oversight

District's Workforce: Annual Report Required by the District of Columbia Retirement Reform Act

Published by the Government Accountability Office on 1990-04-04.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                                                                                  DISTRICT’S
             Apri I l!)!)O



                                                                                  WORKFORCE
                                                                                  Annual Report
                                                                                  Required by the
                                                                                  District of Columbia
                                                                                  Retirement Reform Act


                                                                                                  141048




_1--.-.-._-._.--             ..-.   -   __lll_--__~-._,..-   ._._   -._-   .._-   -.-   ____




 (;A(:l;(;(;l)-!~o-70
United States
General Accounting Office
Washington, D.C. 20648

General Government Division

B-208412

April 4,199O
The Honorable Thomas S. Foley
Speaker of the House of Representatives

The Honorable Robert C. Byrd
President Pro Tempore
United States Senate
The Honorable John Glenn
Chairman, Committee on Governmental Affairs
United States Senate
The Honorable Ronald V. Dellums
Chairman, Committee on the
  District of Columbia
Houseof Representatives
The Honorable Robert C. Byrd
Chairman, Committee on Appropriations
United States Senate

The Honorable Jamie L. Whitten
Chairman, Committee on Appropriations
House of Representatives

The Honorable Marion S. Barry, Jr.
Mayor of the District of Columbia

The Council of the District of Columbia
Washington, DC

In accordancewith subsection 146(b) of the District of Columbia Retire-
ment Reform Act (Public Law 96-122; as amendedby Public Law 9%
104), we are sending you our comments on the enclosedreport prepared
by Mr. Thomas Lowman, of William M. Mercer Meidinger Hansen,Inc.,
on the disability retirement rate of District of Columbia police officers
and firefighters. The act provides for annual federal payments to the
District of Columbia Police Officers and Fire Fighters’ Retirement Fund.
These payments, however, are to be reduced when the disability retire-
ment rate exceedsan established limit. The purpose of making the pay-
ments subject to a reduction was to encouragethe District government
to control disability retirement costs.



Page 1                                    GAO/GGIHO-70 Retirement Reform Act
                Mr. Lowman, an enrolled actuary, was engagedby the District of Colum-
                bia Retirement Board to (1) determine the 1989 disability retirement
                rate for District police officers and firefighters hired before February
                16, 1980; (2) determine if that rate exceededeight-tenths of 1 percent-
                age point; and (3) prepare the annual report required by the act.
                Subsection 146(a) of the act, as amended,established a “trigger mecha-
                nism” for determining whether the annual federal payment of
                $34,170,000 to the District of Columbia Police Officers and Fire Fight-
                ers’ Retirement Fund (authorized under subsection 144(a)(l) of the act)
                is to be reduced. The Comptroller General is required by the act to make
                this determination each year on the basis of a review of the disability
                retirement rate computed by the enrolled actuary. We have reviewed the
                actuary’s report and other relevant data and concluded that no reduc-
                tion is required in the fiscal year 1991 federal payment to the District’s
                police and firefighters’ retirement fund.

  /
Ba#is for Our   As defined by subsection 146(a)(2) of the act, as amended,the disability
                retirement rate is a fraction, the numerator of which is the number of
Determination   District of Columbia police officers and firefighters hired before Febru-
  ,             ary 16,1980, who retired on disability during the applicable calendar
                year. The denominator is the total number of police officers and
                firefighters hired before February 16, 1980, who were on active duty as
                of January 1 of the applicable calendar year.

                For calendar year 1989, up to 118 officers and members of the Metropol-
                itan Police Force who were hired before February 14, 1980, and who
                retired on disability before the end of calendar year 1989 shall be
                excluded from the computation of the disability retirement rate.’
                According to the conferencereport on the bill, a number of officers were
                in limited or light duty status or on extended sick leave, and the police
                chief testified that it was important to replace these individuals with
                able-bodied police officers who could perform on the street. The confer-
                ees,noting that the District responded favorably to incentives for reduc-
                ing the percentageof disability retirements, included language allowing
                up to 118 of these individuals to retire without reducing the authorized
                federal payment to the retirement fund.



                ‘kection 139(a) of Title I, District of Columbia Appropriations Act, 1989 (Public Law 100-462, Oct. 1,
                1988.)



                Psge 2                                                     GAO/GGD-90-70 Retirement Reform Act
5208412




A disability retirement rate greater than eight-tenths of 1 percentage
point triggers a reduction in the next annual federal payment. Thus, the
trigger mechanism governing the fiscal year 1991 payment is baaedon
membersretiring on disability in calendar year 1989 (the numerator)
and memberson board on January 1,1989, (the denominator). The
enrolled actuary must report the determinations made under the law,
along with related documentation, to the Retirement Board and to the
Comptroller General no later than March 1 of each year.
Our comments must include a statement as to whether the determina-
tions made by the enrolled actuary fairly present, in all material
respects,the requirements of the law. The law also requires that we
make a determination as to the amount, if any, by which the annual
federal payment is to be reduced. A reduction in the federal payment
would amount to l-1/2 percent for each whole tenth of a percentage
point by which the disability retirement rate is greater than eight-tenths
of 1 percentagepoint.
We have reviewed the enclosedreport from the actuary, which shows
that 114 police officers and 21 firefighters who were hired before Feb-
ruary 16, 1980, retired on disability in 1989. We did not verify to source
documents the information on disability retirements and employment
strength provided by District officials. On January 1,1989, there were
888 active firefighters and 2,719 active police officers who had been
hired before February X,1980, In his report, the actuary noted, and we
agree,that the recent act did not clearly specify whether the 114 retired
police officers should be excluded from the denominator in calculating
the disability retirement rate. He therefore calculated two separate
rates-one that included these police officers in the denominator and
one that excluded them (0.682 percent and 0.601 percent, respectively).
Since both rates are less than 0.8 percent, no reduction is required in the
fiscal year 1991 payment to the District’s police and firefighters’ retire-
ment fund. We did not consider it necessaryto resolve the matter of
whether the 114 retired police officers should be included in or excluded
from the denominator since there is no effect on future calculations and,
for 1989, both disability retirement rates are less than the trigger
mechanism.

In our opinion, the determination made by the enrolled actuary meets, in
all material respects,the requirements of the law.




Page 3                                     GAO/GGD-90-70 RetirementRefonn   Act
                                                                     I
                                                                         4

                                                                             3


E208412




We are sending a copy of this report to the District of Columbia Retire-
ment Board. Copieswill be made available to other interested parties
upon request.

Larry Endy, Assistant Director, Federal Human ResourceManagement
Issues,was the principal contributor to this report. If you or your staffs
have any questions, please call me on 2766074.




Bernard L. Ungar
Director, Federal Human Resource
  Management Issues




Page 4                                    GAO/GGDW70   Retirement Reform Act
.




    Page 5   GAO/GGDo-?O   Retirement Reform Act
App&dix

A&uary’s Report



            WILLIAM M.
            MmCER
               turto MEIDINGER HANSEN
            v/IYP                                                                                    -
            Thomas B. Lowman, F.S.A./Prmclpal

            February 21, 1990
                                                                  Hand Delivered


            Ms. Carolyn Smith
            Chairperson
            DC Retirement Board
            1025 Vermont Avenue, N.W., Suite 1030
            Washington, DC 20005
            Dear Ms. Smith:
                            Disability Retirement Rate for 1989 Calendar Year
                           District of Columbia Police Officers and Firefighters’

            Public Law 98-104 requires that the enrolled actuary determine the disability
            retirement rate and report on the disability retirement rate by March 1 of each
            year, with respect to the rate for the preceding calendar year.
            The following employee data and disability retirement data was made available
            to me by the D.C. Retirement Board and D.C. Policemen and Firemen
            Retirement Relief Board respectively:
                 1. Number of active police officers as of January 1, 1989, hired on or
                    before February 14, 1980:
                       l   2,719 (includes 114 police officers who retired on disability during
                           1989 as explained below.)
                       a 2,605 (excludes 114 police officers who retired on disability during
                         1989 as explained below.)
                 2. Number of active firefighters as of January 1, 1989, hired on or before
                    February 14, 1980: 888
                 3. Numbers of 1989 disability retirements among employees hired on or
                    before February 14, 1980: 21 (21 firefighters, excludes 114 police
                    officers as explained below):
            Section 139 of Title I - Districiof Columbia Appropriation Act, 1989 (P.L
            100-462) allowed up to 118 officers and members of the Metropolitan Police
            Department who were hired prior to February 14, 1980 to retire on disability
            before the end of calendar year 1989 without including them in the computation
            of the rate of disability retirement pursuant to subsection 145(a)of the District
            of Columbia Reform Act (disability trigger). Based on the provisions of this
            Act, all one hundred and fourteen (114) police officers who were hired prior to
            February 14, 1980 and retired during the 1989 calendar year are eligible for
            exclusion from the disability ratio calculation. The Act did not specify clearly




                  Page 6                                                  GAO/GGD-90-70 Retirement l&form Act
   .



                 Appendix
                 Actuary’s Report




           MEKER          MEIDINGER       HANSEN



           Ms. Carolyn Smith
           February 27, 1990
           Page 4

           whether these disabled retirees should be excluded from the denominator of the
           calculation. As a result, we have done two separate calculations for the
           disability retirement rates, one by including these disabled retirees in the
           denominator and the other by excluding them from the denominator.
           Based on the data provided to us. the disability retirement rate for 1989 as
           defined in Public Law 98-104 amending subsection 145(a) paragraphs (1) and (2)
           of the District of Columbia Retirement Reform Act, after excluding 114 police
           officers who retired on special disability provisions from the denominator of the
           calculation, is 0.601%. If these disabled retirees are included in the
           denominator, the disability retirement ratio will decrease to 0.582%.
           The disability retirement rates calculated above are not greater than 0.8%, i.e.
           eight-tenths of a percentage point.
           Sincerely,

           -72              7-
           ThomasGan,            F.S.A.
           Principal
           TL/plm
           Enclosure
           cc: Mr. William Stanton                      Mr. Larry H. Endy
               Mr. Jorge Morales                        Mr. Charles Bowsher




(B66424)         Page 7                                           GAO/GGD-fW70 Retirement Reform Act
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