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[09/06/1996 - 03/27/1997] [PBGC]
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54979693
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[09/06/1996 - 03/27/1997] [PBGC]
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Presidential Electronic Mail from the Automated Records Management System (ARMS)
Automated Records Management System (ARMS) Email from the Office of Policy Development (OPD) Bucket
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42-t-26444780-20140226F-004-003-2016
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RECORD TYPE: PRESIDENTIAL (ALL-IN-1 MAIL)
CREATOR: Daniel Taberski (TABERSKI_D) (OPD)
CREATION DATE/TIME: 6-SEP-1996 19:51:01.86
SUBJECT: fyi
TO: Daniel Taberski
(TABERSKI_D) (OPD)
READ:NOT READ
TO: Jason S. Goldberg
(GOLDBERG_JS) (OPD)
READ:NOT READ
TO: Jonathan Orszag
(ORSZAG_J) (OPD)
READ: 6-SEP-1996 19:51:06.09
TO: Pauline M. Abernathy
(ABERNATHY_P) (OPD)
READ: 8-SEP-1996 12:57:54.08
TEXT:
ATTACHMENT 1
ATT CREATION TIME/DATE: 6-SEP-1996 10:14:00.00
ATT BODYPART TYPE:B
ATT CREATOR: Ellen S. Seidman
ATT SUBJECT: Memo on pension items
ATT TO: Pauline M. Abernathy
(ABERNATHY_P)
ATT TO: Gene B. Sperling
(SPERLING_G)
TEXT:
Attached is a memo on pension items. I'm following up on the raids issue,
although I think we need to be careful of some potential risk, e.g., Democrats
who have done the same, Cuomo's ETI push. I'm also trying to get more info on
the Daschle situation, but my source is not really going to be close to the
issue of what they're planning on the introduction. Ellen
END ATTACHMENT 1
ATTACHMENT 2
ATT CREATION TIME/DATE: 6-SEP-1996 10:21:00.00
ATT BODYPART TYPE:p
TEXT:
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?<
September 6, 1996
?<MEMORANDUM FORGENE SPERLING
? <FROM:`
Ellen Seidman
?<SUBJECT:
Pension items in the next few months
?@<Congress
Introduction of Daschle omnibus pension bill. Probably next
week. Bill includ
es RSSA items that were not included in the
minimum wage bill (including IRAs),
plus additional MoseleyBraun
items, Boxer 401(k) diversification provision and
some other
items. In general, this bill should be fully supportable by the
Ad
ministration, although there is a serious possibility that we
will not see it u
ntil just prior to introduction, and things have
been dropping in without anyon
e vetting them with us. Kennedy
and Bingaman will also try to reach agreement
with each other on
what they will call an employeedriven 401(k) program. The
r
eason Daschle has been resisting including this in his bill
and the reason we
have all been very skeptical about it is
that the mechanism for enabling this
to happen strongly resembles
regional purchasing cooperatives, for which there
is
significantly less justification in the pension field than there
was in heal
th care.
?< Reich wants to take part in the introduction. We don't know what
Daschle's
plans really are. If the White House wants to
participate, or wants to influen
ce what's going to happen, we
?p<need to talk to Daschle's office quickly.
?<DOL
1. Audit bill Kassebaum has promised a markup, but has not
scheduled one. Re
ich wants White House public and private
support to push it along.
2. Rollout of booklet on "Protecting Your Pension," a userfriendly guide to ev
aluating your pension program, including how
?@<to read and use a Form 5500. Scheduled for next week or the week
? <after, with Reich as lead.
?!<
Treasury
1. Issuance of revenue ruling (IRS) and proposed regulation
(Treasury) impleme
nting two of the portability proposals in the
President's program: (i) safe har
bor for plans accepting
rollovers and (ii) greater flexibility of investments f
or
employees who choose to leave 401(k) money with a former employer"H&`''`'-"
?<when the employee changes jobs. Treasury wants to announce these
soon (they
're saying next week), and staff have indicated some
unease at politicizing esp
ecially the revenue ruling, because of
?X<concerns about seeming to impinge on IRS independence.
2. [This isn't really pensions, but you should know about it,
which you may.]
Issuance of revenue ruling making clear that
section 127 nontaxation of employ
erprovided education benefits
applies to former employees who are laid off, rif
fed, etc., even
?<if they do not have callback rights. Timing: "shortly"
3. We have asked Treasury to move forward on designing the
SIMPLE form as quic
kly as possible. They may be able to make it
by October.
?<DOJ
The AG has indicated that she wants to make pursuit of pension
?<fraud a top whitecollar crime priority. Timing: uncertain
because there are
some bureaucratic steps that have to be taken,
?<but clearly this fall.
?0<PBGC
1. Issuance of booklet: "Divorce Orders & PBGC." This includes
two model Quali
fied Domestic Relations Orders (QDRO). A QDRO is
a direction by a court to a p
ension plan on how to divide pension
benefits among parties to a divorce. The
orders in the book
?< technically apply only to those plans for which the PBGC is the
trustee (ge
nerally terminated plans of bankrupt companies).
However, knowing that you nee
d a QDRO and then writing one that
passes muster under ERISA is fairly difficul
t, and the
expectation is that these models will be useful in a broader
context
. This is NOT the response to the MoseleyBraun provision
in the minimum wage b
ill (that orders Labor to develop sample
QDRO language for plans more generally
), but it is a really good
?
<start.
Timing:
PBGC intends to release the booklet next week.
2. Funding up. The PBGC's "Top 50" list of underfunded plans,
plus the requir
ement under the RPA that employers whose plans are
underfunded so notify their
employees, has led to much funding up
activity. Various cases can be used as e
xamples. A really good
one that should be announced about September 15 is that
in
connection with Teledyne's merger with AlleghenyLudlum, a
portion of the ov
erfunding in the Teledyne pension plan will be
used to fund AlleghenyLudlum's u
nderfunded plan. Teledyne had
been a leader in the reversion fight.
3. General attention to pensions. When Wheeling Pittsburgh went
into bankrupt
cy in the early 1980s, the defined benefit plan was
terminated. The strike iss
ue this year at the company will be
reestablishing the plan.
END ATTACHMENT 2
RECORD TYPE: PRESIDENTIAL (ALL-IN-1 MAIL)
CREATOR: Ellen S. Seidman (SEIDMAN_E) (OPD)
CREATION DATE/TIME:19-SEP-1996 18:43:45.94
SUBJECT: retirement commission
TO: Kenneth S. Apfel
(APFEL_K) Autoforward to: Remote Addressee
( Kenneth S.
Apfel@eop@Ingtwy@eopmrx ) (OMB)
READ:NOT READ
TEXT:
I have my pension working group working on this. Please call me. We need to
include the PBGC in the meeting; they may be the most constructive of all.
Ellen
RECORD TYPE: PRESIDENTIAL (ALL-IN-1 MAIL)
CREATOR: Michael Warren (WARREN_M) (OPD)
CREATION DATE/TIME:20-SEP-1996 14:33:14.79
SUBJECT: Attendees For Your 3:00 Meeting
TO: Ellen S. Seidman
(SEIDMAN_E) (OPD)
READ:20-SEP-1996 17:02:06.34
TEXT:
Here are the attendees for your 3:00pm meeting in Room 231:
Mark Iwry - Treasury
will attend
Viki Judson - Treasury
will attend
Josh Gotbaum - Treasury
will attend
Louise Sheiner - Treasury
will attend
Olena Berg - Labor
out of town
Alan Lebowitz - Labor
will attend
Mary Ann Richarson - Labor will attend
Richard Hinz- Labor
will attend
Larry Matlack - OMB
not confirmed
Mark Mazur - NEC
not confirmed
Nell Hennessey - PBGC
will attend
Judy Schub - PBGC
will attend
RECORD TYPE: FEDERAL (NOTES MAIL)
CREATOR: OIRA_DOCKET@A1@CD@LNGTWY (OIRA_DOCKET@A1@CD@LNGTWY [ EOP (OMB)
CREATION DATE/TIME:27-SEP-1996 16:08:39.00
SUBJECT: 1212-0030 OMB NOTICE OF ACTION
TO: SCHRAMM_A@AI@CD@LNGTWY(SCHRAMM_A@A1@CD@LNGTWY[GSA1)(GSA
READ:UNKNOWN
TO: [email protected]@INET@LNGTWY (
[email protected]@INET@LNGTWY[UNKNOWN
READ:UNKNOWN
TO:[email protected]@INET@LNGTWY([email protected]@INET@LNGTWY[
UNKNOWN ])
READ:UNKNOWN
TO: Debra J. Bond@eop ( Debra J. Bond@eop [ OMB ])
READ:UNKNOWN
TEXT:
NOTICE OF CHANGE
Harold J. Ashner
09/27/96
Pension Benefit Guaranty Corporation
Office of the General Counsel
1200 K Street NW., Suite 340
Washington,, DC 20005-4026
In accordance with the Paperwork Reduction Act, OMB has
made the following change(s).
OMB NO.: 1212-0030
TITLE: Survey of Nonparticipating Single Premium Group
AGENCY FORM NUMBER(S): None
The following items have been changed:
ITEM
PREVIOUS VALUE
NEW VALUE
Nbr. Respondents
14
13
Total Responses
40
28
Total Hours
30
21
Hours Difference
-42
-9
Program Change
-42
-9
Annual Costs
1,056
752
Total Costs
1,056
752
Costs Difference
1,056
-304
Costs Pgm Change
1,056
0
Costs Adj Change
0
-304
OMB Authorizing Official Title
Donald R. Arbuckle
Deputy Administrator, Office of
Information and Regulatory Affairs
RECORD TYPE: PRESIDENTIAL (ALL-IN-1 MAIL)
CREATOR: Ingrid M. Schroeder (SCHROEDER_I) (OMB)
CREATION DATE/TIME: 8-OCT-1996 17:24:48.84
SUBJECT: HTF comments on the signing statement
TO: Ellen S. Seidman
(SEIDMAN_E) (OPD)
READ: 8-OCT-1996 17:27:49.49
CC: James J. Jukes
(JUKES_J) (OMB)
READ: 8-OCT-1996 17:25:51.41
TEXT:
Update-
We have retyped the signing statement and included the SEC
comments (I will forward the file to you seperately). I am
attaching to this email the OMB/HTF comments (these have not been
included in the statement).
So far these are the only comments we have recieved. The
following agencies have responded with either no comments or no
objections to the statement:
Justice
Commerce
Federal Reserve
Labor
PBGC
SBA
Elena Kagan
Lisa Kountoupes is looking at the statement right now and we have
pinged Treasury for their signoff.
ATTACHMENT 1
ATT CREATION TIME/DATE: 8-OCT-1996 12:42:00.00
ATT BODYPART TYPE:E
ATT CREATOR: William F. Wiggins
ATT SUBJECT: signing statement and other stuff
ATT TO: SCHROEDER_I
(SCHROEDER_I@AI@CD)
TEXT:
Message Creation Date was at 8-OCT-1996 12:42:00
Ed and I looked at the signing statement and have no problem with it. However,
Alan thinks we might want to change the 4th to the last line. Currently, it
reads, "The SEC's funding will be stable and more predictable from year to
year." This may be too strong, since the appropriators still have to act to
fund the agency each year. As a result, I think we should change it to the
following:
"The SEC's funding will be more stable and predictable than it has been in
recent years."
In addition, we should add a two sentences to the enrolled bill memo that
explain why both the 6(b) and transaction fees drop substantially in the tenth
year of the fee schedule. I purpose to place the first sentence right after
the sentence which ends, ".....the fee would be reduced to 1/150th of I percent
in FY2007." This sentence should basically say: "This ten year time frame was
required (or used) so that the proposed fee structure would not run afoul of
the pay-as-you-go scoring rules". A substantially similar sentence also should
be placed directly after the sentence that ends, "....1 percent of the
aggregate dollar value of securities traded to 1/800th of I percent in
FY2007."
Thanks a ton, Ingrid. BW
END ATTACHMENT
1
RECORD TYPE: PRESIDENTIAL (ALL-IN-1 MAIL)
CREATOR: Wendy J. Einhellig ( EINHELLIG_W ) (OPD)
CREATION DATE/TIME:18-NOV-1996 14:09:55.30
SUBJECT: RE: Car for 3:00 meeting
TO: Ellen S. Seidman
(SEIDMAN_E) (OPD)
READ:18-NOV-1996 14:22:29.01
TEXT:
Car # 85 at 2:50pm to PBGC 1200 K St NW, Suite 210
RECORD TYPE: PRESIDENTIAL (ALL-IN-1 MAIL)
CREATOR: Ellen S. Seidman (SEIDMAN_E) (OPD)
CREATION DATE/TIME:18-NOV-1996 12:00:47.47
SUBJECT: Pension underfunding announcement
TO: Gene B. Sperling
(SPERLING_G) Autoforward to: Daniel Taberski
(TABERSKI_D)
(WHO)
READ:18-NOV-1996 15:12:23.57
TO: Rahm Emanuel
(EMANUEL_R) (WHO)
READ:NOT READ
TO: Laura D. Tyson
(TYSON_L) Autoforward to: Thomas O'Donnell
(ODONNELL_T)
(WHO)
READ:18-NOV-1996 18:52:58.55
TO: Mark J. Mazur
(MAZUR_M) (WHO)
READ:18-NOV-1996 12:10:00.61
CC: Michelle Crisci
(CRISCI_M) (WHO)
READ:18-NOV-1996 12:05:41.32
CC: Daniel Taberski
(TABERSKI_D) (OPD)
READ:18-NOV-1996 15:12:23.57
CC: Michael Warren
(WARREN_M) (OPD)
READ:20-NOV-1996 17:04:15.03
TEXT:
On Thursday, December 12 about the usual time of year when they do these
things the PBGC will announce (i) underfunding at the end of 1995; (ii) the
fact that the PBGC, at the end of 1995, had a surplus, rather than a deficit;
and (iii) the 50 companies with the greatest degree of underfunding. You will
recall earlier warnings that, because of declining interest rates, the
underfunding number is way up over 1994. The PBGC is working hard at putting
this in context, emphasizing enhanced security and, to some extent, the need for
a better measure, which they actually presented at a conference at Wharton this
weekend. They are also trying to reduce the story's impact by the timing of the
release. Reich is fully aware of this, and there will be a PBGC Board meeting
this afternoon (I'm certain Reich, Rubin and Kantor will not be there but their
reps will be) to discuss the issue. I will attend the Board meeting.
Ellen
RECORD TYPE: PRESIDENTIAL (ALL-IN-1 MAIL)
CREATOR: Ellen S. Seidman (SEIDMAN_E) (OPD)
CREATION DATE/TIME:18-NOV-1996 13:51:44.33
SUBJECT: Car for 3:00 meeting
TO: Wendy J. Einhellig
(EINHELLIG_W) (OPD)
READ:18-NOV-1996 13:57:51.21
TEXT:
Could you get me a car for my 3:00 meeting at the PBGC. At 2:50. Thenks.
Ellen
RECORD TYPE: PRESIDENTIAL (EXTERNAL MAIL)
CREATOR: Michael Deich@EOP@LNGTWY@EOPMRX
CREATION DATE/TIME:27-NOV-1996 08:09:00.00
SUBJECT: issues on DC, CFTC, GSEs
TO: SEIDMAN_E
(SEIDMAN_E@A1@CD)(OPD)
READ:27-NOV-1996 09:09:27.32
CC: Alan B. Rhinesmith
( Alan B. Rhinesmith@EOP@LNGTWY@EOPMRX)
READ:NOT READ
TEXT:
Message Creation Date was at 27-NOV-1996 08:01:00
1. frank is interested in having the feds pick up DC's unfunded pension
liability. i'd like to spell out the proposal and get reactions from
interested admin actors. can you help fill in the cast? i have you, gotbaum,
pbgc (name?). who else?
2. i spoke w/born about cftc fees. her arguments were not based on any
quantitative evidence; neither were mine -- neither she nor omb staff knew of
any econometric/other studies of the effects that fees might have on the
relevant markets. i've put aside up to $1 m. to use on studies. any
recommendations on what people or entities might be regarded as unbiased,
authoritative so that any results might get broad acceptance (or at least force
the futures mkts to pay for their own opposing studies)?
3. HTF staff had the intriguing idea of auctioning off another fannie/freddie
like charter to introduce competition. again, details to follow. again, who
besides you has a stake in this? carnell? hawke? pls advise.
RECORD TYPE: PRESIDENTIAL (ALL-IN-1 MAIL)
CREATOR: Ellen S. Seidman (SEIDMAN_E) (OPD)
CREATION DATE/TIME:27-NOV-1996 09:32:20.11
SUBJECT: RE: issues on DC, CFTC, GSEs
TO: Michael Deich
(Michael Deich@EOP@LNGTWY@EOPMRX)
READ:NOT READ
CC: Alan B. Rhinesmith
( Alan B. Rhinesmith@EOP@LNGTWY@EOPMRX)
READ:NOT READ
TEXT:
1. We'll run into the big problem that no one in the federal govt involved in
pensions spends much time at all on gov't pensions -- ERISA generally doesn't
apply and the tax code sections matter to the beneficiaries, but only in the
atom bomb sense of revoking eligibility, so even the IRS doesn't pay much
attention. Having said this, the critical people are NOT Gotbaum and the PBGC
(although Nell Hennessey at PBGC will be helpful and creative), but rather Mark
Iwry (Benefits Tax Counsel - Treasury, or his deputy, Vicki Judson, but they
usually come in pairs, like nuns), Olena Berg at DOL (who's in charge of ERISA
and the fiduciary stuff, and who used to be on the Board of CALPERS), and -- if
you want to go down to the IRS level -- Evelyn Petchuk, who's head of Employee
Benefits at the IRS. Olena's non-career deputy, Meredith Miller, may actually
have given the DC situation some thought before she came into the gov't, as she
was with the service workers union in DC. Olena's career deputy, Alan Lebowitz,
is a smart guy who's been around a long time, and may have been around when the
whole DC pension issue was considered earlier, so he may have some useful
institutional memory, as well as good judgment. Nell, Evelyn, Mark and Vicki
are also long-time DC people (worked here even if they lived in the suburbs),
and so may have given this issue some pro bono thought over the years. Mark
Mazur might also be interested.
2. I really don't know on this one. NBER is a possibility. Ask Mark Mazur.
Larry Summers may also have some good ideas.
3. My personal view is that this is tilting at windmills, and if anyone picks
up the challenge it will likely be someone already so big that the result is
likely to be a three or four way oligopoly at greater risk to the government
rather than more competition (there's already plenty) at less risk. But,
leaving that aside, please make certain that HUD -- Nic Retsinas -- is involved
as well as Treasury. (My offhand guess is that neither Treasury nor HUD will
favor this proposal, but for totally different reasons; in fact, HUD is more
likely to be sympathetic than Treasury, because they'll see the possibility of
running yet more of their programs through GSEs.) You might also want to give
some thought to whether you can/want to involve Fannie's and Freddie's safety
and soundness regulator, OFHEO, who are the people who have actually done the
most work on the financial structure and risk of the firms, so should have the
best ability to think about such things as the extent to which monopoly rents
are being captured. I'd include them, but there may be policy reasons related
to their regulatory role not to. At Treasury, Hawke will be interested, as will
Gotbaum and Summers. Carnell will be interested too, but on this issue, he's
largely a more extreme version of Hawke. Mark Mazur will also be interested and
helpful.
RECORD TYPE: PRESIDENTIAL (ALL-IN-1 MAIL)
CREATOR: Ellen S. Seidman (SEIDMAN_E) (OPD)
CREATION DATE/TIME:10-DEC-1996 13:27:39.03
SUBJECT: Pensions
TO: Melissa G. Green
(GREEN_MG) (OPD)
READ:10-DEC-1996 13:28:24.20
TEXT:
EOP
Sperling
Emmanuel
Hilley? (someone from his office, who repr either leadership or tax)
Sitglitz
Munnell
Mazur
Ken Apfel
Michael Deich
Larry Matlack
Alan Rhinesmith
Treasury
Don Lubick
Mark Iwry
Josh Gotbaum
Vicki Judson
Labor (Main)
Olena Berg
Meredith Miller
Mary Ann Richardson
Vince Traveli
PBGC
Marty Slate
Judy Schub
Nell Hennessey
RECORD TYPE: PRESIDENTIAL (ALL-IN-1 MAIL)
CREATOR: Ellen S. Seidman (SEIDMAN_E) (OPD)
CREATION DATE/TIME:11-DEC-1996 17:58:42.74
SUBJECT: Pension underfunding announcement
TO: Rahm Emanuel
(EMANUEL_R) Autoforward to: Remote Addressee
( Rahm
Emanuel@eop@lngtwy@eopmrx ] ) (WHO)
READ:NOT READ
TO: Gene B. Sperling
( SPERLING_G) Autoforward to: Melissa G. Green
(GREEN_MG)
(WHO)
READ:11-DEC-1996 20:08:59.20
CC: Melissa G. Green
(GREEN_MG) (OPD)
READ:11-DEC-1996 20:08:59.20
CC: Jason S. Goldberg
(GOLDBERG_JS) (OPD)
READ:11-DEC-1996 17:58:47.83
CC: Michelle Crisci
(CRISCI_M) Autoforward to: Remote Addressee
( Michelle
Crisci@eop@Ingtwy@eopmrx ) (WHO)
READ:NOT READ
TEXT:
Apparently the AP is going to run a long, but hopefully complete and not
excessively excited story tomorrow on the pension underfunding issue. They have
not asked for a quote from Marty, and apparently not from anyone else in the
Administration, either, so the hope at the PBGC is that it will be factual.
ellen
RECORD TYPE: PRESIDENTIAL (PHONE MESSAGE)
CREATOR: Sonyia Matthews (MATTHEWS_S) (OPD)
CREATION DATE/TIME: 8-JAN-1997 10:44:58.70
SUBJECT: PH: gwen #202-326-4010
TO: Ellen S. Seidman
(SEIDMAN_E) (OPD)
READ: 8-JAN-1997 14:50:16.36
TEXT:
Caller: gwen
Of: pbgc
Work: 202-326-4010
Phoned.
conference call on 14th can happen at 10:00. Please call to
confirm or change.
RECORD TYPE: PRESIDENTIAL (ALL-IN-1 MAIL)
CREATOR: Ellen S. Seidman (SEIDMAN_E) (OPD)
CREATION DATE/TIME:13-JAN-1997 08:53:02.37
SUBJECT: DC PENSIONS
TO: Michael Deich
(DEICH_M) Autoforward to: Remote Addressee
(Michael
Deich@eop@lngtwy@eopmrx) (OMB)
READ:NOT READ
TEXT:
Michael, in a quick look over the DC stuff when I got in this morning, I noticed
on the pension part that it is written as if the $52 million will NOT be
transferred each year through 2004. If that's the case, I'm disappointed, but
at least the Q&A are basically accurate. If you DID decide to go ahead with the
$52 million transfer, the Q&A should be revised to reflect it.
If you stayed with the original plan, the second sentence of the first part of
the second answer -- outlays -- should be revised to read "This is being done
because the Federal government typically does not hold non-governmental assets
to fund pension obligations that are the direct responsibility of the federal
government." (Underlined words added) The reason for the first change is that
the trust funds DO hold assets -- the government bonds -- which are real, if a
little strange. The reason for the second change is that the PGBC, which is a
government agency, does, of course, hold lots of non-governmental assets to fund
the terminated plans it guarantees. (For that matter, TSP holds
non-governmental assets, but the theory there would be that TSP doesn't have
"pension obligations" in the sense meant here -- but the PBGC does.)
Finally, if you've stayed with the original plan, I do hope someone has the
answer to the charge that this is a costly $400 million budget gimmick.
Ellen
RECORD TYPE: PRESIDENTIAL (EXTERNAL MAIL)
CREATOR: M. Jill Gibbons@EOP@LNGTWY@EOPMRX
CREATION DATE/TIME:22-JAN-1997 11:11:00.00
SUBJECT: RE: Interagency Meeting on DC Initiatives
TO: SEIDMAN E
(SEIDMAN_E@AI@CD) (OPD)
READ:22-JAN-1997 13:02:10.91
TEXT:
Message Creation Date was at 22-JAN-1997 11:06:00
That's fine. I've already cleared in Terry Deneen and Stuart Sirkin from
PBGC. Are these the two from PBGC you mentioned? If not, 4 from PBGC might be
too many since we are limiting the other agencies. Thanks
RECORD TYPE: PRESIDENTIAL (ALL-IN-1 MAIL)
CREATOR: Ellen S. Seidman (SEIDMAN_E) (OPD)
CREATION DATE/TIME:22-JAN-1997 10:57:32.21
SUBJECT: RE: Interagency Meeting on DC Initiatives
TO: M. Jill Gibbons
(M. Jill Gibbons@EOP@LNGTWY@EOPMRX)
READ:NOT READ
TEXT:
Jill, I'm going to need to have two people each from PBGC and Treasury on the
pension stuff. It's really amorphous and we're meeting afterwards to try to pin
it down. ellen
RECORD TYPE: PRESIDENTIAL (ALL-IN-1 MAIL)
CREATOR: Ellen S. Seidman (SEIDMAN_E) (OPD)
CREATION DATE/TIME:24-JAN-1997 13:33:44.10
SUBJECT: RE: DC Pensions
TO: G E. DeSeve
(GE. DeSeve@EOP@LNGTWY@EOPMRX )
READ:NOT READ
TEXT:
I hope Frank understood that the hard freeze will start DC off with an
underfunded new plan if that new plan is a normal mirror plan.
On the talking to the actuaries, I hope you and Scott talked. The PBGC folks
will talk to them, but would prefer to be assured before asking them for any
runs that they've either agreed to work pro bono or that there's some payment
source. The PBGC CANNOT pay for this stuff. They don't believe the runs they
need are either hard or expensive, but want some assurance that they (i) will
get what they need and (ii) won't be left holding the bag.
Also, having never seen the original Matlack memo, I"m not sure what you mean by
the Treasury trustee option. That the Treasury should pick the trustee -- even
though the practitioners in the group think that may result in no or very high
bids, or that the Treasury should BE the trustee.
Ellen
RECORD TYPE: PRESIDENTIAL (EXTERNAL MAIL)
CREATOR: G E. DeSeve@EOP@LNGTWY@EOPMRX
CREATION DATE/TIME:24-JAN-1997 15:49:00.00
SUBJECT: DC Retirement Plans -- Drafting Issues and Other Notes
TO: SEIDMAN_E
(SEIDMAN_E@A1@CD)(OPD)
READ:24-JAN-1997 17:24:30.09
TEXT:
Message Creation Date was at 24-JAN-1997 15:42:00
I was quite clear with Frank about the unfunded liability. Attached is the
Matlack memo and I will send you a new one reflecting conversations he had (
and mirroring one I had) with Stewart Sirkin. I will talk to City people next
week about getting the most recent actuaries report and about getting
additional information paid for not by PBGC from the actuary.
Forwarded by G E. DeSeve/OMB/EOP on 01/24/97 03:36 PM
Larry R. Matlack 01/23/97 07:53:07 PM
Record Type: Record
To: G E. DeSeve/OMB/EOP
cc: Barry White/OMB/EOP, Robert B. Rideout/OMB/EOP, Scott Quehl/OMB/EOP
Subject: DC Retirement Plans -- Drafting Issues and Other Notes
We need your guidance on a few issues that have come up in the working group.
We have had two meetings on the above issue with the involved agencies and the
NEC, one each on Wednesday afternoon and Thursday afternoon. Many issues were
resolved, but a few still are outstanding. The issues raised by DOL, Treasury,
and the PBGC follow. The PBGC is the principal drafter.
We identified the drafting task as a three-part effort. The issues raised
where we need your guidance are discussed briefly under each heading below:
1. Taking over the Plan: In essence, treating the District's plan as if it
were a private sector company going through bankruptcy.
2. Selecting an Independent Trustee.
3. Administering the Wasting Trust: What happens when the money from the
District's existing investments for this purpose runs out?
1. Plan Takeover: First steps, akin to bankruptcy for the purposes of:
terminating plans; transferring assets to another entity; other entity takes on
responsibility for paying accrued benefits; no more money coming into plan. As
a general matter we agreed that:
- The date for freezing benefits (the "freeze date") will be the date the bill
is introduced.
- The "effective date" for takeover is the date on which the District agrees
to a follow-on plan.
- The "termination date" is the date the independent trustee takes over the
plan.
- In the period between the "effective" and "termination" dates, the District
will continue to administer the current plan, and will be paid for its costs
during that intervening period.
- The Federal payment for pension costs ends with the FY 1997 payment.
Condition One : District has to establish new pension plan for those
continuing employees who were covered under the old plans, and for future
employees. Federal Government may or may not have a role in development of
that follow-on plan (see "problems", below).
Condition Two: No plan termination or Federal takeover until District provides
adequate records (in judgment of Treasury Secretary) on all employees and
retirees under the plan.
Takeover Options:
Hard Freeze on Benefits. This was Wednesday's going-in position for drafting
purposes:
All current vested participants will be treated as vested, separated employees
with their eventual annuity based on age, salary, and years of service as of
the plan termination date.
Payout calculated at the earliest date person would have become eligible for
retirement under the existing plan.
Future salary increases and years of service would not be an issue or cost
concern for the plan the Federal Government takes over. The DC follow-on plan,
which would be left to collective bargaining, would pick up those costs. By
freezing everything on the bill's introduction date, we clearly establish the
Federal liability.
Problems:
Tough employee issue. Raises "anti-cutback" issues for those close to
retirement, seems inconsistent with Administration's past and current pension
initiatives to preserve pensions, but most importantly it would saddle the new
DC plan with immediate liability as it picked up accruing age and service
liabilities.
What to leave to collective bargaining, and how much to influence that
bargaining? There will be strong employee resistance to bargaining a plan that
is less generous than the one being terminated, every tendency to develop one
that has low near-term costs and high outyear costs, and every tendency to
delay coming to closure since the current plan remains in effect until the new
one is developed.
Alternative Takeover Options:
Soft Freeze Alternative. The Federal government assumes the accruing liability
for those near retirement for age, compensation, and related increases (called
"grow-ins"). There is uncertainty whether the $4.3 billion liability figure we
are using includes estimates for these costs. PBGC will try to find out the
status as soon as it can Friday. It could affect the route we choose.
Intermediate Freeze Alternative. Depending on the composition of the $4.3
billion, the Federal Government takes over some of the "grow-in" liability, but
not necessarily all. At issue could be disability (does DC make determinations
and bear the added cost), early retirements (is annuity based on the earliest
eligibility date), and compensation increases.
We cannot at this point give you a sound actuarial analysis necessary to answer
questions about the above and other issues that may come up.
We recommend a "soft freeze" alternative if at all possible. The principal
reason for this position is that a hard freeze saddles the District with an
immediate liability and seems to be a violation of the spirit, if not the
substance, of the agreement we have discussed with them.
Alternatives for Follow-on Plan Bargaining:
The drafting group made the following suggestions, under the assumption that
the absolute earliest date we can take over the current plan is October 1,
1997, but certainly can be much later than that, if necessary.
Establish a Deadline, Impose a Plan. The legislation would specify a
one-year-from- enactment deadline for agreeing to a new plan. If that were not
met, the Federal government would specify the parameters of a plan, and the
plan would be imposed. The plan content would not be specified in the bill.
(We have too little time to do this in the bill, and the detail is too complex
to do well.)
Open-ended Deadline, but With Conditions. The District must agree to a
follow-on plan before the Federal Government will assume the liabilities of the
current plan. The bill would include a contingency for imposing a plan in the
event the District does not negotiate a plan in a reasonable period, and set
out general standards for the plan. The Federal government would not assume
any of the liabilities accruing during the time the District failed to act if
the fallback option had to be imposed.
We recommend the "Open-ended" option. It has the stick of imposing a cost to
the District if it doesn't act, but it gives the District time to agree to a
plan. It's less heavy-handed than the first option, but makes clear we mean
for them to get busy developing a new plan.
2. Selecting an Independent Trustee
In a typical situation, a company establishes an administrative committee that
picks a trustee that usually acts as a passthrough for income generated by a
separate investment manager. At the Wednesday meeting we agreed that Treasury
would run a competitive bidding process to hire a Trustee, who, in turn, could
hire a benefit administrator. Labor would have oversight over fiduciary
standards, as it does in private sector, and for the Federal Retirement Thrift
Investment Board.
Problems:
There is concern that the competitive process will come up dry because the
Treasury will not be able to find an entity that will be willing to act as the
fiduciary if it can't also be the investment manager. The conflicts between
the trustee and investment roles are too apparent a problem. DOL cites its
difficulty getting a trustee for the Central States Teamster Funds as an
example. A possible solution, of course, is to make the fee very large to
overcome the loss of the investment role.
Alternative Trustee Models
Federal Government Board. This option would be modeled on the Federal Thrift
Retirement Board. A Federal agency, or group of agencies (e.g., Treasury, DOL,
and the PBGC) would act as trustee and pick the investment manager. DOL still
would have some fiduciary oversight role. It avoids the fiduciary conflicts
the PBGC and DOL see in the Treasury-competitive model proposed on Wednesday.
The drafters far prefer this option, but it could affect the scoring of the
proposal.
Custodial Board with DC Participation. This DC-oriented Board would include
members from the affected beneficiary groups. They would act as trustee and
hire the investment manager.
We recommend the current Treasury-competition model. While not easy to draft
and implement, we believe this is the best option to keep the Federal
government out of the State and local pension administration business. It also
makes scoring easier. The custodial board has too much of the
fox-in-the-henhouse aspect to it to be acceptable.
3. Endgame, when all the money from DC is gone:
This is pretty well settled. We do not have issues in this areas at the
moment. The remaining benefits and administrative expenses will be financed
from (mandatory) appropriations.
Legislation will give the Treasury Secretary authority to determine at that
time who should administer the benefits. A private entity could remain as the
administrator, or OPM or another appropriate federal agency could take over.
Legislation also would provide full authority for operation and regulation to
the Treasury Secretary who could, in turn, delegate that to another federal
agency if the federal route is chosen.
RECORD TYPE: PRESIDENTIAL (EXTERNAL MAIL)
CREATOR: G E. DeSeve@EOP@LNGTWY@EOPMRX
CREATION DATE/TIME:24-JAN-1997 11:51:00.00
SUBJECT: DC Pensions
TO: SEIDMAN_E
READ:24-JAN-1997 13:29:14.49
TO: Larry R. Matlack
( Larry R. Matlack@EOP@LNGTWY@EOPMRX).
READ:NOT READ
TO: Robert B. Rideout
( Robert B. Rideout@EOP@LNGTWY@EOPMRX)
READ:NOT READ
TO: Scott Quehl
( Scott Quehl@EOP@LNGTWY@EOPMRX)
READ:NOT READ
TO: Michael Deich
(Michael Deich@EOP@LNGTWY@EOPMRX )
READ:NOT READ
TEXT:
Message Creation Date was at 24-JAN-1997 11:46:00
Following up on our meeting yesterday, I asked Director Frank Raines which of
the freeze options he preferred and discussed the Treasury bid of the
trusteeship. Frank was quite clear tht the hard freeze was the preferable
option. It has been the one that he has continuallly articulated.
I told him that we were checking the actuarial assumptions used in calculating
the 4.3 billion and the "grow ins" might be included. He encouraged us to
verify this but was quite clear in his position.
He agreed with the Treasury trusteeship option.
I hope that this is enough to move forward with the drafting.
Scott Quehl should fax a copy of this message to Treasury, Labor and PBGC
participants.
My understanding is that Stanley Sirkin is going to check with the actuary to
find out what assumptions were used in the termination calculation.
On the deadline issue, I think that we should go forward with the open ended
deadline with conditions. That is we don't take over the plan until a new plan
is in place.
If any thing else is needed, please call me or fax me.
RECORD TYPE: PRESIDENTIAL (ALL-IN-1 MAIL)
CREATOR: Ellen S. Seidman (SEIDMAN_E) (OPD)
CREATION DATE/TIME:27-JAN-1997 13:16:37.75
SUBJECT: RE: PBGC Report
TO: Anna M. Briatico
( Anna M. Briatico@EOP@LNGTWY@EOPMRX )
READ:NOT READ
TEXT:
1. Thanks.
2. Send it to me. I'll still be here.
ellen
RECORD TYPE: PRESIDENTIAL (EXTERNAL MAIL)
CREATOR: Anna M. Briatico@EOP@LNGTWY@EOPMRX
CREATION DATE/TIME:27-JAN-1997 12:18:00.00
SUBJECT: PBGC Report
TO: SEIDMAN_E
READ:27-JAN-1997 13:14:29.55
TEXT:
Message Creation Date was at 27-JAN-1997 12:16:00
First I want to congratulate you on your new position!
Second -- I need to find out if I should send the draft PBGC 1996 Annual
Report to you to review or if there is someone else on the Council I should
forward it to instead. (Comments will be due on February 17th.)
Thanks.
RECORD TYPE: PRESIDENTIAL (ALL-IN-1 MAIL)
CREATOR: Ellen S. Seidman (SEIDMAN_E) (OPD)
CREATION DATE/TIME:28-JAN-1997 15:48:02.19
SUBJECT: DC courts pension plan
TO: G E. DeSeve
(GE. DeSeve@eop@LNGTWY@EOPMRX)
READ:NOT READ
TO: Carol Thompson-Cole
( Carol Thompson-Cole@EOP@LNGTWY@EOPMRX ).
READ:NOT READ
CC: Michael Deich
( Michael Deich@eop@LNGTWY@EOPMRX)
READ:NOT READ
CC: Scott Quehl
( Scott Quehl@EOP@LNGTWY@EOPMRX)
READ:NOT READ
TEXT:
Both Stu and Terry have gotten calls from Ulysses Hammond, 879-1700, who
identified himself as the CEO of the DC courts asserting that PBGC -- and Stu
and Terry personally -- are taking over his pension plan. Of course, he doesn't
realize that it's even worse than that. Can Ed or Carol give this fellow a call
and at least make certain he has the company line. He's calling in directly to
Terry and Stu, asking for an appointment, and had gotten the names and number
from "someone named Atchison" (presumably Elizabeth) in the Associate Attorney
General's office. Thanks. Ellen
RECORD TYPE: PRESIDENTIAL (ALL-IN-1 MAIL)
CREATOR: Ellen S. Seidman (SEIDMAN_E) (OPD)
CREATION DATE/TIME:28-JAN-1997 09:49:55.80
SUBJECT: DC pensions
TO: Scott Quehl
( Scott Quehl@EOP@LNGTWY@EOPMRX)
READ:NOT READ
TO: G E. DeSeve
(GE. DeSeve@eop@LNGTWY@EOPMRX)
READ:NOT READ
TO: Michael Deich
( Michael Deich@eop@LNGTWY@EOPMRX)
READ:NOT READ
TO: Larry R. Matlack
(MATLACK_L) (OMB)
READ:28-JAN-1997 10:41:45.85
TO: Robert B. Rideout
( Robert B. Rideout@eop@LNGTWY@EOPMRX)
READ:NOT READ
TO: Mark J. Mazur
(MAZUR_M) (WHO)
READ:30-JAN-1997 10:15:28.21
TEXT:
PBGC expects to have draft legislation available for distribution to the in
crowd tonight. It has a VERY hard freeze, including forcing DC to pick up
accruals and benefits under the OLD plan between the date of introduction and
the date the new plan kicks in. (This is called an incentive in polite company;
it has other names in other places.)
The plan is that we will all study the draft and whatever additional info the
PBGC actuaries and hopefully - the DC contract actuaries can provide about
costs on Wednesday and then
MEET AT THE PBGC (1200 K STREET) IN THE BOARD ROOM ON THURSDAY AT 10:00 FOR A
LINE-by-LINE, for as long as it takes.
If (i) you want to come; (ii) you don't want to come; (iii) you think this a
really awful idea; or (iv) you want to congratulate the PBGC drafters, please
e-mail me.
Ellen
RECORD TYPE: PRESIDENTIAL (ALL-IN-1 MAIL)
CREATOR: Ellen S. Seidman (SEIDMAN_E) (OPD)
CREATION DATE/TIME:28-JAN-1997 09:32:34.50
SUBJECT: DC Pension
TO: G E. DeSeve
(GE. DeSeve@eop@LNGTWY@EOPMRX)
READ:NOT READ
TEXT:
PBGC's actuaries are doing their best to try to figure out the impact of various
versions of a hard and not so hard freeze, but they really need help from DC's
contract actuaries. What's happening? ellen
RECORD TYPE: PRESIDENTIAL (EXTERNAL MAIL)
CREATOR: Robert B. Rideout@EOP@LNGTWY@EOPMRX
CREATION DATE/TIME:28-JAN-1997 10:01:00.00
SUBJECT: Re: DC pensions
TO: SEIDMAN_E
(SEIDMAN_E@AI@CD)(OPD)
READ:28-JAN-1997 11:34:46.72
TEXT:
Message Creation Date was at 28-JAN-1997 09:54:00
Ellen - Thank you for the update. I'm going to regroup to the role of
pensions drop-out, since things are in the hands of the PBGC, who knows them
best, and you've got good help here from Larry. If help is needed from OPM on
anything technical, or as we deal with OPM on the possibility of taking over
administration in year "X," I'll be glad to rejoin you as appropriate.
RECORD TYPE: PRESIDENTIAL (ALL-IN-1 MAIL)
CREATOR: Ellen S. Seidman (SEIDMAN_E) (OPD)
CREATION DATE/TIME:28-JAN-1997 15:59:38.23
SUBJECT: Follow on to DC courts pension issue
TO: G E. DeSeve
(GE. DeSeve@eop@LNGTWY@EOPMRX)
READ:NOT READ
TO: Carol Thompson-Cole
( Carol Thompson-Cole@EOP@LNGTWY@EOPMRX )
READ:NOT READ
CC: Michael Deich
(Michael Deich@eop@LNGTWY@EOPMRX)
READ:NOT READ
CC: Scott Quehl
( Scott Quehl@EOP@LNGTWY@EOPMRX)
READ:NOT READ
TEXT:
If the PBGC gets any press calls on this, they will say they are NOT taking over
the plan, that they are only providing a drafting service, and they will then
refer all calls to Carol. If you want something different, please let me know.
ellen
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Ellen S. Seidman ( CN=Ellen S. Seidman/OU=OPD/O=EOP [ OPD 1)
CREATION DATE/TIME:30-JAN-1997 13:43:59.00
SUBJECT: Inquiries to PBGC
TO: Carol Thompson-Cole ( CN=Carol Thompson-Cole/OU=OMB/O=EOP @ EOP [ OMB ])
READ:UNKNOWN
TEXT:
As we discussed Tuesday, it's inappropriate for people to be calling the
PBGC with questions about the pension transfer. They've been referring
calls to your office. This morning, however, someone called Terry Deneen
who, when told to call your office said you'd told him to call Terry.
Since you personally were with me this morning, that's unlikely, but I
wonder whether everyone in your office realizes that calls should not go
to PBGC. Can you please help? thanks. ellen
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: G E. DeSeve (CN=G E. DeSeve/OU=OMB/O=EOP [ OMB ])
CREATION DATE/TIME: 3-FEB-1997 17:20:33.00
SUBJECT: DC Pensions
TO: Michael Deich ( CN=Michael Deich/OU=OMB/O=EOP @ EOP [ OMB ])
READ:UNKNOWN
TO: Ellen S. Seidman ( CN=Ellen S. Seidman/OU=OPD/O=EOP @ EOP [ OPD ])
READ:UNKNOWN
TEXT:
I sent Larry King a copy of the info request from PBGC. He is forwarding
it to Milliman and Robertson. I also asked him for a copy of the latest
report which he is trying to locate. I will call him again in the morning
to check on progress. Meanwhile, the FRMAA has a report out on pensions
that I didn't find particularly valuable but would be happy to send to
either of you. Basically it says we should pay the accrued unfunded. It
is silent on the going forward normal cost of prior benefits. It sets D
C's going forward cost at $116 per year which is why they don't think
that we are producing sufficent savings.
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Ellen S. Seidman ( CN=Ellen S. Seidman/OU=OPD/O=EOP [ OPD 1)
CREATION DATE/TIME: 6-FEB-1997 19:12:11.00
SUBJECT: Re: 5500 meeting
TO: Alexander T. Hunt ( CN=Alexander T. Hunt/OU=OMB/O=EOP @ EOP [OMB])
READ:UNKNOWN
TEXT:
You mean Rick Carro types? I think that's fine, but I think the functions
may be more unified at DOL and PBGC than at Treasury. Just let's not get
too big, and let's not make process decisions that don't take the
substance into account. ellen
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Scott Quehl ( CN=Scott Quehl/OU=OMB/O=EOP [ OMB )
CREATION DATE/TIME: 7-FEB-1997 13:23:00.00
SUBJECT: Revised Draft of DC Pensions MOU: 2.7.97
TO: Mark D. Menchik ( CN=Mark D. Menchik/OU=OMB/O=EOP @ EOP [ OMB )
READ:UNKNOWN
TO: Larry R. Matlack ( CN=Larry R. Matlack/OU=OMB/O=EOP @ EOP [ OMB ])
READ:UNKNOWN
TO: Robert B. Rideout ( CN=Robert B. Rideout/OU=OMB/O=EOP @ EOP [ OMB ])
READ:UNKNOWN
TO: Ellen S. Seidman ( CN=Ellen S. Seidman/OU=OPD/O=EOP @ EOP [ OPD ] )
READ:UNKNOWN
CC:
READ:UNKNOWN
CC: Bruce D. Long ( CN=Bruce D. Long/OU=OMB/O=EOP @ EOP [ OMB 1)
READ:UNKNOWN
TEXT:
Attached, please find the revised MOU for DC Pesions.
Text that is NOT stricken reflects input from Ed DeSeve, Ellen Seidman,
and the PBGC. Text that IS stricken reflects input from Ed and Ellen that
is taken out to reflect PBGC's recommendations.
As long as there is closure at the Monday meeting on the issues reflected
in the brackets of the text, Ed supports the non-stricken text as it is
presented. However, additional recommendations are always welcome and
will be given strong consideration. Please let me know if you would
suggest changes.
Scott
ATTACHMENT I
ATT CREATION TIME/DATE: 0 00:00:00.00
TEXT:
Unable to convert ARMS_EXT:[ATTACH.D85]MAIL401284738.0161 to ASCII,
The following is a HEX DUMP:
END ATTACHMENT
I
MEMORANDUM OF UNDERSTANDING
PENSIONS
Draft 2. 7. 1997
1.
OMB agrees to submit legislation that: (TBD)
2.
The District Agrees:
2.1.
To establish a replacement plan or plans.
2.1.1. The plan(s) will cover the following groups of [employees who are or would
be covered by the plans for teachers. uniformed fire and police. and judges]:
-
existing employees [members? participants?] vested as of [date],
whose benefits under the Retirments Program [?] will not be provided
entirely by [the Federal government];
-
existing employess [members?participants? [not yet vested as of
[date]: and
-
new employees hired on or after [date to be determined].
2.1.2. To the extent required by current law, the plan(s) will be established through
collective bargaining.
2.1.3. The plans may not be amended in any manner that materially incrases the cost
of the plans(s) beyond those established in this MOU.
2.2.
That the cost of the plan(s) cannot exceed the sum available in the District of
Columbia Budget and Financial Plan.
2.1.
To establish a follow on plan or plans for existing employees not yet vested and for
new employees. This plan or these plans will, if defined benefit plans, meet the
Government Accounting Standards Board (GASB) 27 measurement standards, with
the following additional restrictions:
2.2.1. The cost of any defined benefit plan(s) will be determined in accordance with
the measurement standards of Governmental Accounting Standards Board
Statement No. 27 (GASB 27), with the following additional restrictions:
-
limit funding method to entry age or frozen entry age as defined in
GASB 27; and
-
require amortization of any unfunded actuarial liability over no more
than 30 years on a "closed" basis as described in GASB 27. The cost
of any defined contribution plan(s) is the employer contribution
required under the provisions of the plan(s).
2.3.
All costs of any new plan must be fully reflected in the District of Columbia Budget
and Financial Plan in accordance with the standards described above. If the plan is a
defined contribution plan, such amounts as are necessary to meet contribution
requirements must be included in the Budget and Financial Plan.
2.2.2. All costs of any new plan(s) must be fully reflected in the District of
Columbia Budget and Financial Plan in accordance with the standards
described above for the period (TBD).
2.2.3. All costs of any new plan(s) must be paid in a timely manner.
2.3.
All books and records pertaining to the Existing Pension Funds¹ required by the
Secretary of
or the Trustee must be made available to the Secretary or
Trustee on a date to be determined by the Secretary within 30 days after the Secretary
or Trustee requests them. Limited access, under terms established by the Secretary,
will be provided to potential bidders to serve as Trustee or related function.
2.4.
The City is liable for any errors or omissions from the books and records pertaining
to the Existing Pension Funds. To reimburse the Trustee for all costs, including
benefit payments, resulting from errors or omissions in the books and records
pertaining to the Existing Pension Funds.
2.5.
Any and all assets of the Existing Pension Funds required by legislation to be
transferred to the Trustee shall be transferred on [date] in a form specified by the
Trustee. The Trustee shall reserve the right to select the assets to be transferred.
Assets to be transferred -- if less than all assets -- shall be valued by
[methodology putting a value on selected assets -- Ellen is waiting for Mozelle's
input]. The value of such assets shall be authenticated by the Trustee at the close of
business on the day of transfer.
2.6.
To administer the Existing Pension Funds until the Trustee assumes these
responsibilities.
1
We will need to include these in a definitions section.
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Scott Quehl (CN=Scott Quehl/OU=OMB/O=EOP [ OMB ])
CREATION DATE/TIME: 7-FEB-1997 18:43:41.00
SUBJECT: Re: D.C.: Draft MOU Conditions for Pensions
TO: Mark D. Menchik ( CN=Mark D. Menchik/OU=OMB/O=EOP @ EOP [ OMB ])
READ:UNKNOWN
CC: Marcia D. Occomy ( CN=Marcia D. Occomy/OU=OMB/O=EOP @ EOP [ OMB ])
READ:UNKNOWN
CC: Ellen S. Seidman ( CN=Ellen S. Seidman/OU=OPD/O=EOP @ EOP [ OPD ])
READ:UNKNOWN
CC: G. E. DeSeve (CN=G. E. DeSeve/OU=OMB/O=EOP @ EOP [ OMB )
READ:UNKNOWN
CC: Larry R. Matlack ( CN=Larry R. Matlack/OU=OMB/O=EOP @ EOP [ OMB ])
READ:UNKNOWN
TEXT:
Mark,
Thanks. I added your language on the condition of the books and records.
I think the changes made to reflect comments from Ellen and PBCG have
responded to your other suggestions.
In other news, we received new figures from the D.C. actuary through the
PBGC. I'll fax these to you.
Look forward to wrapping things up on Monday. Take care.
Scott
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Ellen S. Seidman ( CN=Ellen S. Seidman/OU=OPD/O=EOP [ OPD )
CREATION DATE/TIME: 7-FEB-1997 18:18:28.00
SUBJECT: List from yesterday
TO: Mark Iwry ( Mark Iwry @ 622-0236 @ fax [ UNKNOWN D
READ:UNKNOWN
TO: Vicki Judson ( Vicki Judson @ 622-0236 @ fax [ UNKNOWN ])
READ:UNKNOWN
TO: Joseph Grant ( Joseph Grant @ 326-4016 @ fax [ UNKNOWN ])
READ:UNKNOWN
TO: Marty Slate ( Marty Slate @ 326-4016 @ fax [ UNKNOWN 1)
READ:UNKNOWN
TO: Richard Hinz ( Richard Hinz @ 219-5526 @ fax [ UNKNOWN D
READ:UNKNOWN
TO: Olena Berg ( Olena Berg @ 219-5526 @ fax [ UNKNOWN 1)
READ:UNKNOWN
TO: Alexander T. Hunt ( CN=Alexander T. Hunt/OU=OMB/O=EOP @ EOP [ OMB D
READ:UNKNOWN
TO: Kimberly A. Maluski ( CN=Kimberly A. Maluski/OU=OMB/O=EOP @ EOP [ OMB ])
READ:UNKNOWN
TO: Mark D. Menchik ( CN=Mark D. Menchik/OU=OMB/O=EOP @ EOP [ OMB D
READ:UNKNOWN
TO: Nell Hennessy ( Nell Hennessy @ 326-4016 @ fax [ UNKNOWN 1)
READ:UNKNOWN
TO: Stuart Sirkin ( Stuart Sirkin @ 326-4085 @ fax [ UNKNOWN ])
READ:UNKNOWN
TO: Stephen Lee ( Stephen Lee @ 219-4745 @ fax [ UNKNOWN 1)
READ:UNKNOWN
TO: Meredith Miller ( Meredith Miller @ 219-5526 @ fax [ UNKNOWN ])
READ:UNKNOWN
TO: Alan Lebowitz ( Alan Lebowitz @ 219-6531 @ fax [ UNKNOWN ])
READ:UNKNOWN
TO: Judy Schub ( Judy Schub @ 326-4016 @ fax [ UNKNOWN 1)
READ:UNKNOWN
TO:MAZUR_M(MAZUR_M@AI@CD@LNGTWY[EOPJ)(WHO)
READ:UNKNOWN
TO: Debra J. Bond ( CN=Debra J. Bond/OU=OMB/O=EOP @ EOP [OMB])
READ:UNKNOWN
TO: Larry R. Matlack (CN=Larry R. Matlack/OU=OMB/O=EOP @ EOP [OMB])
READ:UNKNOWN
TEXT:
If I have learned to do this right, here is the list from yesterday.
Thanks for everything. (Note, there's a footnote 1, which didn't come out
in this version, which lists the types of incentives we were talking about
-- tax credits, higher contribution limits, softening of nondiscrimination
rules, other items on the DB enhancement list.)
February 7, 1997
MEMORANDUM FOR PENSION GROUP
FROM:
Ellen Seidman
SUBJECT:
List of yesterday ,S brainstorming ideas
First, thanks to all for participating in yesterday ,S event with open and
creative minds. Undoubtedly there still are brilliant ideas that aren ,t
on this list (as well, of course, as not-so-brilliant ideas that are on
the list), but this is a good start. I ,m convinced we have at least a
month more together, so I hope we can really make progress.
As we discussed yesterday, the chance that I ,ve gotten some of these
totally screwed up is high. So please, let me know and we ,11 get out a
revision.
Portability
1. Enhance transferability form 403(b) to 401(k) plans.
Look at Nell ,S old chart
Issues: Topping up allowed in 403(b)
No nondiscrimination in 403(b) for elective accruals
10-year averaging still exists for grandfathered
participants
2. Enhance the ability to buy in by loosening the 415 contribution limits
for buy-ins.
3. Liberalize the cash balance rules, especially concerning: accruals,
nondsicrimination, lump sum distributions and age discrimination. (Note:
this is also a DB enhancement idea)
4. Provide incentives Some incentives we discussed were (i) increased
contribution limits (i.e., above $9500); (ii) relaxing or just simplifying
nondiscrimination rules or testing; (iii) tax credits; and (iv) most of
the other restriction-loosening ideas on the DB enhancement list. for:
Plans (DB and DC) that have very fast vesting;
DCs that include interest on the employer ,S
contribution in a payout
Contributory DBs that pay interest on employee ,S
contribution in a payout
DCs with a rich employer match
Buy-ins
5. Universal payroll deduction
6. Indexation
7. Professional plans/ trade association plans
8. 401(k) makeup rule like 403(b) rule
9. Allow DB buyins to bring people up to FAP(?) level
10. Treasury Direct for pensions (i.e., pre-tax purchase of Treasury
securities direct from Treasury, held at Treasury)
11. Allow people to direct tax refunds into IRAs
12. Federal government will allow service credit for private employer
service to any private employer who agrees to allow service credit for
federal workers
13. Simplify funding rules for multiple employer plans
14. Allow financial institututions that are direct deposit recipients to
function as plan sponsors, so such deposits could be pre-tax.
Preserving/Enhancing DBs
1. Revise the 150% full funding limit
2. Allow projections of benefit and compensation levels for funding
(401(a)(17)), 415
2a. Increase 415 benefit limits
3. Make 415 limits work better with early retirement subsidies
4. Allow tradeoffs, with respect to nondiscrimination, among features,
rather than requiring nondiscrimination on a feature-by-feature basis
5. Move back to pre-1986 nondiscrimination rules
6. Simplify 411(d)(6), the anti-cutback rule
7. Reduce the flat rate ($19) PBGC premium
8. Allow pre-tax employee contributions in DBs
9. Allow the employer match in a 401(k) plan to be used to fund the
employer ,S DB plan
10. Provide incentives to encourage transfer of DC account balances to
DB plan on retirement or separation.
11. Provide incentives for less integration.
12. Raise full funding limits for multiple and multi-employer plans
13. Allowing pooling of funding on multiple employer plans so there ,S
limited termination -- last one out -- risk
14. VERY simple combined DB/DC option for midsize employers
15. Allow association-based DB plans, e.g., NFIB. (Professional group
plans are in this category too.)
16. Relaxed funding rules/premium waivers for plans that grant big
past-service credits.
17. Enable small DCs to grow into DBs by, e.g., reducing funding
requirements for past service credits, premium reductions, loosening
floor-offset rules
18. US government to publish simple model DB plans
19. Put DBs in cafeteria plans, e.g., service credits, salary reduction
20. DB NESTs
21. Self-regulatory Organizations for DBs
22. Liberalize cash-balance rules
Annuities
1. Let DC balance into DB for annuitization on retirement (Is this
proposal to make it an employee right? Can ,t employers allow this now?)
2. Make annuities -- fixed and variable -- available through the Federal
Thrift Savings Plan. (Note: I think fixed annuities are available)
3. Require annuities as a retirement option on DCs
4. Incentives for DCs that require annuitization (or buy annuities as
you go)
5. Incentives for annuity education
Further activities
1. TIAA-CREF pension summit - govt co-sponsor? (We thought not)
2. NAM multiple-employer meeting - Ellen to call Steve Elkins
3. Meeting with small public plans, labor - Mark to call Randy
4. CSIS interaction
5. Education summit
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Alexander T. Hunt CN=Alexander T. Hunt/OU=OMB/O=EOP [ OMB
CREATION DATE/TIME:10-FEB-1997 12:42:48.00
SUBJECT: 5500 meeting
TO: Kimberly A. Maluski ( CN=Kimberly A. Maluski/OU=OMB/O=EOP @ EOP [ OMB
READ:UNKNOWN
TO: Debra J. Bond ( CN=Debra J. Bond/OU=OMB/O=EOP @ EOP [ OMB ])
READ:UNKNOWN
TO: Mark D. Menchik ( CN=Mark D. Menchik/OU=OMB/O=EOP @ EOP [ OMB ])
READ:UNKNOWN
TO: Ellen S. Seidman ( CN=Ellen S. Seidman/OU=OPD/O=EOP @ EOP [ OPD 1)
READ:UNKNOWN
TEXT:
Stu Sirkin just informed me that PBGC now has a scheduling conflict with
the 5500 meeting. I will ask participants if 3:00 on the 20th is okay
instead (this would be convenient for those attending the pension working
group meeting at 4:30 in the OEOB).
When I ask about availability at 3:00, I would also like to propose a
meeting agenda (attached) and ask that principals preferably come alone
(and be limited to one additional person if absolutely necessary). Please
let me know if you can meet at 3:00 and if you have comments about the
agenda.
Many thanks.
5500 Meeting Agenda
The purpose of this meeting is to (1) reach agreement on procedural
issues concerning the Paperwork Reduction Act clearance process and (2)
discuss progress toward meeting the objectives of shortening and
simplifying the 5500.
Procedural Issues
Agency submission and OMB review of the 5500 To improve the clearance
process, we must decide how:
(1) the agencies coordinate revisions and extensions;
(2) the agencies make submissions to OMB (i.e,. separate or single
submissions?); and
(3) OMB assigns control numbers.
Estimating and accounting for 5500 paperwork burden. To ensure that the
public understands which agencies are responsible for which data elements
and their associated burdens, we must decide:
(1) how to attribute questions and burden to each agency;
(2) how to identify specific revisions with the agency/agencies requesting
them; and
(3) which burden estimation methodology will be used to measure burden
consistently.
The New 5500
Shortening/simplification of the 5500. We will discuss the degree to
which the new draft (to be circulated before the meeting) achieves the
Administration's pension simplification and burden reduction objectives.
We will have to agree on how to measure burden reduction.
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Wendy J. Einhellig ( CN=Wendy J. Einhellig/OU=OPD/O=EOP [OPD])
CREATION DATE/TIME:10-FEB-1997 11:21:55.00
SUBJECT: Pension Simplification Working Group
TO: Ellen S. Seidman ( CN=Ellen S. Seidman/OU=OPD/O=EOP @ EOP [ OPD D
READ:UNKNOWN
TEXT:
PBGC would like to add an additional person as a regular to the meetings:
David Gustafson. OK with you?
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Scott Quehl ( CN=Scott Quehl/OU=OMB/O=EOP [ OMB ])
CREATION DATE/TIME:12-FEB-1997 19:30:21.00
SUBJECT: D.C. Pensions: 2.12.97 Draft
TO: Marcia D. Occomy ( CN=Marcia D. Occomy/OU=OMB/O=EOP @ EOP [ OMB D
READ:UNKNOWN
TO: James J. Jukes ( CN=James J. Jukes/OU=OMB/O=EOP @ EOP [ OMB 1)
READ:UNKNOWN
TO: Harry G. Meyers ( CN=Harry G. Meyers/OU=OMB/O=EOP @ EOP [ OMB D
READ:UNKNOWN
TO: Larry R. Matlack ( CN=Larry R. Matlack/OU=OMB/O=EOP @ EOP [ OMB 1)
READ:UNKNOWN
TO: Ellen S. Seidman ( CN=Ellen S. Seidman/OU=OPD/O=EOP @ EOP [ OPD 1)
READ:UNKNOWN
CC: Bruce D. Long ( CN=Bruce D. Long/OU=OMB/O=EOP @ EOP [ OMB ])
READ:UNKNOWN
CC: Daniel M. Tangherlini ( CN=Daniel M. Tangherlini/OU=OMB/O=EOP @ EOP [ OMB 1)
READ:UNKNOWN
CC: Alan B. Rhinesmith ( CN=Alan B. Rhinesmith/OU=OMB/O=EOP @ EOP [ OMB ])
READ:UNKNOWN
CC: G. E. DeSeve ( CN=G. E. DeSeve/OU=OMB/O=EOP @ EOP [ OMB )
READ:UNKNOWN
TEXT:
Please find the attached Feb. 12th draft of the pensions MOU. It reflects
revisions by Ellen Seidman and the PBGC. Please send in any comments or
recommended changes tomorrow. Thanks.
Scott
ATTACHMENT I
ATT CREATION TIME/DATE: 0 00:00:00.00
TEXT:
Unable to convert ARMS_EXT:[ATTACH.D60JMAIL43287724A.016 to ASCII,
The following is a HEX DUMP:
END ATTACHMENT 1
MOU
PENSIONS
Draft 2. 12. 97
A.
The District Government agrees:
1.
To establish a Replacement Plan for the Retirement Program
1.1.
The Replacement Plan will be satisfactory to the Secretary, will cover all existing and
new Employees who are, or would be, covered by the Retirement Program, if the
Retirement Program continued unchanged, and will be established by the date
specified in the Revitalization Act.
1.2.
To the extent required by current law, the Replacement Plan will be established
through collective bargaining.
1.3.
After the Adoption Date, the Replacement Plan may not be amended in any manner
that materially increases the cost of the Replacement Plan beyond those established in
this MOU without provision of a mechanism for funding such increases in
accordance with Section 2.
2.
That the cost of the Replacement Plan will not exceed the sum available in the District of
Columbia Budget and Financial Plan.
2.1.
The cost of any defined benefit plan will be determined in accordance with the
measurement standards of Governmental Accounting Standards Board Statement No.
27 (GASB 27), with the following additional restrictions:
2.1.1. funding methods will be limited to entry age or frozen entry age as defined in
GASB 27; and
2.1.2. amortization of any unfunded actuarial liability is required over no more than
30 years on a "closed" basis as described in GASB 27.
2.2.
The cost of any defined contribution plan is the employer contribution required under
the provisions of the plan.
2.3.
All costs of the Replacement Plan must be fully reflected in the District of Columbia
Budget and Financial Plan in accordance with the standards described above for each
fiscal year.
2.4.
All costs of the Replacement Plan must be paid in a timely manner.
3.
To transfer copies of books and records of the Retirement Program and the Fund and to be
responsible for errors and omissions
3.1.
Copies of all books and records pertaining to the Retirement Program and the Fund
required by the Secretary of the Treasury or the Trustee must be made available to the
Secretary or Trustee within 30 days after the Secretary or Trustee requests them.
3.2.
The District will reimburse the Trustee for all costs, including benefit payments,
resulting from errors or omissions in the books and records pertaining to the Fund.
4.
To transfer assets from the Fund
4.1.
Any and all assets of the Fund required to be transferred to the Trustee shall be
transferred on the Transfer Date in a form specified by the Trustee. [The following
will likely be stricken, but is here as a place holder until it is finally determined if any
assets will be left] The Trustee shall reserve the right to select the assets to be
transferred. Assets to be transferred if less than all assets shall be valued
by
[methodology putting a value on selected assets]. The value of
such assets shall be authenticated by the Trustee at the close of business on the day of
transfer.
4.2.
The District will administer the Fund until the Trustee assumes these responsibilities.
The Federal government will reimburse the District Government for any benefit
payments made during the period between the Freeze Date and the Transfer Date.
DEFINITIONS IN THE ACT
"Adoption Date" means the date the Replacement Plan is adopted by the District Government or, if
later, October 1, 1997.
"District Government" means, as appropriate, the "District government" as defined by section 305(5)
of the District of Columbia Financial Responsibility and Management Assistance Act of 1995 (Pub.
L 104-8) or the District of Columbia Retirement Board as defined in section 102(5) of the Reform
Act.
"Employee" means
"Freeze Date" means the date of introduction of the Revitalization Act.
"Fund" means the District of Columbia Police Officers and Fire Fighters' Retirement Fund, the
District of Columbia Teachers' Retirement Fund, and the District of Columbia Judges' Retirement
Fund as defined in section 102(10) of the Reform Act.
"Reform Act" means the District of Columbia Retirement Reform Act (Pub. L. 96-122).
"Replacement Plan" means the plan or plans described under Title I of the Revitalization Act.
"Revitalization Act" means the "District of Columbia Revitalization Act of 1997."
"Secretary" means the Secretary of the Treasury or the Secretary's designee.
"Transfer Date" means the District of Columbia Retirement Trust created under Title I of the
Revitalization Act.
"Trustee" means the person designated by the Secretary of the Treasury under Title I of the
Revitalization Act.
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: G E. DeSeve (CN=G E. DeSeve/OU=OMB/O=EOP [ UNKNOWN ])
CREATION DATE/TIME:15-FEB-1997 12:49:31.00
SUBJECT: D.C. Update: 2.14.97
TO: Carol Thompson-Cole CN=Carol Thompson-Cole/OU=OMB/O=EOP @ EOP [ OMB
READ:UNKNOWN
TO: Ellen S. Seidman ( CN=Ellen S. Seidman/OU=OPD/O=EOP @ EOP [ OPD 1)
READ:UNKNOWN
TO: Michael Deich ( CN=Michael Deich/OU=OMB/O=EOP @ EOP [ OMB
READ:UNKNOWN
CC: Franklin D. Raines ( CN=Franklin D. Raines/OU=OMB/O=EOP @ EOP [ OMB ])
READ:UNKNOWN
Rebecca R. Culberson ( CN=Rebecca R. Culberson/OU=OMB/O=EOP [ OMB 1)
READ:UNKNOWN
TEXT:
Pensions and other Numbers
The first section of Scott's report below points out exactly the
problem we have been trying to anticipate by getting the City to put
numbers on the table. I haven't seen courts or prisons but I hear that
progress is being made. Larry King does not himself have 25 year cash
flow numbers from the actuary so the numbers that Scott has been working
with are the best available. Larry promises that as soon as he has them
we will have them.
Ellen Seidman and I have been working to see if we can separate
disability into two parts. The first is that which the individual would
have earned if he or she had received a normal pension and the second of
which is the additional amount of liability that is due to the
determination of disability. We believe that it is possible to separate
these components. We would leave the disability component with the City
and take the liability for the normal retirement component. PBGC is
thinking about how to cost this option.
Economic Development
The meeting at Commerce went very well. I would ask Ellen Seidman
to add her comments when she reads this. Treasury took responsibility for
preparing a simple one or two page description of what the proposal for
the EDC entails. They should have this early next week. The group agreed
to recommend to Frank, Bob Rubin and if desired Secretary Daley and or
Secretary Cuomo, a three part strategy for rolling out and starting up the
EDC. The first phase would involve rounding up the usual DC suspects from
the DC Chamber, Board of Trade, Federal City Council and their DC Agenda
Project Economic Development Strategy Group, the City and the Authority
plus anyone else we feel would be helpful (eg. Johnson from BET, Abe
Polin) and have some combination of Frank, Bob and Sec.s Daley and Cuomo
present the plan for the EDC. We would have pre-breifed a number of the
members of the audience so that their understanding of the plan can lead
to their support.
At this meeting, Frank and Bob would ask the groups to nominate
individuals who would serve on an Organizing Committee that would be
responsible for planning how the entity would operate once legislation
was put in place and which would more broadly seek "support" of the
activities of the EDC from elements of the local, regional, and even
national business and civic communities. This Organizing Committee would
not in anyway lobby for the legislation. If the groups mentioned above
chose to voice their support that would be their own business. It is
possible but not required that some of the Organizing Committee members
could be on the Board of the EDC. The Commerce Department agreed to see if
there are some national/international individuals who might join in the
roll out and even be asked to serve on the Organizing Committee.
The third phase would be the building of support and beginnings of
a strategy being developed by the Organizing Committee at the same time
that the Legislation was being considered.
Next steps are for Treasury to produce the summary, for Frank and
Bob to decide where, how and when a roll out would occur. The consensus
was that although it did not have to happen immediately, it would be good
to do it before the legislation was introduced in late April or early
May.
MOU Process
The reinforcing of the dicta that legislation would not change the
DC Code has sent Justice back to the drawing board on their MOU language.
I don't think the problem is substantive and anticipate that an acceptable
draft will be available by COB Tuesday.
As Scott notes below, Treasury has some new language. I have a couple of
substantive points such as, why limit cash flow financing to 9/30/98?".
We have a meeting on Tuesday that should allow us to iron these issues
out. I anticipate that we will shorten the MOU language and reserve much
of the discussion for the legislation because there is nothing that the
District must do before the legislation will be effective. All of
Treasury's conditions govern borrowing after the legislation is approved.
My key question for all of you is do we want to provide the
District and the Authority with a draft of the MOU on Wednesday? If we do
that, it may be in the Post on Thursday when Frank is testifying
Another approach is to establish working groups in each of the areas.
our I don't think that Medicaid, Courts, Treasury Borrowing, Economic
Development or Taxation will be a problem. Pensions will be complicated
and we will need to agree on the mathematics of what the language means.
The role of the Board of Pensions is likely to complicate matters at some
point. The most difficult one will be Prisons. Holder and Justice will
have to negotiate directly with someone in Council and the City (Mayor
plus Rodgers plus Margaret Moore) with the Authority in the room. As I
mentioned previously, Chuck Ruff is anxious to be helpful and very
knowledgeable about the issues.
My recommendation is that at Wednesday's meeting Frank verbally
present the conditions from the MOU and get reactions. The parties at
that meeting would agree in which areas sub-groups would be set up and who
would participate. The sub-groups would be given a deadline for agreement
on the technical aspects of each condition in the MOU and would report
back to their principal on their substance. A target date would be
established for the next principals meeting at which time any
disagreements could be discussed and an agreement "initialed". Initialing
would represent a commitment of the principal to bring the MOU back to
their respective organization with a recommendation for approval. A
deadline would be set for such approval. Once approval was achieved, the
sections of the legislation would be formally given to Davis for final
legislative drafting and negotiation where necessary Davis's own
deadline is to have a bill passed before the Memorial Day recess in late
May.
Please let me know what you think on Tuesday.
Forwarded by G E. DeSeve/OMB/EOP on 02/15/97 11:52
AM
Scott Quehl
02/14/97 07:12:07 PM
Record Type: Record
To: G.E. DeSeve/OMB/EOP
cc:
Subject: D.C. Update: 2.14.97
Medicaid
Today, OMB's Mark Miller and Nani Coloretti met with Jearline Williams and
Paul Offner from the Mayor's staff, Doneg McDonough from the Control
Board, Roland Helveijian from the CFO's office, and with D.C.
Councilmember at-large Linda Cropp and Chris Murray from her staff. At
issue was the latest Mayor's FY 1998 Medicaid baseline and the baseline
that our independent HCFA actuary developed for the FY 1998 President's
Budget.
Overall, both Paul Offner and Linda Cropp agreed that while our estimates
were different, we could use the HCFA estimates as long as we noted in our
talking points that our proposal will provide the District with 70%
Federal funding for Medicaid benefits, no matter what the actual level of
D.C. Medicaid spending. In other words, the estimates don't drive the
benefit to D.C. -- D.C. will be matched at 70% on whatever they spend in
the future.
However, D.C. staff are interested in providing a more updated D.C.
Medicaid baseline. We agreed to look at updated D.C. numbers, which they
are going to submit by COB Tuesday. In particular, D.C. staff believe
that the 1998 number should be higher, and thus the projected net benefit
to the city should be higher. We noted that our 1998 number was obtained
from an official submission from D.C. to HCFA. In providing new numbers,
D.C. agreed to provide a justification of the difference between the FY
1998 spending estimate they submitted to HCFA in November and the FY 1998
spending estimate in the Mayor's budget.
In the meantime, HFB staff recommend that we continue to use the FY 1998
President's Budget estimate. It should be noted that our estimated 5-year
total for net benefit to the District are fairly close (about 5-6%
different, or approximately $50 million over the 5 year period).
Treasury Financing
Treasury sent to OMB today a new draft of the financing legislation and
Statement of Intent. The language still limits Treasury's authority to
extent inter-year loans for only one year: through the end of FY 1998 The
conditions for each intermediate-term advance include:
1.
The Mayor must deliver to the Secretary:
1.1. a financing agreement in which the Mayor agrees to
procedures for requisitioning intermediate-term advances;
1.2. a requisition for each advance; and
1.3. a promissory note evidencing the District's obligation
to repay the Treasury for the advance.
2.
The requisition cannot be made after September 30, 1998.
3. The District must deliver to the Secretary:
3.1. evidence satisfactory to the Secretary that the District is
unable to obtain credit in the public credit markets in sufficient amounts
and on sufficiently reasonable terms to liquidate the District's
accumulated deficit; and
3.2. a schedule setting out the anticipated timing and amounts of
requisitions for intermediate-term advances.
4.
The Authority must deliver to the Secretary its certifications
that:
4.1. there is an approved financial plan and budget in effect under
the District of Columbia Financial Responsibility and Management
Assistance Act of 1995 for the fiscal year in which the requisition is to
be made;
4.2. the District is in compliance with the approved Budget and
Financial Plan;
4.3. both the receipt and repayment of the advance are consistent
with the approved Budget and Financial Plan for the year;
4.4. advance will not adversely affect the financial stability of
the District; and
4.5. the District is unable to obtain credit in the public credit
markets in sufficient amounts and on sufficiently reasonable terms to
liquidate the District's accumulated deficit.
5. The District's Inspector General (IG) must deliver to the
Secretary a certification as to same matters certified by the Authority.
The IG may rely upon an audit conducted by an outside auditor engaged by
the IG if the IG concurs in the audits's findings.
6.
The Secretary must determine that:
6.1. there is reasonable assurance of repayment of the
intermediate-term advance; and
6.2. the debt that the District will owe to the Treasury for the
intermediate-term advance will not be subordinate to any other debt owed
by the District.
7.
The Secretary receives such additional certifications and
opinions as the Secretary determines appropriate.
8.
Each intermediate-term advance shall be made in the amount
requisitioned by the Mayor if the following conditions are satisfied:
8.1. The Mayor must deliver his certification to the Secretary that
the requisitioned amount is needed to liquidate the accumulated deficit of
the general fund within 30 days of the time that the Mayor's requisition
is delivered to the Secretary.
8.2. The Authority must concur in the Mayor's certification
regarding the requisitioned amount.
8.3. The total amount of all intermediate-term advances must not
greater than $500,000,000.
8.4. Each intermediate-term advance shall mature on the date
designated by the Mayor in the requisition for the advance as long as the
designated maturity date is not later than 15 years from the date on which
the first intermediate-term advance is made.
9. If the Secretary determines that the District is able to obtain
credit in the public credit markets or elsewhere in amounts and on terms
sufficient to refinance all or a portion of the unpaid balance of the
advance without adversely affecting D.C.'s financial stability, the
Secretary may require the District to repay the Treasury all or a portion
of the unpaid balance of the advance prior to its maturity.
10. The interest on each intermediate-term advance will be based on
the yield of outstanding marketable Treasury securities having comparable
maturities, plus 1/8th of 1 percent a year.
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Mark D. Menchik ( CN=Mark D. Menchik/OU=OMB/O=EOP [ OMB ])
CREATION DATE/TIME:18-FEB-1997 09:38:09.00
SUBJECT: Change of Room for 5500 Meeting
TO: Rae.Michael ( Rae.Michael @ PBGC.GOV @ inet [ UNKNOWN ])
READ:UNKNOWN
TO: Sirkin.Stuart ( Sirkin.Stuart @ PBGC.GOV @ inet [ UNKNOWN ])
READ:UNKNOWN
TO: Canary~Joe ( Canary~Joe @ PWBA.DOL.GOV @ inet [ UNKNOWN 1)
READ:UNKNOWN
TO: Carol Gold ( Carol Gold @ 622-5805 @ fax [ UNKNOWN 1)
READ:UNKNOWN
TO: Larry R. Matlack ( CN=Larry R. Matlack/OU=OMB/O=EOP @ EOP [ OMB 1)
READ:UNKNOWN
TO: Debra J. Bond ( CN=Debra J. Bond/OU=OMB/O=EOP @ EOP [ OMB ])
READ:UNKNOWN
TO: Hennessy.Nell ( Hennessy.Nell @ PBGC.GOV @ inet [ UNKNOWN ])
READ:UNKNOWN
TO: Hinz~Richard ( Hinz~Richard @ PWBA.DOL.GOV @ inet [ UNKNOWN ])
READ:UNKNOWN
TO: Garrick.Shear ( Garrick.Shear @ WPGATE.IRS.GOV @ inet [ UNKNOWN 1)
READ:UNKNOWN
TO: Ellen S. Seidman ( CN=Ellen S. Seidman/OU=OPD/O=EOP @ EOP [ OPD D
READ:UNKNOWN
TO: Kathleen M. Turco ( CN=Kathleen M. Turco/OU=OMB/O=EOP @ EOP [ OMB ])
READ:UNKNOWN
TO: Alexander T. Hunt ( CN=Alexander T. Hunt/OU=OMB/O=EOP @ EOP [ OMB ])
READ:UNKNOWN
TEXT:
Thursday's meeting will be held in NEOB room 8116.
New Executive Office Building
725 17th Street, Room 8116
February 20, 1997
3:00-4:00
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Melissa Y. Cook ( CN=Melissa Y. Cook/OU=OMB/O=EOP [ OMB ])
CREATION DATE/TIME:19-FEB-1997 12:03:11.00
SUBJECT: PBGC 1996 Annual Report
TO: Ellen S. Seidman ( CN=Ellen S. Seidman/OU=OPD/O=EOP @ EOP [OPD])
READ:UNKNOWN
TEXT:
Could you please let me know by 4:00pm TODAY (Feb. 19th) if you have any
comments on PBGC's 1996 Annual Report (LRM #AMB7)? If I do not hear from
you by then, I will assume that you do not have any comments on this
report.
Thanks.
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: G.E. DeSeve (CN=G. E. DeSeve/OU=OMB/O=EOP [ OMB ])
CREATION DATE/TIME:26-FEB-1997 17:26:08.00
SUBJECT: Re: DC pension - new draft
TO: Ellen S. Seidman ( CN=Ellen S. Seidman/OU=OPD/O=EOP @ EOP [ OPD )
READ:UNKNOWN
CC: John H. Gibbons ( CN=John H. Gibbons/OU=OSTP/O=EOP @ EOP [OSTP])
READ:UNKNOWN
CC: Scott Quehl ( CN=Scott Quehl/OU=OMB/O=EOP @ EOP [ OMB ])
READ:UNKNOWN
CC: James J. Jukes ( CN=James J. Jukes/OU=OMB/O=EOP @ EOP [ OMB 1)
READ:UNKNOWN
TEXT:
I do realize that you all won't be with us. I believe that this will be
at least a two step process.
We will share our policies and concerns tomorrow and ask that the actuary
prepare analysis to demonstrate the economic effects of these policies.
We think we know what they will show but we won't hand out our numbers.
We will also share the language in the MOU indicating that it is a first
draft and that NEC and PBGC are not represented here today and that while
they have reviewed the language, they wish to participate in the dialogue
with the District about it.
I am going to do an agenda shortly and will circulate it. The MOU language
I am going to share is from the 2/18 version unless Scott tells me that
you have put in play a more recent version.
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: G. E. DeSeve (CN=G. E. DeSeve/OU=OMB/O=EOP [ OMB ])
CREATION DATE/TIME:26-FEB-1997 17:50:51.00
SUBJECT: Pension Meeting Agenda
TO: Carol Thompson-Cole ( CN=Carol Thompson-Cole/OU=OMB/O=EOP @ EOP [ OMB D
READ:UNKNOWN
TO: Ellen S. Seidman ( CN=Ellen S. Seidman/OU=OPD/O=EOP @ EOP [ OPD )
READ:UNKNOWN
TO: Michael Deich ( CN=Michael Deich/OU=OMB/O=EOP @ EOP [ OMB 1)
READ:UNKNOWN
CC: Scott Quehl (CN=Scott Quehl/OU=OMB/O=EOP @ EOP [ OMB )
READ:UNKNOWN
Toni S. Hustead ( CN=Toni S. Hustead/OU=OMB/O=EOP [ OMB )
READ:UNKNOWN
TEXT:
Below is the agenda of tomorrow's DC pension meeting. Scott has sent out
a list of invitees and we are happy to have more.
Purpose: To discuss the elements of the President's Plan for DC Pensions
and to agree on the analytic and information gathering next steps that the
group should take
1. Intent of the President's Plan
- To ensure the timely and full payment to all beneficiaries back
by the full faith and credit of the Federal Government where appropriate.
- Accept significantly all of the liability for the pensions of
Teacher's, Firefighters, Police and judges.
- To properly assign responsibility for items such as disability
and years of service
- To achieve an affordable going forward cost for the District
2. Basis for Analysis
- Milliman & Robertson (M&R) Valuation as of October 1, 1996 for
Fiscal Year 1998
- Revisions by M&R as agreed to by the parties
- The Mayor's Budget and Financial Plan for FY 97 as approved by
the Financial Responsibility Authority
3. Sharing of information and views
- Federal government is happy to share our analysis and PBGC will
do so with whomever other parties designate
- Need for agreement
- Views should be shared but need not be unitary
- Different responsibilities and duties must be respected
4. MOU
-Process
- Pension Conditions
5. Next Steps
and Congress
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Wendy J. Einhellig ( CN=Wendy J. Einhellig/OU=OPD/O=EOP [ OPD D
CREATION DATE/TIME:26-FEB-1997 10:16:06.00
SUBJECT: Flights
TO: Ellen S. Seidman ( CN=Ellen S. Seidman/OU=OPD/O=EOP @ EOP [ OPD 1)
READ:UNKNOWN
TEXT:
For you to fly out of National on the flight with PBGC folks will cost
$546. To fly out of Dulles will cost $194. Still want to fly out of
National?
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: James J. Jukes ( CN=James J. Jukes/OU=OMB/O=EOP [ OMB ])
CREATION DATE/TIME:26-FEB-1997 16:36:05.00
SUBJECT: Re: DC pension - new draft
TO: Ellen S. Seidman ( CN=Ellen S. Seidman/OU=OPD/O=EOP @ EOP [ OPD ])
READ:UNKNOWN
CC: M. Jill Gibbons (CN=M. Jill Gibbons/OU=OMB/O=EOP @ EOP [ OMB ])
READ:UNKNOWN
CC: G. E. DeSeve (CN=G. E. DeSeve/OU=OMB/O=EOP @ EOP [OMB])
READ:UNKNOWN
TEXT:
We don't have one and PBGC is refusing to supply one until Ed or you
specifically ask them to give it to us.
Ellen S. Seidman
02/26/97 01:14:23 PM
Record Type: Record
To: G.E. DeSeve/OMB/EOP, James J. Jukes/OMB/EOP, John H. Gibbons/OSTP/EOP
cc:
Subject: DC pension - new draft
Obviously I should know this, but is there a recent draft of the pension
bill? Treasury is asking for one, and I'd like one too. Also, Ed, you
realize you won't have me, Stuart or Mark Iwry tomorrow. ellen
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Ellen S. Seidman ( CN=Ellen S. Seidman/OU=OPD/O=EOP [OPD])
CREATION DATE/TIME:26-FEB-1997 17:38:20.00
SUBJECT: Re: DC pension - new draft
TO: G.E. DeSeve (CN=G. E. DeSeve/OU=OMB/O=EOP @ EOP [ OMB ])
READ:UNKNOWN
TEXT:
EEK I think there is a more recent version. Here's what I created based
on our somewhat hasty discussions that evening, working from Scott's
previous draft. Also, PBGC will be represented by Dave, Jane and Terry.
Only Stuart from the group is going up. Good luck. ellen
ATTACHMENT 1
ATT CREATION TIME/DATE: 0 00:00:00.00
TEXT:
Unable to convert ARMS_EXT:[ATTACH.D94JMAIL425536654.016 to ASCII,
The following is a HEX DUMP:
END ATTACHMENT
1
A)
To establish replacement retirement programs, through collective bargaining if
applicable, that cover new and existing employees who are or would have been covered
by the transferred retirement programs.
A.1.
Once the new retirement programs are adopted, they may not be amended to
increase their costs without providing a means to fund the increase.
B)
That the cost of the replacement retirement programs will not exceed the sum available in
the District of Columbia Budget and Financial Plan.
B.1.
The cost of any defined benefit plan will be determined in accordance with the
measurement standards of Governmental Accounting Standards Board Statement
No. 27 (GASB 27), with the following additional restrictions:
funding methods will be limited to entry age or frozen entry age; and
amortization of any unfunded actuarial liability is required over no more
than 30 years on a closed basis.
B.2.
The cost of any defined contribution plan is the employer contribution required
under the provisions of the plan.
B.3.
All costs of the replacement retirement programs must be reflected in the D.C.
Budget and Financial Plan in accordance with the standards described above.
B.4.
All costs of the replacement retirement program must be paid in a timely manner.
C)
To transfer copies of books and records of the Retirement Program and the Fund and to
be financially responsible for errors and omissions
D)
To transfer assets from the Fund
D.1.
Any and all assets of the Fund required to be transferred to the Trustee shall be
transferred on the Transfer Date in a form specified by the Trustee.
D.2.
The District will administer the retirement programs until the Trustee assumes
these responsibilities. The District government will reimburse the Fund before the
transfer date for any benefits paid out of the fund between the freeze date and the
transfer date that exceed payments that would have been the responsibility of the
Federal government if the transfer had occurred simultaneously with the freeze.
E)
To implement reforms in the retirement program.
E.1.
The District will enact legislation to authorize Cost-Of-Living-Adjustments
(COLAs) for the beneficiaries in question at a rate acceptable to the Federal
government.
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Mark D. Menchik (CN=Mark D. Menchik/OU=OMB/O=EOP [ OMB ])
CREATION DATE/TIME:26-FEB-1997 11:47:10.00
SUBJECT: Seal Named PBGC Acting Executive Director
TO: Ellen S. Seidman (CN=Ellen S. Seidman/OU=OPD/O=EOP @ EOP [ OPD ])
READ:UNKNOWN
TEXT:
Forwarded by Mark D. Menchik/OMB/EOP on 02/26/97
11:48 AM
No. 38 Wednesday February 26, 1997
Main View
Cases
Economic News Highlights
Print
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REGULATION, ECONOMICS AND LAW
Employment
Administration Opposes Senate Bill That Would Allow Comp Time For Overtime
A GOP-backed bill (S 4) that would allow hourly wage workers to
accept compensatory time off in lieu of overtime pay does not provide
enough protection for workers and would be vetoed by President Clinton, a
Labor Department spokeswoman said Feb. 25.
Acting Labor Secretary Cynthia Metzler was expected to outline the
administration's objections to the bill in a letter to Sen. James M.
Jeffords (R-Vt), chairman of the Senate Labor and Human Resources
Committee, the spokeswoman said. The committee was scheduled to meet Feb.
26 to vote on the legislation sponsored by Sen. John Ashcroft (R-Mo).
According to the spokeswoman, Vice President Al Gore outlined the
administration's opposition to the bill during his meeting with labor
leaders last week in Los Angeles. The vice president told officials of the
AFL-CIO that the president would veto the Ashcroft bill in its present
form, the spokeswoman said. Gore also made clear that the administration
does not take the position that approval of comp time legislation, which
is a high priority of Republicans, should be tied with the president's
proposal to amend the Family and Medical Leave Act, she said. The
president has proposed granting workers 24 hours of unpaid leave per year
to attend children's school activities.
Clinton has advocated amending the Fair Labor Standards Act to permit
hourly wage workers to take comp time, but Republicans have taken no
action on recommendations the president made during the last Congress,
according to a Labor Department spokesman.
Democratic opponents of the Ashcroft bill maintain that employees
would be vulnerable to employer pressure to accept time off instead of
compensation, and contend that it gives employers too much discretion as
to when comp time can be taken. Proponents argue that many workers would
prefer to have extra time off to be with their families, instead of having
the single option of overtime pay.
The committee also was scheduled to vote Feb. 26 on the Teamwork for
Employers and Managers Act (S 295), which is intended to make it easier
for companies to establish employee involvement teams in the workplace.
The measure is identical to a bill that was vetoed by President Clinton
last August.
(c) 1997 by The Bureau of National Affairs, Inc. Washington, D.C. 20037
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: G.E. DeSeve (CN=G. E. DeSeve/OU=OMB/O=EOP [ OMB ])
CREATION DATE/TIME:28-FEB-1997 16:24:01.00
SUBJECT: Re: COLA changes to existing plans
TO: Ellen S. Seidman ( CN=Ellen S. Seidman/OU=OPD/O=EOP @ EOP [OPD])
READ:UNKNOWN
TEXT:
Boy am I glad you are helping to work on this. We gave the principals
(District, Council, and FRMAA) a copy of the draft pension conditions
yesterday. The final condition was a blank proviso on plan changes. I
would like to discuss , probably Tuesday or Wednesday of next week the
conditions and what is possible in the area of plan changes for existing
employees. Frank is much more comfortable on the ability to make changes
than I am. We may have to ask PBGC or someone to give us a legal breif.
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Ellen S. Seidman (CN=Ellen S. Seidman/OU=OPD/O=EOP [ OPD ])
CREATION DATE/TIME:28-FEB-1997 12:52:36.00
SUBJECT: D.C. Pensions: Response to Mica
TO: Scott Quehl CN=Scott Quehl/OU=OMB/O=EOP @ EOP [ OMB
READ:UNKNOWN
TEXT:
There are a few small changes noted. The only major question is what we
want to say about judges. Also, my understanding is that, after
yesterday's meeting, we may have to rejigger our proposal to take future
service and/or leave some assets. My fixes probably could be interpreted
as allowing us to leave some assets, but we're pretty specific about
future service. Do we need to be? You COULD solve the problem by
deleting the stuff in brackets in the second paragraph, but that leaves
the status of the current employees' benefits very ambiguous. If you add
the stuff in red at the end of the first sentence of the second paragraph,
you solve it, but then you commit yourself to more than I think we're
ready to do. The word "virtually" still appears in the first paragraph,
but I think that's OK because I'm almost certain we're going to try to
leave them with some disability.
Forwarded by Ellen S. Seidman/OPD/EOP on 02/28/97
12:46 PM
Scott Quehl
02/28/97 12:24:14 PM
Record Type: Record
To: Ellen S. Seidman/OPD/EOP
cc:
bcc:
Subject: D.C. Pensions: Response to Mica
Ellen,
Welcome back. Unlike what was sent to you before, what is written below
reflects the responses of Michael Deich, Ed, PBGC, and OMB career staff on
the answer to the question posed by Chairman Mica. Any changes before we
send it out this afternoon?
Scott
6. The President ,S Budget proposes to assume both the assets and
liabilities of the District of Columbia ,S pension programs covering
police, firefighters, judges and teachers. During the five years covered
by this budget, this action is presented as revenue-neutral.
Please describe for the Subcommittee the President ,S plan for assuming
the assets and resolving the liabilities associated with these pension
plans. Please provide, too, the methods by which this plan was developed,
and a description of alternative proposals to address any problems
identified in developing this plan.
DESCRIPTION OF PRESIDENTS PENSION PROPOSAL.
What the Pension Proposal Would Do. Beginning in FY1998, the Federal
government would assume both financial and administrative responsibility
for a major share of the benefits payable under the District ,S retirement
programs for police and firefighters, teachers, and judges. Upon enactme
nt of legislation providing the transfer and the District establishing
replacement plans as specified in the Memorandum of Understanding, the
Federal government would take responsibility for virtually all pension
benefits accrued under the plans for all active and retired employees, as
of the date the legislation is introduced. Assets of the retirement plans
will be transferred to the Federal government. The Federal government
would pledge its full faith and credit to meet its responsibilities to
these beneficiaries.
The Federal government would make full benefit payments to current
retirees and beneficiaries, and would pay virtually all benefits of
current employees. [It would "freeze" benefits payable to current
employees based on service earned as of the date the legislation is
introduced, and would pay their future retirement, death and some of their
disability benefits to the extent they are earned based on the frozen
service. Under the current proposal, current employees would be able to
count future service with the District toward vesting and eligibility for
retirement benefits, but not for the amount of the benefits. While the
Federal government, therefore, would not be responsible for benefits
earned during future years of service by members of the current retirement
programs, these members would get the benefit of pay increases on the
frozen benefits. Frozen] benefits would continue to be subject to
cost-of-living adjustments under the terms of the existing programs.
Employees hired after the freeze date would belong to the new District
plans, not to the plans taken over by the Federal government. All
employee contributions subsequent to the freeze date would be made to the
new District plans. [This isn't true of judges -- do you want to say so
here?]
A third-party Trustee would be appointed by the Federal government to
administer the plan and invest pension assets. The benefits would be
backed by the full faith and credit of the Federal government.
The existing assets would be liquidated as needed and used to make
payments to beneficiaries. Federal outlays would be needed only after the
existing assets are exhausted.
What Would the District Have to Do to Make the Plan Work? The District
government would sign a Memorandum of Understanding with the Federal
government in which it agrees to establish and properly fund and budget
for the funding of replacement plans, transfer books and records and
assets to the Trustee, and make certain reforms in the retirement programs.
PROCESS FOR DEVELOPING THE PLAN & ALTERNATIVE PROPOSALS.
Since the spring of 1996, the Administration has worked with
District stakeholders to consider various proposals regarding the
District ,S pension system. The President proposed in his FY1997 Budget
to provide the District an additional $52 million a year toward its
unfunded pension liability in 1997, and a growing stream of payments in
subsequent years (with a present value of about $3 billion) -- a proposal
that was not enacted into law. The Administration has reviewed the
proposal put forward by District Delegate Eleanor Holmes Norton. It has
also assessed the recommendations of the D.C. Appleseed Foundation to have
the Federal government assume the assets and liabilities associated with
the pension systems of teachers, police and firefighters, and judges.
A Federal government working group composed of the Departments of
Labor and Treasury, Office of Management and Budget, National Economic
Council, and the Pension Benefit Guaranty Corporation has been developing
the details of the framework presented by OMB Director Franklin D.
Raines. The working group is also drafting a Memorandum of Understanding
which will be shared with the District shortly.
As with the other elements of the President ,S Plan, we are
working with the District government and Financial Authority to use common
actuarial and budget numbers -- based on analysis by the D.C. actuary --
to finalize costs, savings, liability, and cash flows associated with the
pension proposal.
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Ellen S. Seidman (CN=Ellen S. Seidman/OU=OPD/O=EOP [ OPD ])
CREATION DATE/TIME:28-FEB-1997 17:28:56.00
SUBJECT: Re: COLA changes to existing plans
TO: G.E. DeSeve (CN=G. E. DeSeve/OU=OMB/O=EOP @ EOP [ OMB ])
READ:UNKNOWN
CC: Scott Quehl ( CN=Scott Quehl/OU=OMB/O=EOP @ EOP [ OMB 1)
READ:UNKNOWN
TEXT:
HELP!! Do you want me to start the legal balls rolling?
Also, PBGC will have M&R run the numbers without any of the extra stuff -
judges, overtime or COLAs. They will, however, draft to include all the
judges, including new hires.
Also, you should be aware that everything is drafted, and all the numbers
are run, in a manner that gives DC all the back-ended [higher] accrual
rates. This is apparently particularly an issue with the teachers, who
have a three tier system. Example: say a teacher accrues at the rate of
1.5% per year of service for the first 15 years, 2% for the next 10 and
2.5% for the next 5, and the teacher works 15 years before the freeze and
15 years after. The way we have things drafted now, we pay only at a 1.5%
accrual rate, instead of the average accrual rate of
((1.5*15)+(2*10)+(2.5*5)/30=1.8333333. This obviously benefits us at the
expense of the District. Jane is not sure by how much, but she thinks it
may be alot for the teachers. I 've told her to keep things running as
they are, but to try to get the differential, as this might be an easy way
to throw some extra money to the district.
ellen
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Ellen S. Seidman ( CN=Ellen S. Seidman/OU=OPD/O=EOP [ OPD 1)
CREATION DATE/TIME:28-FEB-1997 08:50:46.00
SUBJECT: Re: Comment on pension MOU -- COLAs
TO: M. Jill Gibbons (CN=M. Jill Gibbons/OU=OMB/O=EOP @ EOP [ OMB )
READ:UNKNOWN
CC: Mark D. Menchik ( CN=Mark D. Menchik/OU=OMB/O=EOP @ EOP [ OMB ])
READ:UNKNOWN
TEXT:
Mark's suggestions on COLAs are good in theory but miss an important
point. Frank wants DC to agree to fix this for the OLD plans, and
obviously would prefer they not be double for the new plans, BUT THE
ENTIRE ISSUE IS BEING LEFT TO THE DC GOVERNMENT AND COLLECTIVE BARGAINING<
PARTICULARLY AS TO THE NEW PLANS. The suggested langugage would violate
this pledge we've made to them.
I'm also not inclined to change the "in a timely manner" langauge. For
one thing, the contribution schedule on a DC plan will be quite different
than on a DB plan, and we don't know what they'll come up with, although
I'll agree the DB is a better bet. I know for a number of reasons we
don't want to bind them to ERISA rules. I wonder whether there's a GASB
rule on this similar to the rule on the AMOUNT of funding. I've asked the
PBGC to check. I will get something from them when we talk at 10.
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: G.E. DeSeve (CN=G. E. DeSeve/OU=OMB/O=EOP [OMB])
CREATION DATE/TIME:28-FEB-1997 16:17:10.00
SUBJECT: Re: Informing PBGC on COLAs, Overtime, and Judges
TO: Scott Quehl ( CN=Scott Quehl/OU=OMB/O=EOP @ EOP [ OMB 1)
READ:UNKNOWN
CC: Ellen S. Seidman ( CN=Ellen S. Seidman/OU=OPD/O=EOP @ EOP [ OPD ])
READ:UNKNOWN
TEXT:
Go ahead as we discussed and ask them to run the system as it is. As we
agree with the District what the issues for potential plan changes are, we
will run estimates of the individual elements. But let's get a base case
in the bag ASAP. Could you ask PBGC to ask MR when this run might be done
so we can set a meeting on numbers.
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: G.E. DeSeve (CN=G. E. DeSeve/OU=OMB/O=EOP [ OMB D
CREATION DATE/TIME:28-FEB-1997 16:19:58.00
SUBJECT: Re: D.C. Pensions: COLA, OVERTIME, JUDGES
TO: Scott Quehl ( CN=Scott Quehl/OU=OMB/O=EOP @ EOP [ OMB ])
READ:UNKNOWN
CC: Ellen S. Seidman ( CN=Ellen S. Seidman/OU=OPD/O=EOP @ EOP [ OPD ])
READ:UNKNOWN
TEXT:
Ellen/Scott, It occurs to me that we might save some time and eliminate
the middle man if we join the MR PBGC meeting. I am happy to go there if
it would facilitate things. However, I don't want to annoy PBGC by
seeming to be looking over thier shoulder? What do you think?
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Scott Quehl CN=Scott Quehl/OU=OMB/O=EOP [ OMB ])
CREATION DATE/TIME:28-FEB-1997 12:25:11.00
SUBJECT: D.C. Pensions: Response to Mica
TO: Ellen S. Seidman ( CN=Ellen S. Seidman/OU=OPD/O=EOP @ EOP [ OPD
READ:UNKNOWN
TEXT:
Ellen,
Welcome back. Unlike what was sent to you before, what is written below
reflects the responses of Michael Deich, Ed, PBGC, and OMB career staff on
the answer to the question posed by Chairman Mica. Any changes before we
send it out this afternoon?
Scott
6. The President ,S Budget proposes to assume both the assets and
liabilities of the District of Columbia ,S pension programs covering
police, firefighters, judges and teachers. During the five years covered
by this budget, this action is presented as revenue-neutral.
Please describe for the Subcommittee the President ,S plan for assuming
the assets and resolving the liabilities associated with these pension
plans. Please provide, too, the methods by which this plan was developed,
and a description of alternative proposals to address any problems
identified in developing this plan.
DESCRIPTION OF PRESIDENTS PENSION PROPOSAL.
What the Pension Proposal Would Do. Beginning in FY1998, the Federal
government would assume both financial and administrative responsibility
for a major share of the benefits payable under the District ,S retirement
programs for police and firefighters, teachers, and judges. Upon enactme
nt of legislation providing the transfer and the District establishing
replacement plans as specified in the Memorandum of Understanding, the
Federal government would take responsibility for virtually all pension
benefits accrued under the plans for all active and retired employees, as
of the date the legislation is introduced and the assets of the retirement
plans are transferred to the Federal government. The Federal government
would pledge its full faith and credit to meet its responsibilities to
these beneficiaries.
The Federal government would make full benefit payments to current
retirees and beneficiaries. It would "freeze" benefits payable to current
employees based on service earned as of the date the legislation is
introduced, and would pay their future retirement, death and some of their
disability benefits to the extent they are earned based on the frozen
service. Under the current proposal, current employees would be able to
count future service with the District toward vesting and eligibility for
retirement benefits, but not for the amount of the benefits. While the
Federal government, therefore, would not be responsible for benefits
earned during future years of service by members of the current retirement
programs, these members would get the benefit of pay increases on the
frozen benefits. Frozen benefits would continue to be subject to
cost-of-living adjustments under the terms of the existing programs.
Employees hired after the freeze date would belong to the new District
plans, not to the plans taken over by the Federal government. All
employee contributions subsequent to the freeze date would be made to the
new District plans.
A third-party Trustee would be appointed by the Federal government to
administer the plan and invest pension assets. The benefits would be
backed by the full faith and credit of the Federal government.
The existing assets would be liquidated as needed and used to make
payments to beneficiaries. Federal outlays would be needed only after the
existing assets are exhausted.
What Would the District Have to Do to Make the Plan Work? The District
government would sign a Memorandum of Understanding with the Federal
government in which it agrees to establish and properly fund and budget
for the funding of replacement plans, transfer books and records and
assets to the Trustee, and make certain reforms in the retirement programs.
PROCESS FOR DEVELOPING THE PLAN & ALTERNATIVE PROPOSALS.
Since the spring of 1996, the Administration has worked with
District stakeholders to consider various proposals regarding the
District ,S pension system. The President proposed in his FY1997 Budget
to provide the District an additional $52 million a year toward its
unfunded pension liability in 1997, and a growing stream of payments in
subsequent years (with a present value of about $3 billion) -- a proposal
which was not enacted into law. The Administration has reviewed the
proposal put forward by District Delegate Eleanor Holmes Norton. It has
also assessed the recommendations of the D.C. Appleseed Foundation to have
the Federal government assume the assets and liabilities associated with
the pension systems of teachers, law enforcement officers and f
irefighters, and judges.
A Federal government working group composed of the Departments of
Labor and Treasury, Office of Management and Budget, National Economic
Council, and the Pension Benefit Guaranty Corporation has been developing
the details of the framework presented by OMB Director Franklin D.
Raines. The working group is also drafting a Memorandum of Understanding
which will be shared with the District shortly.
As with the other elements of the President ,S Plan, we are
working with the District government and Financial Authority to use common
actuarial and budget numbers -- based on analysis by the D.C. actuary --
to finalize costs, savings, liability, and cash flows associated with the
pension proposal.
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Scott Quehl (CN=Scott Quehl/OU=OMB/O=EOP [OMB])
CREATION DATE/TIME:28-FEB-1997 12:03:55.00
SUBJECT: Informing PBGC on COLAs, Overtime, and Judges
TO: Ellen S. Seidman ( CN=Ellen S. Seidman/OU=OPD/O=EOP @ EOP [OPD])
READ:UNKNOWN
TO: G.E. DeSeve ( CN=G. E. DeSeve/OU=OMB/O=EOP @ EOP [OMB])
READ:UNKNOWN
TEXT:
Ed and Ellen,
Dave Gunderson and Jane Pachelli of PBGC have asked for specific guidance
on how to treat judges, restrictions on excessive overtime, and
elimination of double COLAs for the purposes of working with Milliman and
Robertson to run the numbers we need.
Would a conference call be appropriate?
Scott
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Scott Quehl ( CN=Scott Quehl/OU=OMB/O=EOP [ OMB 1)
CREATION DATE/TIME:28-FEB-1997 16:15:47.00
SUBJECT: D.C. Pensions: COLA, OVERTIME, JUDGES
TO: Ellen S. Seidman ( CN=Ellen S. Seidman/OU=OPD/O=EOP @ EOP [ OPD )
READ:UNKNOWN
CC: G. E. DeSeve ( CN=G. E. DeSeve/OU=OMB/O=EOP @ EOP [ OMB 1)
READ:UNKNOWN
TEXT:
Ellen,
Ed would like to have PBGC run the numbers without reflecting changes to
COLAs, excessive use of overtime to inflate the "high three" pay
calculation (a concern of Frank's), or different treatment for judges.
Doing so provides us with a base case from which to assess the impact of
changes (like those associated with removing double COLAs). PBGC and
Milliman & Robertson will meet Wednesday to reach mutual agreement on the
numbers, and pass on the results to us afterwards.
Scott
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Ellen S. Seidman ( CN=Ellen S. Seidman/OU=OPD/O=EOP [ OPD D
CREATION DATE/TIME:28-FEB-1997 17:16:40.00
SUBJECT: Re: Informing PBGC on COLAs, Overtime, and Judges
TO: G. E. DeSeve (CN=G. E. DeSeve/OU=OMB/O=EOP @ EOP [ OMB 1)
READ:UNKNOWN
TEXT:
Ed/Scott: I told them to try to include the judges (although they then
asked the obvious question -- what about new hires -- to which I assume
the answer is we take them), but not the other items. ellen
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Mark D. Menchik (CN=Mark D. Menchik/OU=OMB/O=EOP [ OMB
CREATION DATE/TIME:28-FEB-1997 09:10:01.00
SUBJECT: Re: Comment on pension MOU -- COLAs
TO: Ellen S. Seidman ( CN=Ellen S. Seidman/OU=OPD/O=EOP @ EOP [ OPD
READ:UNKNOWN
CC: M. Jill Gibbons (CN=M. Jill Gibbons/OU=OMB/O=EOP @ EOP [ OMB )
READ:UNKNOWN
TEXT:
I'm glad that people are thinking about the double COLAs. I wanted to
raise the issue for two reasons: First, because of all the flak DC has
gotten because of them. Second, because of concern that in the press of
drafting, most judgment calls at this stage might be settled toward higher
costs to the federal government, which could undermine the "tough love"
philosophy of the plan.
I'm glad, too, that you will be considering what "timely funding" might
mean.
But in sec. E.1 (new COLAs at a rate "acceptable to the federal
government."): Doesn't this line in the MOU inappropriately limit the
District's discretion? Why is it there?
Thanks, Ellen.
Mark
Ellen S. Seidman
02/28/97 08:53:03 AM
Record Type: Record
To: M. Jill Gibbons/OMB/EOP
cc: Mark D. Menchik/OMB/EOP
Subject: Re: Comment on pension MOU -- COLAs
Mark's suggestions on COLAs are good in theory but miss an important
point. Frank wants DC to agree to fix this for the OLD plans, and
obviously would prefer they not be double for the new plans, BUT THE
ENTIRE ISSUE IS BEING LEFT TO THE DC GOVERNMENT AND COLLECTIVE BARGAINING<
PARTICULARLY AS TO THE NEW PLANS. The suggested langugage would violate
this pledge we've made to them.
I'm also not inclined to change the "in a timely manner" langauge. For
one thing, the contribution schedule on a DC plan will be quite different
than on a DB plan, and we don't know what they'll come up with, although
I'll agree the DB is a better bet. I know for a number of reasons we
don't want to bind them to ERISA rules. I wonder whether there's a GASB
rule on this similar to the rule on the AMOUNT of funding. I've asked the
PBGC to check. I will get something from them when we talk at 10.
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Ellen S. Seidman ( CN=Ellen S. Seidman/OU=OPD/O=EOP [OPD])
CREATION DATE/TIME:28-FEB-1997 12:09:48.00
SUBJECT: Re: Informing PBGC on COLAs, Overtime, and Judges
TO: Scott Quehl ( CN=Scott Quehl/OU=OMB/O=EOP @ EOP [OMB])
READ:UNKNOWN
TEXT:
Also, Ed needs to be on the call.
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Ellen S. Seidman ( CN=Ellen S. Seidman/OU=OPD/O=EOP [ OPD 1)
CREATION DATE/TIME:28-FEB-1997 17:01:57.00
SUBJECT: Re: COLA changes to existing plans
TO: G.E. DeSeve (CN=G. E. DeSeve/OU=OMB/O=EOP @ EOP [ OMB ])
READ:UNKNOWN
TEXT:
I don't think this is the PBGC's area. It's basically DC law and
constitutional law. If you think you're going to need legal help (notice
I sent it to Damus and Rettman too), I think it's going to be a
combination of OMB/OLC and possibly DC lawyers. ellen
PS Chuck Ruff should prove useful here.
PPS I'm not acting without further direction from you
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Ellen S. Seidman ( CN=Ellen S. Seidman/OU=OPD/O=EOP [ OPD D
CREATION DATE/TIME:28-FEB-1997 12:09:29.00
SUBJECT: Re: Informing PBGC on COLAs, Overtime, and Judges
TO: Scott Quehl ( CN=Scott Quehl/OU=OMB/O=EOP @ EOP [ OMB D
READ:UNKNOWN
TEXT:
Yes, but only if Ed says so. And the three issues might be treated VERY
differently. I didn't even know about the exessive overtime. ellen
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Scott Quehl (CN=Scott Quehl/OU=OMB/O=EOP [ OMB ])
CREATION DATE/TIME:28-FEB-1997 17:17:37.00
SUBJECT: Wednesday Actuarial Meeting on Pensions
TO: Catherine A. Poynton ( CN=Catherine A. Poynton/OU=OMB/O=EOP @ EOP [ OMB D
READ:UNKNOWN
TO: Marcia D. Occomy ( CN=Marcia D. Occomy/OU=OMB/O=EOP @ EOP [ OMB ])
READ:UNKNOWN
TO: Ellen S. Seidman ( CN=Ellen S. Seidman/OU=OPD/O=EOP @ EOP [ OPD 1)
READ:UNKNOWN
TO: Larry R. Matlack ( CN=Larry R. Matlack/OU=OMB/O=EOP @ EOP [ OMB D
READ:UNKNOWN
TO: Harry G. Meyers (CN=Harry G. Meyers/OU=OMB/O=EOP @ EOP [ OMB 1)
READ:UNKNOWN
TO: Mark D. Menchik ( CN=Mark D. Menchik/OU=OMB/O=EOP @ EOP [ OMB ])
READ:UNKNOWN
TO: G.E. DeSeve (CN=G. E. DeSeve/OU=OMB/O=EOP @ EOP [ OMB )
READ:UNKNOWN
CC: Alan B. Rhinesmith ( CN=Alan B. Rhinesmith/OU=OMB/O=EOP @ EOP [ OMB ])
READ:UNKNOWN
CC: Daniel M. Tangherlini ( CN=Daniel M. Tangherlini/OU=OMB/O=EOP @ EOP [ OMB 1)
READ:UNKNOWN
CC: Bruce D. Long ( CN=Bruce D. Long/OU=OMB/O=EOP @ EOP [ OMB D
READ:UNKNOWN
CC: Robert B. Rideout ( CN=Robert B. Rideout/OU=OMB/O=EOP @ EOP [ OMB 1)
READ:UNKNOWN
CC: Michael Deich ( CN=Michael Deich/OU=OMB/O=EOP @ EOP [ OMB D
READ:UNKNOWN
TEXT:
There will be a meeting between the actuaries of PBGC and Milliman and
Roberts, Inc. -- D.C.'s actuary -- to come to closure on the pension
numbers as we have developed them to this point on Wednesday, March 5th,
at the PBGC, which is located at 1200 K Street, N.W., 2nd Floor, Suite 250
from 10:00am to noon (ring the door bell to get in). One condition: sit
in the back and absolutely no talking -- just kidding.
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Ellen S. Seidman ( CN=Ellen S. Seidman/OU=OPD/O=EOP [ OPD ])
CREATION DATE/TIME: 3-MAR-1997 08:51:42.00
SUBJECT: Re: pension-help: Marty Slate memorial service
TO: Pension-Help-Sender ( Pension-Help-Sender @ bolis.com @ INET @ LNGTWY [ UNKNOWN 1)
READ:UNKNOWN
TEXT:
Additional details, and information about charities for memorial
donations, are at the PBGC web site, www.pbgc.gov.
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Scott Quehl ( CN=Scott Quehl/OU=OMB/O=EOP [ OMB ])
CREATION DATE/TIME:12-MAR-1997 10:53:30.00
SUBJECT: Re: DC: repealing "double cola" provision
TO: Steven D. Aitken ( CN=Steven D. Aitken/OU=OMB/O=EOP @ EOP [ OMB ])
READ:UNKNOWN
CC: Marcia D. Occomy ( CN=Marcia D. Occomy/OU=OMB/O=EOP @ EOP [ OMB
READ:UNKNOWN
CC: Ellen S. Seidman ( CN=Ellen S. Seidman/OU=OPD/O=EOP @ EOP [ OPD
READ:UNKNOWN
CC: G.E. DeSeve ( CN=G. E. DeSeve/OU=OMB/O=EOP @ EOP [ OMB
READ:UNKNOWN
CC: Mark D. Menchik ( CN=Mark D. Menchik/OU=OMB/O=EOP @ EOP [ OMB 1)
READ:UNKNOWN
CC: Rosalyn J. Rettman ( CN=Rosalyn J. Rettman/OU=OMB/O=EOP @ EOP [ OMB 1)
READ:UNKNOWN
TEXT:
Steve,
The President's Plan for D.C. Revitalization calls for the Federal
government to assume most, if not all, of the District's unfunded pension
liability for D.C. police, firefighters, judges, and teachers. The issue
is whether the District has the authority to repeal its provision of
double Cost of Living Adjustments to D.C. employees who are currently
entitled to them. D.C. says "no," the Federal government must impose such
a change on D.C. via statute. We aren't so sure, and, for Home Rule
reasons, would likely prefer a condition written into the MOU between the
District and the Federal government that D.C. make this change itself.
The economic impact the double COLAs have on driving D.C. pension costs
is unclear. While the D.C. actuary is assessing the financial impact,
there is a very real perception, including among the Congressional
leadership, that the double COLAs are driving pension costs to
exhorbitantly high levels, and that the Federal government should be wary
of taking on a liability that could grow excessively because of these
COLAs.
The District is taking another look into the legal basis for its opinion,
and we would hope to have an internal legal opinion as well.
Ellen, Mark, Marcia, and Ed, based on your experience and issues raised at
last week's meeting with D.C. principals on D.C. pensions, please feel
free to jump in if I have left out any background for Roz and Steve.
Scott
Steven D. Aitken
03/12/97 10:31:31 AM
Record Type: Non-Record
To: Scott Quehl/OMB/EOP
cc:
Subject: Re: DC: repealing "double cola" provision
What is the legal issue that needs looking into?
Forwarded by Steven D. Aitken/OMB/EOP on 03/12/97
10:32 AM
Robert G. Damus
03/12/97 09:12:44 AM
Record Type: Record
To: Steven D. Aitken/OMB/EOP
cc:
Subject: Re: DC: repealing "double cola" provision
Forwarded by Robert G. Damus/OMB/EOP on 03/12/97
09:17 AM
Please see/call me about this question. Thanks.
Roz
Mark D. Menchik 03/11/97 06:03:06 PM
Record Type: Record
To: Rosalyn J. Rettman/OMB/EOP
cc: Scott Quehl/OMB/EOP, Robert G. Damus/OMB/EOP, Larry R. Matlack/OMB/EOP
bcc:
Subject: Re: DC: repealing "double cola" provision
Roz,
What I've learned:
DC Code sections in the 1981 codification (available on Lexus and Westlaw):
Police & Fire
4-624
Teachers
13-1241
13-1243
Generally (incl. 1979 reform act)
1-701
PBGC's Chuck Finke has been doing the drafting for them; he's familiar
with the law and with certain constitutional issues common to the
private-pension world. He's at 326-4020, ext 3588. Alternatively, you
could talk with Paul Mannina in the DOL Solicitor's office, 219-9141, ext.
144.
Possibly useful as a matter of policy (not law), Paul notes that in the
private-pension world COLAs are not "accrued benefits," which are
protected by federal law.
Mark
Scott Quehl
03/11/97 02:38:12 PM
Record Type: Record
To: Robert G. Damus/OMB/EOP
cc: Mark D. Menchik/OMB/EOP
Subject: Re: DC: repealing "double cola" provision
Roz,
Thanks for your diligence. Mark Menchik is on the case for finding the
citations.
Scott
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Scott Quehl ( CN=Scott Quehl/OU=OMB/O=EOP [ OMB ])
CREATION DATE/TIME:14-MAR-1997 17:18:36.00
SUBJECT: DC MOU: Double COLA Condition
TO: Mark D. Menchik ( CN=Mark D. Menchik/OU=OMB/O=EOP @ EOP [ OMB 1)
READ:UNKNOWN
TO: Rosalyn J. Rettman ( CN=Rosalyn J. Rettman/OU=OMB/O=EOP @ EOP [ OMB )
READ:UNKNOWN
TO: Toni S. Hustead ( CN=Toni S. Hustead/OU=OMB/O=EOP @ EOP [ OMB 1)
READ:UNKNOWN
TO: G.E. DeSeve (CN=G. E. DeSeve/OU=OMB/O=EOP @ EOP [ OMB D
READ:UNKNOWN
TO: Steven D. Aitken ( CN=Steven D. Aitken/OU=OMB/O=EOP @ EOP [ OMB ])
READ:UNKNOWN
TO: Marcia D. Occomy ( CN=Marcia D. Occomy/OU=OMB/O=EOP @ EOP [ OMB D
READ:UNKNOWN
TO: Ellen S. Seidman ( CN=Ellen S. Seidman/OU=OPD/O=EOP @ EOP [ OPD )
READ:UNKNOWN
CC: M. Jill Gibbons (CN=M. Jill Gibbons/OU=OMB/O=EOP @ EOP [ OMB 1)
READ:UNKNOWN
CC: Lawrence J. Haas ( CN=Lawrence J. Haas/OU=OMB/O=EOP @ EOP [ OMB ])
READ:UNKNOWN
CC: James J. Jukes ( CN=James J. Jukes/OU=OMB/O=EOP @ EOP [ OMB 1)
READ:UNKNOWN
TEXT:
PBGC submits the following condition to the MOU to apply to D.C.'s
treatment of double COLAs:
2.5.1.
The District will enact legislation that amends the
Retirement Program to substitute a reasonable annual cost of living
adjustment to replace the Double COLAs and Equivalency provisions now in
place.
Please let me know Monday by 10:30am if this language looks acceptable for
inclusion in the draft MOU, which will go to the D.C. principals with a
cover letter from the Director Monday evening or Tuesday morning.
Scott
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Scott Quehl ( CN=Scott Quehl/OU=OMB/O=EOP [ OMB ])
CREATION DATE/TIME:14-MAR-1997 23:39:25.00
SUBJECT: DC Pension Numbers for FY98
TO: Mark D. Menchik ( CN=Mark D. Menchik/OU=OMB/O=EOP @ EOP [ OMB ])
READ:UNKNOWN
TO: Ellen S. Seidman ( CN=Ellen S. Seidman/OU=OPD/O=EOP @ EOP [ OPD )
READ:UNKNOWN
TO: Daniel M. Tangherlini ( CN=Daniel M. Tangherlini/OU=OMB/O=EOP @ EOP [ OMB 1)
READ:UNKNOWN
TO: Toni S. Hustead ( CN=Toni S. Hustead/OU=OMB/O=EOP @ EOP [ OMB ])
READ:UNKNOWN
TO: G.E. DeSeve ( CN=G. E. DeSeve/OU=OMB/O=EOP @ EOP [ OMB 1)
READ:UNKNOWN
CC: Alan B. Rhinesmith ( CN=Alan B. Rhinesmith/OU=OMB/O=EOP @ EOP [ OMB ])
READ:UNKNOWN
CC: Harry G. Meyers ( CN=Harry G. Meyers/OU=OMB/O=EOP @ EOP [ OMB ])
READ:UNKNOWN
TEXT:
Attached are estimated District payments, costs, transferred & retained
assets, and liabilities for FY1998, fashioned within the parameters agreed
to with the District: President's overall plan saves at least $60 million;
Federal govt. takes enough assets to not incur its first contribution to
beneficiaries until no earlier than 2003; employee contributions stay with
District; interest = 7.25%.
The attachment reflects comments by PBGC to the draft circulated on the
12th. Toni Hustead and Marcia will give this a scrub before the
methodology is used to plug in figures to the "Estimated District Budget
Savings" Table for the President's Plan figures to serve as placeholders
until the D.C. actuary completes the formal analysis.
Scott
ATTACHMENT 1
ATT CREATION TIME/DATE: 0 00:00:00.00
TEXT:
Unable to convert ARMS_EXT:[ATTACH.D82JMAIL44341757Z.016 to ASCII,
The following is a HEX DUMP:
END ATTACHMENT
1
DISTRICT BUDGET SAVINGS
UNDER THE PRESIDENT'S PENSION PROPOSAL
(Dollars in Millions)
Without the Pension Proposal
FY98 FY99 FY00 FY01 FY02
Total Contribution to Plans
400.4
425.0
451.4
478.7
505.5
Employee Contribution to Plans
(40.9) (42.9) (45.1) (47.2) (49.7)
Net Pay-As-You-Go
359.5
382.1
406.3
431.5
455.8
Program Changes (over 25 years)
7.9
7.9
7.9
7.9
7.9
Inflation/Amortization Component
3.7
3.7
3.7
3.7
3.7
District Payments
371.1
393.7
418.0
443.1
467.4
With the President's Proposal
District Costs from New Plans
Gross Normal Cost of Plans
55.2
60.1
65.4
70.9
76.7
Employee Contribution of Plans
(35.5) (37.2) (39.1) (41.0) (43.1)
Net Normal Cost
19.7
22.9
26.3
29.9
33.6
District Costs Remaining from Old Plans
Amortization of Unfunded Liability
83.6
83.6
83.6
83.6
83.6
District Payments
103.3
106.5
109.9
113.5
117.2
DISTRICT SAVINGS
267.8 287.2 308.1 329.6 350.2
I
District Payments without the President's Pension Proposal are derived from p. 144 of the District
Budget and Financial Plan and PBGC calculations taken from the D.C. actuary's 10.1.95 study. District
Payments with the President's Plan are from PBGC estimates, taken from information provided by the D.C.
actuary at the District government's request. Figures will be revised pending analysis of the 10.1.96 valuation.
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Ellen S. Seidman (CN=Ellen S. Seidman/OU=OPD/O=EOP [ OPD ])
CREATION DATE/TIME:18-MAR-1997 16:42:24.00
SUBJECT: Re: Meeting on Thursday
TO: Wendy J. Einhellig ( CN=Wendy J. Einhellig/OU=OPD/O=EOP @ EOP [ OPD 1)
READ:UNKNOWN
TEXT:
scott quell works for ed deseve at omb. Call Mary to get his title. Toni
Huston(? last name) also works for Ed, I believe. Dave is Dave Gustafson
at PBGC and Jane is Jane Pacelli at PBGC. Can you call them and let them
know about the meeting -- when, where etc., and also get whatever it is
carla needs. thanks. ellen
P.S. Jane works for Dave
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Wendy J. Einhellig ( CN=Wendy J. Einhellig/OU=OPD/O=EOP [ OPD ])
CREATION DATE/TIME:18-MAR-1997 16:58:51.00
SUBJECT: DC Retirement Board meeting on Pensions
TO: Carla B. Stone ( CN=Carla B. Stone/OU=OMB/O=EOP @ EOP [ OMB 1)
READ:UNKNOWN
TEXT:
Accompanying Ellen Seidman (Special Asst to President) will be:
Scott Quehl, OMB, Special Asst to Controller
Toni Hustead, OMB, Chief Veterens Affairs Branch
Charles "Dave" Gustafson, PBGC, Chief Policy Actuary
Jane Pacelli, PBGC, Chief Research Actuary
Call me if I can help otherwise. Wendy X62802.
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Mark D. Menchik ( CN=Mark D. Menchik/OU=OMB/O=EOP [ OMB ])
CREATION DATE/TIME:19-MAR-1997 16:08:28.00
SUBJECT: PBGC Ponders Change In Assumptions For Valuing Plan Distributions, Seal Says
TO: Ellen S. Seidman ( CN=Ellen S. Seidman/OU=OPD/O=EOP @ EOP [OPD])
READ:UNKNOWN
TEXT:
Forwarded by Mark D. Menchik/OMB/EOP on 03/19/97
04:08 PM
No. 53 Wednesday March 19, 1997
Main View
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Economic News
Highlights
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REGULATION, ECONOMICS AND LAW
Pensions
PBGC Ponders Change In Assumptions For Valuing Plan Distributions, Seal
Says
The Pension Benefit Guaranty Corporation intends to decide whether or not
it will change this year the actuarial assumptions it uses for valuing
pension plan benefits and assets, acting PBGC Executive Director John
Seal said March 18.
The agency will announce the planned review and seek comments on a
possible change in the March 19 Federal Register, Seal told the Enrolled
Actuaries 22nd Year Meeting.
"As you know, the National Association of Insurance Commissioners has
adopted new mortality tables for determining reserve liabilities for
group annuities," he said. "These may provide greater accuracy in
valuing annuity benefits than the tables we now use."
Currently, the federal pension plan insurer uses the 1983 Group Annuity
Mortality Table (GAM '83). In December 1996, NAIC adopted new mortality
tables called the 1994 Group Annuity Reserve Valuation Standard (GAR '94)
for determining reserve requirements for group annuities.
PBGC is not mandated to adopt GAR '94, Ellen Hennessy, PBGC deputy
executive director and chief negotiator, told BNA after another
conference session. When half of the state insurance commissioners adopt
GAR '94, it will be considered the standard assumption for lump-sum
distributions, Hennessy explained.
The agency will still be free at that time to continue using GAM '83 and
to decide whether or not it wants to adopt the new assumption, which was
recommended in 1995 by a task force formed by the Society of Actuaries.
Improving Customer Service
As part of its continuing goal to improve its customer service, Seal said
PBGC will conduct a survey this Spring of its responsiveness to the
defined benefit pension plan community's needs. Questionnaires will be
mailed to a sampling of practitioners, including approximately 800
enrolled actuaries, he added.
PBGC also held a series of focus groups with practitioners throughout
1996, he said, noting that the proposed rules for standard terminations
published March 14 evolved from the input received during the group
meetings.
"We want to work with you through the entire termination process to make
sure we get the information we need to make a determination," Seal said.
"We can do that best if you contact us well in advance of filing a
distress termination. Delays result in unnecessary expenses and hurt all
parties involved, including the participants."
In addition to contacting PBGC before filing a distress termination, Seal
urged plans with a reportable event to contact the agency before
submitting the required notice. By contacting the agency first, the work
involved for both PBGC and the plan can be minimized, he said.
"To make it easier for filers, we developed abbreviated optional forms
that may be used for the initial filings," Seal added. The optional
forms will soon be available on PBGC's Internet Home Page at
http://www.pbgc.gov, according to Seal.
System Improvements
To raise the percentage of U.S. workers covered by the private pension
system, the Clinton administration is looking at the various types of
pension plans and examining how the tax rules affect them, Seal said,
adding that the agencies charged with protecting pension plans welcome
suggestions on easing pension plan administration.
"Retirement savings will be a pivotal issue as we close out the century
and you, as pension professionals, have a major role to play," he said.
"Our goal should be to provide every American worker the opportunity to
participate in a pension plan that will provide them with a secure
retirement."
He noted that PBGC has seen a large decline in the number of defined
benefit pension plans it insures, going from a high of more than 100,000
plans in 1985 to the current 50,000. The drop primarily reflects the
large number of terminations in small plans, according to Seal. The
number of large plans with 5,000 participants or more, however, has
increased from 900 in 1985 to nearly 1,100 in 1997, he added.
A way to raise the current level of less than 50 percent of U.S. workers
being covered by a pension plan might be to combine the stability and
protection offered by a defined benefit plan with the portability offered
by a defined contribution plan, Seal said.
Stronger Financial Footing
Attributing much of the agency's financial turn-around to former
Executive Director Martin Slate's leadership, Seal said PBGC expects to
have a surplus for the first time in agency history when the year-end
results are reported at the end of March.
"Still with changes in interest rates and the economy, we must remain
vigilant. We saw the effect that low interest rates had on pension
liabilities in 1995," he added. "Although large investment returns
helped build pension assets, the low interest rate in years pushed
liabilities higher."
PBGC's sounder financial footing was brought about by record investment
earnings, having no major pension plan terminations, and enactment of the
Retirement Protection Act in 1994, which provided the agency with the
tools to address pension plan underfunding, Seal said. For example, PBGC
has been able to phase out the cap on the variable rate premium, thus
providing plan sponsors more of an incentive to keep their plans better
funded, he noted.
In addition to RPA's non-funding reforms, the funding reforms included in
the 1994 pension protection law, and just beginning to "kick in," will
have the greatest impact on plan underfunding, he said.
"By tightening the funding requirements for underfunded plans, we should
see a gradual and continued improvement in funding levels over the next
15 years," Seal added.
Copyright , 1997 by The Bureau of National Affairs, Inc.
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Scott Quehl (CN=Scott Quehl/OU=OMB/O=EOP [ OMB ])
CREATION DATE/TIME:20-MAR-1997 23:11:53.00
SUBJECT: Today's Meeting with the D.C. Retirement Board
TO: G.E. DeSeve (CN=G. E. DeSeve/OU=OMB/O=EOP @ EOP [ OMB ])
READ:UNKNOWN
CC: Lawrence J. Haas ( CN=Lawrence J. Haas/OU=OMB/O=EOP @ EOP [ OMB ])
READ:UNKNOWN
CC: M. Jill Gibbons (CN=M. Jill Gibbons/OU=OMB/O=EOP @ EOP [ OMB ])
READ:UNKNOWN
CC: Marcia D. Occomy ( CN=Marcia D. Occomy/OU=OMB/O=EOP @ EOP [ OMB D
READ:UNKNOWN
CC: Toni S. Hustead ( CN=Toni S. Hustead/OU=OMB/O=EOP @ EOP [ OMB D
READ:UNKNOWN
CC: Carol Thompson-Cole ( CN=Carol Thompson-Cole/OU=OMB/O=EOP @ EOP [ OMB ])
READ:UNKNOWN
CC: Daniel M. Tangherlini ( CN=Daniel M. Tangherlini/OU=OMB/O=EOP @ EOP [ OMB 1)
READ:UNKNOWN
CC: James J. Jukes ( CN=James J. Jukes/OU=OMB/O=EOP @ EOP [ OMB D
READ:UNKNOWN
CC: Mark D. Menchik ( CN=Mark D. Menchik/OU=OMB/O=EOP @ EOP [ OMB D
READ:UNKNOWN
CC: Ellen S. Seidman ( CN=Ellen S. Seidman/OU=OPD/O=EOP @ EOP [ OPD 1)
READ:UNKNOWN
CC: Michael Deich ( CN=Michael Deich/OU=OMB/O=EOP @ EOP [ OMB ])
READ:UNKNOWN
TEXT:
Carol, Ellen, Toni, Dave Gustofson of the PBGC, and I met with the D.C.
Retirement Board today to discuss the pension proposal.
Environment.
The initial tone seemed more like that of a hearing than a feedback
session. An eery, angry hearing. After a 45 minute wait, our group was
seated at the end of the world's longest table, stretched across a room
filled with the whir of tape recorders and the kind of mechanical hum you
find in nuclear submarine flicks or Aliens 1-3, to field questions from
smoldering board members.
The environment warmed up as Ellen explained the parameters of the plan,
with help from Carol, Toni, and Dave. Members became more at ease as it
became clear that a portion of existing assets may be left with the Board,
that employee contributions would be fully devoted to funding the new
retirement plan, and that the Federal benefit payments would factor in pay
increases for beneficiaries after the freeze date.
Diverging Interests amongst our Hosts.
At the risk of oversimplifyng, representatives of some employees groups
seemed to care little about the Board, so long as the employees ultimately
benefit from the President's plan. The representative of one employee
group said so plainly. Another reflected this in a sidebar discussion.
Others in the room seemed focused on the interests of the Board as an
institution.
In spite of our past openness with the City and Board members in defining
the parameters of the pension proposal and the terms of the MOU, the one
thing all members seemed to share was fear for the employees: fear of
the plan's unknowns -- for the Board: its own uncertain future. Today's
outreach went a long way to allay these fears, as it gave the employees'
groups some of the information they need, and gave the Board interests the
prospect that assets will be left on the table to justify the Board's e
xistence.
Issues Raised by the Board
Funding. Unless it fully funds the liability its takes over, the Federal
government could wipe away its commitment to pay beneficiaries during a
financial crisis. Should DC employees and their Fiduciary take enough
comfort in the full faith and credit of the United States that they
support the President's proposal, even though their pensions, like those
of their Federal counterparts, will be underfunded by billions? Ellen
said it plainly: this is the bottom-line question that they will have to
answer. Our communications efforts should continue to address this
question.
Wave of Employee Retirements. Employee representatives claimed that public
safety and education would be put at risk as waves of teachers, police
(600 of them -- more than a sixth of the force) and firefighters (200)
rush to retire before the freeze date because of a perceived reduction in
benefits after this date. Better information about the pensions proposal
should reduce their concerns, but may not fully stem the outflow. The
City and unions could be encouraged to find ways to induce the most valued
employees to stay on the job.
New Plans. The Board pointed out that none of the employee groups in
question enter into benefit agreements with the City through collective
bargaining. The D.C. Council simply approves new plans, within the limits
of Federal statute. Is this true? If so, we need to strike references to
collective bargaining from the MOU. At least one key Board member
asserted that the D.C. Council would have little political choice but to
create replacement retirement plans with the same benefits as the old plans
Great, since we assume the same level of benefits before and after the
transfer.
Double COLAs/Equalization Provisions. These provisions came up early and
often as something beneficiaries fear losing. Perception may not match
reality. Analysis will show if getting rid of these provisions will have
much actual economic impact.
Dealing with New Hires after 10/1/96. We need to assess if the Federal
government will have to treat employees hired after October 1, 1996
differently because of the new retirement system the D.C. Council put in
place for FY1997.
Disability Backlog. Because of past abuses, Congress imposed a very low
cap, which is still in effect, on the number of employees who can retire
on disability. Some employee representatives acknowledged old abuses, and
the Federal government's legitimate interest in preventing a return to
those practices. At the same time, they claimed that the backlog of truly
disabled employees who do not retire because of congressional cap
restrictions harms individuals and work force productivity. They want the
cap eliminated and a disability system put in place that is agreeable to
the employees, City, and the Federal government.
MOU Signing. The D.C. Retirement Board is legally responsible for the
pension assets, not the City. Should the Board be a signatory to the
MOU? If so, we may never get it signed.
Next Steps.
Expose the pension proposal to as much light as possible. The PBGC is
developing examples of how hypothetical teachers, police and firefighers,
and judges would be affected by the President's plan within its present
benefit structure. The City could work with the PBGC to develop these
examples into materials rank-and-file employees can understand.
Federal working group representatives will meet again with the Board and
separately with individual employees' unions to encourage their support.
Comments
Ellen, Carol, and Toni, please make any additions or edits you'd like.
Scott
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Jonathan A. Kaplan ( CN=Jonathan A. Kaplan/OU=OPD/O=EOP [ OPD 1)
CREATION DATE/TIME:21-MAR-1997 17:08:37.00
SUBJECT:
TO: ELLEN S. (Pager) #SEIDMAN ( ELLEN S. (Pager) #SEIDMAN [ UNKNOWN ])
READ:UNKNOWN
TEXT:
need to discuss PBGC report of 3/31. kaplan 6-5360
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Mark D. Menchik (CN=Mark D. Menchik/OU=OMB/O=EOP [ OMB ])
CREATION DATE/TIME:21-MAR-1997 10:09:39.00
SUBJECT: Re: Today's Meeting with the D.C. Retirement Board
TO: Toni S. Hustead (CN=Toni S. Hustead/OU=OMB/O=EOP @ EOP [ OMB ])
READ:UNKNOWN
CC: Lawrence J. Haas (CN=Lawrence J. Haas/OU=OMB/O=EOP @ EOP [ OMB 1)
READ:UNKNOWN
CC: M. Jill Gibbons (CN=M. Jill Gibbons/OU=OMB/O=EOP @ EOP [ OMB 1)
READ:UNKNOWN
CC: Marcia D. Occomy ( CN=Marcia D. Occomy/OU=OMB/O=EOP @ EOP [ OMB D
READ:UNKNOWN
CC: Carol Thompson-Cole ( CN=Carol Thompson-Cole/OU=OMB/O=EOP @ EOP [ OMB 1)
READ:UNKNOWN
CC: G.E. DeSeve ( CN=G. E. DeSeve/OU=OMB/O=EOP @ EOP [ OMB ])
READ:UNKNOWN
CC: Larry R. Matlack ( CN=Larry R. Matlack/OU=OMB/O=EOP @ EOP [ OMB D
READ:UNKNOWN
CC: Daniel M. Tangherlini ( CN=Daniel M. Tangherlini/OU=OMB/O=EOP @ EOP [ OMB 1)
READ:UNKNOWN
CC: James J. Jukes ( CN=James J. Jukes/OU=OMB/O=EOP @ EOP [ OMB 1)
READ:UNKNOWN
CC: Ellen S. Seidman ( CN=Ellen S. Seidman/OU=OPD/O=EOP @ EOP [ OPD D
READ:UNKNOWN
CC: Michael Deich ( CN=Michael Deich/OU=OMB/O=EOP @ EOP [ OMB 1)
READ:UNKNOWN
CC: Scott Quehl ( CN=Scott Quehl/OU=OMB/O=EOP @ EOP [ OMB ])
READ:UNKNOWN
TEXT:
Neat e-mail, Scott -- appreciate your taking the time to write it. I
especially liked the Right Brain paragraph that went from an "eery, angry
tone" to "Aliens 1-3."
My suggestions:
Funding. Ask current and would-be pensioners who is more likely to
violate their pension promise -- the DC or the federal gov't. And in
which town do all the national news reporters hang out, interested in a
story with implications for social security?
Toni: I am an examiner with painful experience with an account that --
simply put -- is really private but for weird & bad reasons is scored
on-budget. Bad all around. I firmly believe that the Trust should be
declared (in law) as non-federal, and its activities should not be
included in the Budget or in anything else that OMB does. (The federal
checks to them would be on-budget, of course.) How else are authority and
responsibility properly allocated? Don't we believe in our own law and
MOU?
Wave of Employee Retirements. The experience in the private sector is
that it is very difficult to predict early retirements, given some change
in the situation. The number is both over- and under-estimated.
Something to think about, but not to be paralyzed by, of course.
Collective Bargaining. If DC isn't legally required to do collective
bargaining, then by all means take it out. The MOU is long enough and, in
the nature of things, every additional provision raises the risk of
misinterpretation and adverse legal action later.
Double COLAs/Equalization.
Ask these critics how they would explain these two "features" either to
Chairman Faircloth or to their neighbors retired from private-sector
jobs.
Equalization (thanks, Scott) strikes me as particularly odd. COLAs are
designed to protect otherwise-vulnerable people against increases in the
cost of living, but what do "equalization increases" protect against? A
still-working neighbor with a bigger-screen TV? Perhaps the active
employees earned their TVs etc. by being more productive? I think
equalization provisions are limited to sub-national governments; maybe
they serve to protect worried officials from the charge of favoring
"actives" over "retireds" or vice versa.
Disability. A tough issue.
It's late in the day, but if disability proves to be very contentious, how
about suggesting periodic "disability reviews." Fact is, some disabled
people can get much better. Disability reviews are being greatly expanded
for social security Disability Insurance. having been proven fair,
non-intrusive, and cost effective for federal employees.
The notion seems odd that the current cap causes a backlog of the truly
disabled. Are the falsely disabled getting out before them?
MOU Signing. Argh! If the Retirement Board continues their unhappiness
with the MOU (and if all else fails) could the MOU contain a provision
that the city transfer this authority of the Board back to the DC
government? It can be argued that the current power of the Board seems
inconsistent with the idea of home rule by elected officials.
Toni S. Hustead
03/21/97 08:52:52 AM
Record Type: Record
To: Scott Quehl/OMB/EOP
cc: See the distribution list at the bottom of this message
bcc:
Subject: Re: Today's Meeting with the D.C. Retirement Board
This is a wonderful write up of the meeting. My only comments involve
"New Steps". After the meeting, Dave stated that PBGC has already created
the hypothetical cases. I think we need to put together a package -- easy
to read and understand by the layman -- that simply describes (assuming
that the wrap around plan will look like the current benefit package) the
mechanics of the future situation. The hypotheticals can be attached. I
think many of the concerns will be defused if we include:
total individual benefit levels (from an employee perspective will my
benefit decrease)
benefits payments (from an admin perspective - who pays what in the future
- two checks?)
federal funding (as you know I feel we should create a govt trust fund)
DC funding (guarantee that there will be no cash flow problem left with DC
's immediate liability) administrative responsibilities (including the
board)
who determines disability retirements
a timetable of what must be done and when
Scott Quehl
03/20/97 11:10:45 PM
Record Type: Record
To: G.E. DeSeve/OMB/EOP
cc: See the distribution list at the bottom of this message
Subject: Today's Meeting with the D.C. Retirement Board
Carol, Ellen, Toni, Dave Gustofson of the PBGC, and I met with the D.C.
Retirement Board today to discuss the pension proposal.
Environment.
The initial tone seemed more like that of a hearing than a feedback
session. An eery, angry hearing. After a 45 minute wait, our group was
seated at the end of the world's longest table, stretched across a room
filled with the whir of tape recorders and the kind of mechanical hum you
find in nuclear submarine flicks or Aliens 1-3, to field questions from
smoldering board members.
The environment warmed up as Ellen explained the parameters of the plan,
with help from Carol, Toni, and Dave. Members became more at ease as it
became clear that a portion of existing assets may be left with the Board,
that employee contributions would be fully devoted to funding the new
retirement plan, and that the Federal benefit payments would factor in pay
increases for beneficiaries after the freeze date.
Diverging Interests amongst our Hosts.
At the risk of oversimplifyng, representatives of some employees groups
seemed to care little about the Board, so long as the employees ultimately
benefit from the President's plan. The representative of one employee
group said so plainly. Another reflected this in a sidebar discussion.
Others in the room seemed focused on the interests of the Board as an
institution.
In spite of our past openness with the City and Board members in defining
the parameters of the pension proposal and the terms of the MOU, the one
thing all members seemed to share was fear -- for the employees: fear of
the plan's unknowns -- for the Board: its own uncertain future. Today's
outreach went a long way to allay these fears, as it gave the employees'
groups some of the information they need, and gave the Board interests the
prospect that assets will be left on the table to justify the Board's e
xistence.
Issues Raised by the Board
Funding. Unless it fully funds the liability its takes over, the Federal
government could wipe away its commitment to pay beneficiaries during a
financial crisis. Should DC employees and their Fiduciary take enough
comfort in the full faith and credit of the United States that they
support the President's proposal, even though their pensions, like those
of their Federal counterparts, will be underfunded by billions? Ellen
said it plainly: this is the bottom-line question that they will have to
answer. Our communications efforts should continue to address this
question.
Wave of Employee Retirements. Employee representatives claimed that public
safety and education would be put at risk as waves of teachers, police
(600 of them -- more than a sixth of the force) and firefighters (200)
rush to retire before the freeze date because of a perceived reduction in
benefits after this date. Better information about the pensions proposal
should reduce their concerns, but may not fully stem the outflow. The
City and unions could be encouraged to find ways to induce the most valued
employees to stay on the job.
New Plans. The Board pointed out that none of the employee groups in
question enter into benefit agreements with the City through collective
bargaining. The D.C. Council simply approves new plans, within the limits
of Federal statute. Is this true? If so, we need to strike references to
collective bargaining from the MOU. At least one key Board member
asserted that the D.C. Council would have little political choice but to
create replacement retirement plans with the same benefits as the old plans
Great, since we assume the same level of benefits before and after the
transfer.
Double COLAs/Equalization Provisions. These provisions came up early and
often as something beneficiaries fear losing. Perception may not match
reality. Analysis will show if getting rid of these provisions will have
much actual economic impact.
Dealing with New Hires after 10/1/96. We need to assess if the Federal
government will have to treat employees hired after October 1, 1996
differently because of the new retirement system the D.C. Council put in
place for FY 1997.
Disability Backlog. Because of past abuses, Congress imposed a very low
cap, which is still in effect, on the number of employees who can retire
on disability. Some employee representatives acknowledged old abuses, and
the Federal government's legitimate interest in preventing a return to
those practices. At the same time, they claimed that the backlog of truly
disabled employees who do not retire because of congressional cap
restrictions harms individuals and work force productivity. They want the
cap eliminated and a disability system put in place that is agreeable to
the employees, City, and the Federal government.
MOU Signing. The D.C. Retirement Board is legally responsible for the
pension assets, not the City. Should the Board be a signatory to the
MOU? If so, we may never get it signed.
Next Steps.
Expose the pension proposal to as much light as possible. The PBGC is
developing examples of how hypothetical teachers, police and firefighers,
and judges would be affected by the President's plan within its present
benefit structure. The City could work with the PBGC to develop these
examples into materials rank-and-file employees can understand.
Federal working group representatives will meet again with the Board and
separately with individual employees' unions to encourage their support.
Comments
Ellen, Carol, and Toni, please make any additions or edits you'd like.
Scott
Message Copied
To:
Michael Deich/OMB/EOP
Carol Thompson-Cole/OMB/EOP
Ellen S. Seidman/OPD/EOP
Toni S. Hustead/OMB/EOP
Mark D. Menchik/OMB/EOP
Marcia D. Occomy/OMB/EOP
James J. Jukes/OMB/EOP
M. Jill Gibbons/OMB/EOP
Daniel M. Tangherlini/OMB/EOP
Lawrence J. Haas/OMB/EOP
Message Copied
To:
G.E. DeSeve/OMB/EOP
Michael Deich/OMB/EOP
Carol Thompson-Cole/OMB/EOP
Ellen S. Seidman/OPD/EOP
Mark D. Menchik/OMB/EOP
Marcia D. Occomy/OMB/EOP
James J. Jukes/OMB/EOP
M. Jill Gibbons/OMB/EOP
Daniel M. Tangherlini/OMB/EOP
Lawrence J. Haas/OMB/EOP
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Ellen S. Seidman ( CN=Ellen S. Seidman/OU=OPD/O=EOP [ OPD
CREATION DATE/TIME:21-MAR-1997 10:10:32.00
SUBJECT: Re: Today's Meeting with the D.C. Retirement Board
TO: Scott Quehl ( CN=Scott Quehl/OU=OMB/O=EOP @ EOP [ OMB ])
READ:UNKNOWN
CC: Lawrence J. Haas ( CN=Lawrence J. Haas/OU=OMB/O=EOP @ EOP [ OMB ])
READ:UNKNOWN
CC: M. Jill Gibbons (CN=M. Jill Gibbons/OU=OMB/O=EOP @ EOP [ OMB ])
READ:UNKNOWN
CC: Marcia D. Occomy ( (CN=Marcia D. Occomy/OU=OMB/O=EOP @ EOP [ OMB 1)
READ:UNKNOWN
CC: Toni S. Hustead (CN=Toni S. Hustead/OU=OMB/O=EOP @ EOP [ OMB D
READ:UNKNOWN
CC: Michael Deich ( CN=Michael Deich/OU=OMB/O=EOP @ EOP [ OMB ])
READ:UNKNOWN
CC: Daniel M. Tangherlini (CN=Daniel M. Tangherlini/OU=OMB/O=EOP @ EOP [ OMB ])
READ:UNKNOWN
CC: James J. Jukes ( CN=James J. Jukes/OU=OMB/O=EOP @ EOP [ OMB ])
READ:UNKNOWN
CC: Mark D. Menchik ( CN=Mark D. Menchik/OU=OMB/O=EOP @ EOP [ OMB 1)
READ:UNKNOWN
CC: Carol Thompson-Cole (CN=Carol Thompson-Cole/OU=OMB/O=EOP @ EOP [ OMB ])
READ:UNKNOWN
CC:G.E. DeSeve (CN=G. E. DeSeve/OU=OMB/O=EOP @ EOP [ OMB ])
READ:UNKNOWN
TEXT:
My first reaction is to note Scott's future as a writer of spy novels.
It was indeed a dark and stormy night. I really appreciate the support
from Carol, Scott, Toni and Dave Gustafson of PBGC.
The memo is accurate, although maybe just a tad more optimistic than I
would be. Education is clearly a VERY big issue. The disability backlog
is too. I must admit I don't quite understand the outflow issue, assuming
we get the education right and the new plan is a total wrap. I think it
may be concern that (i) the new plan WON'T be a total wrap and (ii) the
loss of double COLAs is meaningful. The ecnomic analysis on that will be
very important -- and we may need to rethink whether, if it shows not much
impact,, it's better to try to convince the Congress that getting rid of
it is unimportant or the unions that getting rid of it doesn't matter.
Finally, Mozelle brought up an issue with me last night. The Secret
Service is overreacting just like the DC folks. Their concern is that the
folks who are part of the DC plan -- and who therefore can double dip in a
federal pension if they get a non-Secret Service federal job after
retirement -- will lose that wonderful opportunity. Mozelle tried to
reassure them that we're just transferring responsibility for
administering the plan, not merging them into the federal system.
However, they, like the DC folks, need someone responsible to talk to. It
can be Mozelle, but only if he's truly plugged into what's happening, which
is not the case right now.
Ed, can you please talk to him.
Thanks.
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Russell W. Horwitz ( CN=Russell W. Horwitz/OU=OPD/O=EOP [ OPD
CREATION DATE/TIME:21-MAR-1997 21:28:06.00
SUBJECT: text of message in case the attachment doesn't work
TO: kwallman ( kwallman @ ix.netcom.com @ inet [ OMB
READ:UNKNOWN
TEXT:
March 21, 1997
MEMORANDUM FOR THE PRESIDENT
FROM:
GENE SPERLING
RE:
NEC Weekly Report
G.I. Bill/Skill Grants. On Friday, I participated in the second panel at
the Council on Competitiveness with Governor Engler regarding the
Administration ,S priorities to strengthen the workforce. We agreed that
his staff would come to the White House next week for an informal
discussion and an exchange of ideas to gain further impetus for the
legislation. In the next couple of weeks -- hopefully with Alexis
confirmed -- we will need to present you with options on how to proceed
legislatively and strategically this year on skill grants.
Financial Services Modernization: Tuesday and Thursday, we held NEC
principals , meetings on Treasury ,S financial services modernization
proposal. The four main issues are: 1) whether to go ahead with the
proposal in light of the other issues; 2) the extent to which bank and
commercial industrial firms ought to be able to combine or get into one
another ,S business; 3) how holding companies should be regulated; and, 4)
what opportunities or risks may be posed for CRA in the course of the
legislative process. We are quite close on the substantive questions, but
both the politics and substantive considerations are quite complex. Bob
Rubin and I met with John Hilley today and decided we should delay its
internal announcement and our final recommendation to you -- until we
further investigate the Congressional and outside politics. Treasury is
delaying its intended announcement of the Administration ,S position
(which had been scheduled for March 31), pending further discussions to
gauge support. This may mean a delay beyond April 7 in Treasury ,S
response in submitting a report by March 31 on the bank/thrift charter
issues, as required by last year ,S BIF/SAIF bill.
Preparation for April 3rd Big 3 Automakers: Kathy Wallman, Ellen Seidman,
Dorothy Robyn and I, with CEQ and OPL, met with the Washington
representatives of the Big 3 automakers to prepare for the upcoming
meeting of the CEOs with you, scheduled for April 3. The main issues they
care about are the changing dollar/yen ratio -- which they blame on their
inability to penetrate the Japanese market as well as loss of market share
at home (but which we would not talk about); the PM/Ozone rulemaking,
where we explained that while we could not talk about the pending
rule-making, the Administration through OIRA would be reaching out to
those concerned, including the auto industry (this has since been done);
and climate change.
On the latter, we made clear our real interest in working with them on
modeling and other analysis to try to generate informed decisions that
respond to the climate problem without harm to the economy. They were
skeptical but willing to try. We emphasized the need to be working
together if the United States government was not to be isolated on certain
issues we both care about, such as the responsibilities of developing
countries. We are exploring whether there is a safety issue or NEXTEA
announcement we could do with them, so that the news focus is not on the
dollar or their objections on Global Climate Change. We will know more
about this in the coming week.
Officially Announcing Higher Education Legislation. On Thursday, the Vice
President held a "higher education roundtable" at Washington & Lee High
School in Arlington, VA to announce that your higher education legislation
-- the Hope and Opportunity for Postsecondary Education (HOPE) Act of 1997
was sent to Congress that day. At the event, the White House also
released a state-by-state analysis of benefits to students under the HOPE
Act and a list of the more than 250 college presidents who support the
President's higher education initiatives. That same day, I opened up a
briefing we hosted for higher education groups.
School Construction. There were 41 sponsors for your school construction
legislation in the House and 10 sponsors in the Senate.
Utility Re-Structuring (Electricity Deregulation): This week, the NEC
continued it interagency process on this issue. The NEC arranged a
briefing for White House staff of the major issues and options for
legislation to re-structure the $200 billion-a-year electric utility
industry. Among the major issues to be resolved will be: 1) whether the
Administration should advocate a statutory requirement that all states
de-regulate their retail electric markets by a specific date or,
alternatively, let the states decide how and when to proceed; 2) what
measures should be proposed to ensure that deregulation does not, by
encouraging the generation of more low-cost, coal-fired power,
dramatically worsen regional and national air quality (and climate-change)
objectives; 3) how to preserve public benefits programs -- such as state
low-income and weatherization assistance -- currently administered by
regulated utilities; and 4) how to encourage energy efficiency and the
development of alternative energy sources in a deregulated environment.
Climate Change: Dan Tarullo and Elgie Holstein participated in several
interagency meetings on climate change issues. One meeting examined
detailed language that the U.S. is planning to submit to the International
Secretariat on Climate Change by April 1. This language simply describes
in some detail previously stated U.S. positions on the draft protocol
(e.g., an explanation of how compliance with agreed-upon targets would be
ensured). This submission should not be viewed as a major step.
A second meeting covered the state of economic modeling of climate change
policies that would impose constraints on U.S. greenhouse gas emissions.
This work is proceeding slowly, but is crucial for any policy-making in
the climate change area. Elgie Holstein coordinated an Assistant
Secretary level meeting on the domestic policies that would support an
agreed-upon international goal for limiting greenhouse gas emissions.
These policies will be developed over the next few weeks. Two options
focused on are: a cap on overall greenhouse gas emissions with trading of
permits allowed between parties responsible for emissions; and, increased
reliance on energy-efficiency enhancing technology.
Securities Litigation. As you may know, 6 Members of Congress sent you a
letter urging you to work with Congress on legislation to establish a
uniform litigation system for securities claims -- i.e., preempt the
states. You said in California last year, against the backdrop of Prop
211, that we should consider preemption. Proponents now argue that even
though 211 was defeated, and the possibility that another state may try
this is remote, the benefits of last year's federal securities litigation
reform are being undercut by plaintiffs' lawyers who are shifting their
suits to state courts. The NEC is examining the evidence to see whether
there is substance.
Product Liability. We are conducting, with DPC and Counsel's Office, a
policy process on product liability legislation. We will be sending a
memorandum to you soon that reviews the bidding and outlines the issues to
be resolved in the policy process. There is interest from the Hill and
from outside groups in knowing what the Administration would need to see
in legislation to support a bill, and that is what we will work through in
our process, using the concerns you expressed in your veto statement of
last year as a point of departure.
Education Technology: Net Day is April 19, which is designed to highlight
ways in which the computer industry can make the World Wide Web more
accessible for people with disabilities. We are arranging for you to issue
a statement on that day. We are also preparing a possible Vice
Presidential NetDay event in D.C. schools on April 4th. Another event we
are planning would allow you to highlight the ways in which available
software allows parents to protect their children from inappropriate
materials on the Internet.
EITC: I am meeting with Treasury and OMB to discuss ways to reduce the
error rate on earned income tax credit (EITC) claims. The IRS will
release a study on misclaimed EITC payments in the near future and that
will be the appropriate time to announce a series of steps to further
reduce the error rate on these claims. An expedited policy process will
be started with possible initiatives developed over the next couple of
weeks.
Milk Price Policy: Secretary Glickman reasserted on Thursday his August
approval of the controversial Northeast Interstate Dairy Compact, an
arrangement among milk producers designed to support milk prices in New
England. The USDA response to the District Court tries to address concerns
about the rationale for the disputed policy by highlighting the importance
of preserving small farms and emphasizing that consideration should be
given to the impact on low income milk buyers who are affected by the
higher, supported prices. The Secretary reasserted the authority to
revoke the Compact if it does not turn out to be in the public interest, a
point likely to be litigated.
The Compact, which is a new regional price floor scheme, arguably
contradicts Administration and Congressional policy directions toward
fewer regional differences, and more integrated national pricing, and
pressure is building for a national price floor for milk. Current
Administration policy opposes a floor because of its harm to consumers,
especially lower-income participants in Federal food and nutrition
programs like WIC, School Lunch and Food Stamps. The NEC will participate
in this larger aspect of the issue.
DC Economic Development: We are now negotiating the MOU with the city. We
had an initial meeting on Friday, March 21, which cleared the air some,
but the MOU-- which was originally drafted before the announcement and
thus was extremely general will need to be made much more specific and
track the legislation more closely if we ,re to get the District to sign.
There is significant concern about the extent to which the EDC might be
usurping, not supplementing, the District ,S economic development
processes. It is not, but there is some delicacy on how to draw the
line. We are also moving ahead on the Challenge Committee, with the hope
that the chairs can be in place next week and the first meeting happen
before April 11, so they can report by May 11.
DC Pensions: Ellen Seidman, accompanied by OMB and PBGC staff, met with
the DC Retirement Board on Thursday. It was a difficult meeting, as they
had many concerns that arose from the original announcement. Although
many of these concerns have been answered by subsequent decisions, this
was the first time the Retirement Board (and, almost more importantly,
representatives of police, firefighter and teachers) had heard about the
changes. Much education will be needed. OMB and PBGC are proceeding.
Outreach:
Columbia HCA: We met with Rick Scott of Columbia HCA on health issues,
views of the health industry, and possible initiatives we could do
together, similar to the effort to immunize one million children.
Welfare Reform: I spoke to the ACORN convention on Monday. They are
highly focused on Workfare recipients, specifically, their right to
organize and ensuring that the minimum wage laws will apply to all of
them. They also wanted to stress that on the Welfare-to-Work challenge to
CEOs, the companies should provide health benefits to people moving off
welfare. I did encounter some booing over our welfare legislation, but
still found an overall openness to the Administration, and particular
support for the extension of health care for all children and the welfare
fixes. Interestingly, the greatest applause I received from the crowd was
reminding them that you had gone to the mat to provide health care for
every American.
COLA ,S: I met with Moe Biller, head of the Postal Workers Union this week
as well. Overall, he was supportive, but did feel upset because of our
COLA delay for federal workers when neither the Blue Dogs nor the
Republicans, at this time, have proposed such a measure.
National Association of Manufacturers: I spoke to the National Association
of Manufacturers. They were please with recent progress on budget talks
and assurances of the Administration ,S commitment to Fast Track. There
was concern voiced that economic considerations were being taken into acc
ount on environmental issues and utility deregulation. I assured them
that we would chair those processes cooperatively with CEQ.
Financial Modernization: I met with some community groups and Senator
Sarbanes on Financial Modernization. They are obviously opposed to any
bank and commerce change. The community groups are particularly concerned
about CRA. Both also met with Bob Rubin this week, as well.
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Toni S. Hustead (CN=Toni S. Hustead/OU=OMB/O=EOP [ OMB ])
CREATION DATE/TIME:21-MAR-1997. 08:54:19.00
SUBJECT: Re: Today's Meeting with the D.C. Retirement Board
TO: Scott Quehl (CN=Scott Quehl/OU=OMB/O=EOP @ EOP [ OMB ])
READ:UNKNOWN
CC: Lawrence J. Haas ( CN=Lawrence J. Haas/OU=OMB/O=EOP @ EOP [ OMB ])
READ:UNKNOWN
CC: M. Jill Gibbons (CN=M. Jill Gibbons/OU=OMB/O=EOP @ EOP [ OMB 1)
READ:UNKNOWN
CC: Marcia D. Occomy ( CN=Marcia D. Occomy/OU=OMB/O=EOP @ EOP [ OMB ])
READ:UNKNOWN
CC: Ellen S. Seidman ( CN=Ellen S. Seidman/OU=OPD/O=EOP @ EOP [ OPD 1)
READ:UNKNOWN
CC: Michael Deich ( CN=Michael Deich/OU=OMB/O=EOP @ EOP [ OMB 1)
READ:UNKNOWN
CC: Daniel M. Tangherlini ( CN=Daniel M. Tangherlini/OU=OMB/O=EOP @ EOP [ OMB 1)
READ:UNKNOWN
CC: James J. Jukes ( CN=James J. Jukes/OU=OMB/O=EOP @ EOP [ OMB ])
READ:UNKNOWN
CC: Mark D. Menchik ( CN=Mark D. Menchik/OU=OMB/O=EOP @ EOP [ OMB ])
READ:UNKNOWN
CC: Carol Thompson-Cole ( CN=Carol Thompson-Cole/OU=OMB/O=EOP. @ EOP [ OMB ])
READ:UNKNOWN
CC: G.E. DeSeve ( CN=G. E. DeSeve/OU=OMB/O=EOP @ EOP [ OMB 1)
READ:UNKNOWN
Toni S. Hustead ( CN=Toni S. Hustead/OU=OMB/O=EOP [ OMB 1)
READ:UNKNOWN
TEXT:
This is a wonderful write up of the meeting. My only comments involve
"New Steps". After the meeting, Dave stated that PBGC has already created
the hypothetical cases. I think we need to put together a package -- easy
to read and understand by the layman -- that simply describes (assuming
that the wrap around plan will look like the current benefit package) the
mechanics of the future situation. The hypotheticals can be attached. I
think many of the concerns will be defused if we include:
total individual benefit levels (from an employee perspective will my
benefit decrease)
benefits payments (from an admin perspective - who pays what in the future
- two checks?)
federal funding (as you know I feel we should create a govt trust fund)
DC funding (guarantee that there will be no cash flow problem left with DC
's immediate liability) administrative responsibilities (including the
board)
who determines disability retirements
a timetable of what must be done and when
Scott Quehl
03/20/97 11:10:45 PM
Record Type: Record
To: G. E. DeSeve/OMB/EOP
cc: See the distribution list at the bottom of this message
Subject: Today's Meeting with the D.C. Retirement Board
Carol, Ellen, Toni, Dave Gustofson of the PBGC, and I met with the D.C.
Retirement Board today to discuss the pension proposal.
Environment.
The initial tone seemed more like that of a hearing than a feedback
session. An eery, angry hearing. After a 45 minute wait, our group was
seated at the end of the world's longest table, stretched across a room
filled with the whir of tape recorders and the kind of mechanical hum you
find in nuclear submarine flicks or Aliens 1-3, to field questions from
smoldering board members.
The environment warmed up as Ellen explained the parameters of the plan,
with help from Carol, Toni, and Dave. Members became more at ease as it
became clear that a portion of existing assets may be left with the Board,
that employee contributions would be fully devoted to funding the new
retirement plan, and that the Federal benefit payments would factor in pay
increases for beneficiaries after the freeze date.
Diverging Interests amongst our Hosts.
At the risk of oversimplifyng, representatives of some employees groups
seemed to care little about the Board, so long as the employees ultimately
benefit from the President's plan. The representative of one employee
group said so plainly. Another reflected this in a sidebar discussion.
Others in the room seemed focused on the interests of the Board as an
institution.
In spite of our past openness with the City and Board members in defining
the parameters of the pension proposal and the terms of the MOU, the one
thing all members seemed to share was fear -- for the employees: fear of
the plan's unknowns -- for the Board: its own uncertain future. Today's
outreach went a long way to allay these fears, as it gave the employees'
groups some of the information they need, and gave the Board interests the
prospect that assets will be left on the table to justify the Board's e
xistence.
Issues Raised by the Board
Funding. Unless it fully funds the liability its takes over, the Federal
government could wipe away its commitment to pay beneficiaries during a
financial crisis. Should DC employees and their Fiduciary take enough
comfort in the full faith and credit of the United States that they
support the President's proposal, even though their pensions, like those
of their Federal counterparts, will be underfunded by billions? Ellen
said it plainly: this is the bottom-line question that they will have to
answer. Our communications efforts should continue to address this
question.
Wave of Employee Retirements. Employee representatives claimed that public
safety and education would be put at risk as waves of teachers, police
(600 of them -- more than a sixth of the force) and firefighters (200)
rush to retire before the freeze date because of a perceived reduction in
benefits after this date. Better information about the pensions proposal
should reduce their concerns, but may not fully stem the outflow. The
City and unions could be encouraged to find ways to induce the most valued
employees to stay on the job.
New Plans. The Board pointed out that none of the employee groups in
question enter into benefit agreements with the City through collective
bargaining. The D.C. Council simply approves new plans, within the limits
of Federal statute. Is this true? If so, we need to strike references to
collective bargaining from the MOU. At least one key Board member
asserted that the D.C. Council would have little political choice but to
create replacement retirement plans with the same benefits as the old plans
Great, since we assume the same level of benefits before and after the
transfer.
Double COLAs/Equalization Provisions. These provisions came up early and
often as something beneficiaries fear losing. Perception may not match
reality. Analysis will show if getting rid of these provisions will have
much actual economic impact.
Dealing with New Hires after 10/1/96. We need to assess if the Federal
government will have to treat employees hired after October 1, 1996
differently because of the new retirement system the D.C. Council put in
place for FY 1997.
Disability Backlog. Because of past abuses, Congress imposed a very low
cap, which is still in effect, on the number of employees who can retire
on disability. Some employee representatives acknowledged old abuses, and
the Federal government's legitimate interest in preventing a return to
those practices. At the same time, they claimed that the backlog of truly
disabled employees who do not retire because of congressional cap
restrictions harms individuals and work force productivity. They want the
cap eliminated and a disability system put in place that is agreeable to
the employees, City, and the Federal government.
MOU Signing. The D.C. Retirement Board is legally responsible for the
pension assets, not the City. Should the Board be a signatory to the
MOU? If so, we may never get it signed.
Next Steps.
Expose the pension proposal to as much light as possible. The PBGC is
developing examples of how hypothetical teachers, police and firefighers,
and judges would be affected by the President's plan within its present
benefit structure. The City could work with the PBGC to develop these
examples into materials rank-and-file employees can understand.
Federal working group representatives will meet again with the Board and
separately with individual employees' unions to encourage their support.
Comments
Ellen, Carol, and Toni, please make any additions or edits you'd like.
Scott
Message Copied
To:
Michael Deich/OMB/EOP
Carol Thompson-Cole/OMB/EOP
Ellen S. Seidman/OPD/EOP
Toni S. Hustead/OMB/EOP
Mark D. Menchik/OMB/EOP
Marcia D. Occomy/OMB/EOP
James J. Jukes/OMB/EOP
M. Jill Gibbons/OMB/EOP
Daniel M. Tangherlini/OMB/EOP
Lawrence J. Haas/OMB/EOP
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Jonathan A. Kaplan CN=Jonathan A. Kaplan/OU=OPD/O=EOP [ OPD])
CREATION DATE/TIME:24-MAR-1997 15:03:18.00
SUBJECT: POTUS Pension Event: PBGC Annual Report
TO: Katherine Hubbard ( CN=Katherine Hubbard/OU=WHO/O=EOP @ EOP [ WHO 1)
READ:UNKNOWN
TEXT:
As we discussed.
Forwarded by Jonathan A. Kaplan/OPD/EOP on 03/24/97
03:03 PM
Jonathan A. Kaplan
03/24/97 12:52:44 PM
Record Type: Record
To: Michelle Crisci/WHO/EOP
cc: Gene B. Sperling/OPD/EOP, Russell W. Horwitz/OPD/EOP, Kathleen M.
Wallman/WHO/EOP
Subject: POTUS Pension Event: PBGC Annual Report
Rahm:
You asked Friday afternoon for feedback on a possible pension event for
March 31.
I have discussed with Ellen Seidman, Olena Berg and others the possibility
of the President releasing the PBGC annual report on March 31 at the White
House. If this were to be scheduled, the recommendation is for the
President to focus on pension security, and to make the following
announcements:
Release the PBGC annual report to Congress, which for the first time
reports a year-end financial surplus;
Announce that the PWBA has just passed the $20 million mark in 401(k)
recoveries, returning more than that amount to pension plans as a result
of the 401(k) enforcement program;
Announce a new 1-800 number (about to be inaugurated by PWBA) that
provides information on how to protect your pension and how women can gain
retirement security; and
Recognize Marty Slate in a tribute.
Pursuant to the "underfunding" issue raised by Sylvia on Friday, Seidman
said that while the report does mention that many plans are underfunded,
there is only a short narrative on that. The focus of the report, which
Seidman has read and which is at the printer, is on improvements in the
balance sheet, stronger corporate management, and customer service
improvements.
Finally, the consensus opinion is that it is simply too early to announce
any new pension legislation or proposals. But we could announce new
initiatives within the next four weeks.
Please provide guidance on how to proceed or let me know if you need any
additional information. In the interim, I will continue to pull together
information from PBGC and PWBA.
Jon Kaplan
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Jonathan A. Kaplan CN=Jonathan A. Kaplan/OU=OPD/O=EOP [ OPD ])
CREATION DATE/TIME:24-MAR-1997 12:50:26.00
SUBJECT: POTUS Pension Event: PBGC Annual Report
TO: Michelle Crisci ( CN=Michelle Crisci/OU=WHO/O=EOP @ EOP [ WHO ])
READ:UNKNOWN
CC: Russell W. Horwitz CN=Russell W. Horwitz/OU=OPD/O=EOP @ EOP [ OPD )
READ:UNKNOWN
CC: Kathleen M. Wallman CN=Kathleen M. Wallman/OU=WHO/O=EOP @ EOP [ WHO 1)
READ:UNKNOWN
CC: Gene B. Sperling ( CN=Gene B. Sperling/OU=OPD/O=EOP @ EOP OPD
READ:UNKNOWN
Ellen S. Seidman ( CN=Ellen S. Seidman/OU=OPD/O=EOP [ OPD ])
READ:UNKNOWN
Jonathan A. Kaplan ( CN=Jonathan A. Kaplan/OU=OPD/O=EOP [ OPD D
READ:UNKNOWN
TEXT:
Rahm:
You asked Friday afternoon for feedback on a possible pension event for
March 31.
I have discussed with Ellen Seidman, Olena Berg and others the possibility
of the President releasing the PBGC annual report on March 31 at the White
House. If this were to be scheduled, the recommendation is for the
President to focus on pension security, and to make the following
announcements:
Release the PBGC annual report to Congress, which for the first time
reports a year-end financial surplus;
Announce that the PWBA has just passed the $20 million mark in 401 (k)
recoveries, returning more than that amount to pension plans as a result
of the 401(k) enforcement program;
Announce a new 1-800 number (about to be inaugurated by PWBA) that
provides information on how to protect your pension and how women can gain
retirement security; and
Recognize Marty Slate in a tribute.
Pursuant to the "underfunding" issue raised by Sylvia on Friday, Seidman
said that while the report does mention that many plans are underfunded,
there is only a short narrative on that. The focus of the report, which
Seidman has read and which is at the printer, is on improvements in the
balance sheet, stronger corporate management, and customer service
improvements.
Finally, the consensus opinion is that it is simply too early to announce
any new pension legislation or proposals. But we could announce new
initiatives within the next four weeks.
Please provide guidance on how to proceed or let me know if you need any
additional information. In the interim, I will continue to pull together
information from PBGC and PWBA.
Jon Kaplan
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Jonathan A. Kaplan ( CN=Jonathan A. Kaplan/OU=OPD/O=EOP [ OPD )
CREATION DATE/TIME:27-MAR-1997 09:15:59.00
SUBJECT: Re: News Flash on the Weekly Report
TO: Russell W. Horwitz (CN=Russell W. Horwitz/OU=OPD/O=EOP @ EOP [ OPD ])
READ:UNKNOWN
TEXT:
We are working on pension announcement for Monday, at which the President
will release the PBGC's Annual Report for 1996 -- which shows a surplus
for the first time in the 22-year history of the corporation. The
President will also announce that 401(k) recoveries have exceeded $20
million and that the Labor Department has just started a toll-free 1-800
number to provide workers and others with pension information.
We are hoping to finalize an additional piece as well. The President may
announce that he will propose audit reform legislation as he did last
year, which would repeal the "limited scope audit" exemption for pension
plans and give workers more assurance that the financial statements are
fully and properly audited.