the greater risk is to the District of Columbia [rather] than to the pensioner.. . . [T]he city may have to trade down other assets to get these [pensions] in the legislative sausage grinder.
In the rush to agree on a long over-due budget resolution, there has been no time for District leaders or for Delegate Eleanor Holmes Norton, who represents the District of Columbia in Congress, to evaluate the consequences of this proposal. She points out that the Treasury Department agreed last year to study alternative funding arrangements for these District assets. This study has never been undertaken.
The Pension Fund earned 26% in returns in the 1996-1997 fiscal year (the most recent year for which financial statements have been audited and certified). Under this new proposal, the Treasury would be forced to convert these assets to Treasury securities earning approximately 5% per year. (And this may not be the best time to be selling securities.)
The additional cost to the U.S. taxpayer of this scheme is at least $1.6 billion by the year 2010.
The Pension Fund was fed by yearly payments from the District of Columbia government and by employee contributions. This is not federal money, but rather the product of District taxpayer dollars, payroll deductions, and investment income from the D.C. Retirement Board.
Before Home Rule, all District employees were Federal Government employees. When the
Retirement Board began operations in 1980, the unfunded pension liability inherited from
the Federal government was $2.6 billion. This was offset in part by 25 planned annual
payments of $52 million each, but this revenue stream had a present value then of only
$600 million, which left a
For the past 18 years Republican and Democratic Congresses and Republican and Democratic Presidents have not funded the Federal governments shortfall for its pension obligations. It is therefore a Big Lie to say that the District of Columbia would soon be bankrupted by its own pension obligations. No, the problem is that over 18 years the District had paid $2.1 beyond its own obligations to cover the Federal shortfall.
The sad truth is: Uncle Sam is a deadbeat. He is into us in the District for $2.1 billion already, and now he wants $1.6 billion from the whole country.
Again, this raid on the D.C. pension fund is bad for the nations capital. It is bad for the pensioners of the District, many of whom live in the Maryland and Virginia congressional districts. It is bad for taxpayers in the entire country. And it must not be permitted.
Additional comments from each of the Party leaders are attached.
The party leaders and the coordinator of this statement are available to the press for interviews: Please contact them individually: Ms. Julie Finley, 202/338-2849; Mr. John Gloster, 202/561-1605; Mr. Scott McLarty, 202/518-5624; Ms. Louanner Peters, 202/463-8806; Mr. Philip Blair, Jr., (coordinator) 202/ 526-8821.
Additional contacts from D.C. Retirement Board: Ms. Betty Ann Kane (Chair), 202/ 546-9062; Ms. Judith C. Marcus (member), 301/299-2836.
Julie Finley for the D.C. Republican Party:
It is important that people across the country understand that this fiscal irresponsibility will hurt them personally. You may live in Iowa or Idaho or Indiana, but this scheme reaches a hand into your pocket. The conversion of the Districts well-administered, profit-generating pension fund into a Federal IOU will raise the cost for these federalized pensions. Every taxpayer in this country will be a loser as a result. This is fiscal irresponsibility.
How much money is involved? Betty Ann Kane, chair of the D.C. Retirement Board, has conservatively calculated that this scheme will cost the American taxpayer $1.6 billion in unwarranted expenses by the year 2010. That figure gets my attention!
Moreover, this scheme is part of an ugly inter-generational injustice. This scheme steals from Tomorrow to pay Today. It irresponsibly ties the hands of future political leaders solely in order to achieve a false appearance of accomplishment today.
Ms. Finley is available to the press for interviews: Please contact her directly: Ms. Julie Finley, 202/338-2849
John Gloster for the D.C. Statehood Party:
It was Congressman Davis, not I, who called the congressional budget process a sausage grinder. A wise man once said that if you see sausage being made youll never eat it. People of this country worry about social security and about company pension funds looted by corporate raiders. If what is being done to the District pension fund by Congress were done to a companys pension fund, somebody would go to jail. If this is the way the President and Congress will work together to safeguard social security and other pension funds, my advice to you is: get a passport.
I am a citizen of the District of Columbia. As such, I and my neighbors are not yet granted basic political rights that all other citizens of the United States takes for granted. We were not consulted in this matter, though the money concerned is ours, accumulated from our taxes. This entire scheme is being rushed past under a dark and secretive cloak of misstatements and evasions. Surely, after a little bit of sunshine is allowed in, this scheme will be rejected by the Administration and by Congress.
To cite one case in which mistaken calculations lead to complacency in the face of this threat, Sundays Washington Post editorial talks about X hundred thousand dollars this year as the appropriation from the Federal budget that will be necessary to pay D.C. pensions. They've dropped three zeroes! The true figure would be hundreds and hundreds of millions of dollars. This is not funny: it is too, too typical of the quality of press attention to District issues.
Mr. Gloster is available to the press for interviews: Please contact him directly: Mr. John Gloster, 202/561-1605
Scott McLarty for the D.C. Green Party:
I would like to commend the District of Columbia Retirement Board. By so vigorously defending the interests of the pensioners and taxpayers of the District, Ms. Betty Ann Kane is adding yet another capstone to her career of public service. The men and women who serve with her on the Board retired and active firefighters, retired and active teachers, retired and active police officers, judges, and mayoral and Council appointees are energetic and accomplished public servants. And your staff is superb. You have labored out of the glare of publicity. Maybe the lack of media attention is itself a reward that is rare enough in our day. But my colleagues and I want to thank you for your service to this city and its people.
Moreover, I must note that the Board includes some members who live not in the city, but in Maryland and Virginia. We especially appreciate your presence on the Board, as a living demonstration that the entire region has a stake in the financial well-being and the efficient administration of the city. We thank you for your willingness to confront and to educate your own members of Congress, who do have a vote in Congress, unlike our single elected Delegate.
The Treasury has not yet prepared the study of alternatives that was promised to us. This study will I think show the wisdom of leaving the administration of this pension fund in your capable and proven hands.
We in the Green Party urge the citizens of the District to work urgently for representation in Congress and full statehood; our friends around the country must support us in achieving full citizenship.
Mr. McLarty is available to the press for interviews: Please contact him directly: Mr. Scott McLarty, 202/518-5624
Louanner Peters for the Umoja party:
Once again, the U.S. Congress and president seek to balance the Federal budget on the backs of the citizens and taxpayers of the District of Columbia.
This time, like the corporate raiders of the 1980s, they want to loot a pension fund. They attack one of our citys best-managed assets, the pension fund administered by the D.C. Retirement Board. This budgetary shell-game, a hostile takeover of our assets, is obscene. Our countrys political leaders want to put into play one of our city's most valuable assets, in order to consolidate their hold on power.
The Umoja Party stands in total opposition to this shortsighted political ploy. It is one more step in the campaign to strip residents of the Nations capital of our democratic rights. But this time they cannot use alleged mismanagement of city resources as a pretext.
We hereby serve notice that we are working alongside our colleagues here and our fellow citizens to mobilize our community against this direct threat to the future of our city. To our fellow Washingtonians we say: This year it is the D.C. pension fund. Which of our assets will be taken next year? And what makes these Federal raiders think that District residents will sit quietly by while our assets go up in smoke?
Ms. Peters is available to the press for interviews: Please contact her directly, along with Mr. Bill Washburn, who is also a spokesperson for the Umoja party: Ms. Louanner Peters, 202/463-8806; Mr. Bill Washburn, 202/561-1008
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