The following letter from the Chairman of the Fairfax County Board of Supervisors (BOS) responds to the comments about soaring pension costs that were made by Charles McAndrew, Board member of the Fairfax County Taxpayers Alliance (FCTA) and frequent Fairfax Free Citizen contributor, at a BOS public hearing on April 6. His comments are available here and follow the BOS Chairman’s response below .
Thank you for contacting me regarding Fairfax County government employee benefits and retirement system. The County Executive and the Board of Supervisors will be evaluating features of our pension plan through the FY 2018 budget guidance process as well as completing a comprehensive Lines of Businesses Review currently underway. The Board will examine plan provisions and benefits such as the minimum retirement age, Rule of 85, DROP program, and pre-Social Security supplement.
Our Board is committed to taking an extensive look at these items moving forward. These proposed changes would impact new hires within the Fairfax County government. An overall conversation about employee pay and benefits will begin at the Board of Supervisors Personnel meeting in June. This will be a priority moving forward for our Board of Supervisors. Thank you for your comments.
Yesterday (April 6) I was the 58th speaker to the County Board of Supervisors. My speech was on just one subject: PENSIONS!
Here were my points:
- Raise the age for new employees to 67, the same age as one who would retire with Social Security.
- Move all three major pension funds, i.e., the Employees Retirement Fund, Police Retirement Fund, and the Uniformed Retirement Fund to a system similar to the Federal Government, i.e., the Federal Employees Retirement System (FERS). See footnote on this below.
- Realize that pension costs are growing as noted by the Washington Post front page article in METRO section page 1, dated January 29, 2017 titled, “ Pension costs plague Fairfax budget.” The article goes on to state: “that since 2010, pension expenses in Virginia’s largest jurisdiction have nearly doubled to $219.5 million at a time when the stubbornly lukewarm local economy has kept revenue down.” Of course, the Post failed to state that in 2008 and 2009 Fairfax County failed to fully fund their pension systems during the recession. Fairfax County pensions are growing each year and eventually these pensions will become unsustainable!
- As I understand it, Fairfax County has the only Supplemental Social Security system in the entire region! John Hummel, CPA and Deputy Inspector General of the Montgomery County, MD, Office of the Inspector General, told me that his county does not have this system! This system costs Fairfax County approximately $36 million each year. This system should be canceled!
- Fairfax County needs to fully fund their pensions. As I understand it, approximately $100 million is an unfunded pension liability for Fairfax County. This may not include the Virginia Retirement System.
- I urge the Fairfax County Board of Supervisors to carefully review their pensions with the idea to either go to a 401k system or something similar to FERS for all new employees and to raise the retirement age.
In the summer of 1985, I worked in the Office of Financial Management in the U.S. Office of Management and Budget (OMB) under Director David Stockman. He assigned a team of pension experts to study the Civil Service Retirement System (CSRS). They projected costs out for 30 years, i.e., to 2015 and predicted that the CSRS would cost billions and greatly increase the National Debt. So they made a significant change by setting up a less generous system called the FERS. This system was implemented in 1987 for all NEW employees hired in the Federal Government. So my point is that the Fairfax County Government needs to change their unsustainable pensions systems to a more realistic systems similar to the Federal Government’s FERS.