Childers softens position on 401(a) rates

These are notes taken as the discussion took place. I will review transcripts for an updated version for  the newspaper.

Escambia County Comptroller Pam Childers said she has set the rates for the much-discussed 401(a) annuity program but the Board of County Commissioners may decide to set another rate for its senior management level staff if the commissioners decide a higher rate might be needed to recruit or retain senior leaders.

The rates Childers gave the board that she wants to go into effect on  July 1 are 4.67% for senior managers and 8.34% for elected officials.

She did ask County Attorney Alison Rogers to review the whether elected officials are allowed to participate under Escambia County laws.

Commissioner Jeff Bergosh asked whether the contribution rates that been paid for the 401(a) are illegal and should be forced to recoup contributions made to employees enrolled in the program.

Rogers told the board that it’s a county program and the BCC is the body who determines the management of the program.

Only eight people are in the program – five senior managers and three commissioners – Bender (2019) and May and Barry in December. Childers questioned whether the 401(a) should be considered excessive compensation and not permitted under Florida law.

Childers said that she believes it is illegal. However, Rogers said she said that it is legal because Florida law allows a county to establish a 401(a).

Childers attorney said depositing the Unfunded Actuarial Liability into the elected officials’ accounts is “problematic.” He argued that it doesn’t agree with general law.

Bergosh said the issue should have been discussed before Childers made her decision. He said, “The way this was put on the agenda was sloppy, inappropriate and unartful.”

Bergosh was open to changing the rates but said it was a board decision.

Childers said if the board and her agency don’t agree – “We will see us in court.”  Until the board makes a decision, the comptroller said her rates will be used.

Commissioner Bender said he did contact Childers’ office in May or June 2019 and was given the rate that has been in effect. Childers said her people based their statement on what a county HR director had told them.

She added Bender’s call for clarification was when her agency began to investigate the 401(a) rates – meaning she and her staff have spent two years on the issue.

Commissioner Doug Underhill reiterated his position that commissioners should not receive a pension. He said that Barry should have brought the issue to the board long before the June 3 meeting.

Commissioner Steve Barry said plan has been place since 1997 and has been interpreted the same way until now. Decisions were made based on the tables, interpretations and the best good faith information made available.

“Each of us cost the taxpayers the same, regardless of the retirement plan chosen,” said Barry. He said his intent is to continue  interpreting the contract the same way we have until the contract comes up for renewal.

Childers chimed in that she was glad to see the board might make senior management 21% – which is higher than what she recommended.

Commissioner Lumon May said he doesn’t think senior managers should receive a higher rate than the lowest paid employees. However, he also said he was concerned about the senior managers made the decision to leave FRS for the 401(a) based on the information HR gave them.

He wants a legal opinion.  “If we’ve done this for so long and it’s illegal,  then we’ve got a problem for me.”

He wants to fix the retirement system for all our employees. “If we’re going to peel back the bandaid, we need to look at the entire system and find the best system for the masses and the taxpayers.”

Bergosh said he’s concerned about the process. He sees this as a board decision.

Barry made the motion to maintain the rates as they have been until the county receives a legal opinion on 401(a) program and there’re be a steady line of dialogue with the Comptroller. Bergosh seconded the motion.

“No one has the intent to do anything that’s illegal,” said Barry.

May argued that the retirement process be reviewed and “maybe revamp the entire process.”

Underhill clarified that outside attorney will research the issue to avoid any conflict.

Bender offered to split out the senior management staff and let them kept the status quo rate since the Comptroller appeared to be mainly concerned about elected officials.

May said, “Senior management is important but so are bus drivers and custodians. I’m not going to support a higher rate for senior management.”

He said, “We should not make any change until we bring professionals into here.”

Bender offered that any difference between status quo and Childers’ rate be placed into escrow. May said if it’s determined to be illegal, “then we should give it back.”

Motion passed 3-2 – Underhill and Bender in dissent.

Underhill made the motion to eliminate the elected official class. He received no second.

Childers said she would honor status quo for senior management level but would not do so for the elected officials – effective July 1.