By Adam Pagnucco.
Just imagine it. MoCo bureaucrats frolicking in an opulent palace. Amenities include a fitness center, a sauna, a hot tub, a basketball court, a bocce court, a batting cage, on-site daycare and an on-site café with indoor and outdoor seating. Sounds pretty sweet, yeah? Here’s the problem:
Millions of dollars of YOUR money will be paying for it.
Which specific bureaucrats will be headed to office nirvana? The answer lies in the county’s retiree benefits office, known as the Montgomery County Employee Retirement Plans (MCERP). The benefits office is overseen by two county-appointed boards: the Board of Investment Trustees (which oversees county retirement funds) and the Consolidated Retiree Health Benefits Trust (which oversees health care funds for retirees of the county, MCPS and Montgomery College). All members of the two boards are nominated by the county executive and confirmed by the county council. Additionally, the executive director of the benefits plans is overseen by the county’s chief administrative officer (CAO), the highest manager in county government, and the CAO is explicitly designated as the administrator of the retirement system. The county’s finance director, who is supervised by the CAO, is the custodian of the retirement assets.
These boards are virtually unknown to the public but the assets they oversee are massive. The combined net position of the county’s pension and retiree health care funds totaled more than $8 billion at the end of FY24. These funds service many thousands of active and retired employees. This is billions of dollars of public money promised to employees who earned it through public service.
For many years, this hybrid arrangement of the boards, the CAO and the executive director was operated quietly and efficiently. But that changed three years ago when the decades-long executive director retired. The hiring of a new executive director ushered in an era of conflict with the CAO, resulting in debate over “independence” of the funds, harsh accusations flying left and right and even legislation to remove the CAO’s ability to select an actuary, shifting that power to the Board of Investment Trustees.
One recommendation made by the new executive director was that the retiree benefit office should move out of its free county space in the executive office building and into leased space in North Bethesda. In January 2024, the two boards approved resolutions authorizing the executive director to negotiate and sign a new lease for office space. The executive director may not have seen eye to eye with the CAO, but he had a great eye for prime real estate.
Consider CapRock, a gleaming Class A office campus at the junction of I-495 and I-270. Jones Lang LaSalle, a leasing agent for the property, advertises prime amenities including a fitness center, a sauna, a hot tub, a basketball court, a bocce court, a batting cage, on-site daycare and an on-site café with indoor and outdoor seating. It’s a far cry from the sedate quarters of the 40+ year old executive office building and comfortably distant from the prying eyes of the CAO.
Images of opulence from the top: an exclusive amenity floor, the indoor-outdoor café and the fitness center. Only the best for county bureaucrats!
And how much will this cost in public funds? Ultimately, more than $3 million over the next decade, with millions more after that if the lease is extended.
The executive director has now departed county government but this lease has been signed. The benefits office has not yet moved. Will the boards reverse this plan to establish a publicly funded palace in North Bethesda? Sure, there would presumably be a penalty for breaking the lease, but would it really exceed its total cost over the next ten years and more? Or will the county allow its bureaucrats to frolic in this monument to opulence, reversing decades of careful management of public money?
We shall soon find out!