By Adam Pagnucco.
As I wrote yesterday, a war is being waged over control of the county government’s $8+ billion in pension and retiree health care funds. The combatants include the presidents of the county’s three non-MCPS unions (MCGEO, the fire fighters and the police) as well as the county executive and the chief administrative officer. After I revealed the plans’ pending shift out of free office space into multi-million dollar offices, the union presidents responded and the funds’ former executive director hit back.
Now comes another tale of battle.
This story involves Linda Herman, author of a guest column on this subject. Herman was the executive director of the benefit funds from 2004 through 2022, when she retired. The county council recognized her with a proclamation presentation, shown below, in which they discussed her establishment of a ten-year annualized return rate of 9.7%, which ranked in the nation’s top decile during her time. Council Members Gabe Albornoz, Nancy Navarro, Andrew Friedson and Sidney Katz all heaped lavish praise on her in public.
Fast forward two years. The Montgomery County Retired Employees’ Association (MCREA) advocated that Herman represent county retirees on the Board of Investment Trustees, which oversees the county’s pension fund, and the Consolidated Retiree Health Benefits Trust, which oversees the retiree health care fund. County Executive Marc Elrich nominated her and the council voted to confirm her in October. The three union presidents fiercely opposed her and sent a letter to Elrich in December asking that she be removed from the boards. Elrich sent a strong reply defending her and she remains on the boards at this writing. The strongly worded exchange of letters between Elrich and his allies in labor resembles the tone of their remarks on Chief Administrative Officer Rich Madaleno, whom the unions wanted punished and whom Elrich also defended. It’s a mark of the intensity of this backroom war which is only now seeing the light of day.
The unions’ attack on Herman is remarkable considering her recognized record and her demonstrated political capital at the council (at least in prior councils). It’s also noteworthy given her public comments on the luxurious office space where the funds are headed and her open criticism of making the funds “independent” of county government control. Attacking Madaleno, who has had his ups and downs at the council, is one thing. But trying to dislodge Herman – and failing – is quite another.
There will be more to say because this story has more wrinkles to it. But in the meantime, here are the letters by the union presidents and Elrich concerning Herman.
First, the union presidents.
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December 18, 2024
Dear County Executive Elrich:
We are writing on behalf of UFCW Local 1994 MCGEO, FOP Lodge 35, and IAFF Local 1664 to demand the immediate removal of Linda Herman from the Board of Investment Trustees (BIT) and Consolidated Retiree Health Benefits Trust Board of Trustees. Her continued interference, unethical behavior, and failure to act in the best interests of plan participants and beneficiaries jeopardize the integrity and sustainability of the plans we are all committed to protecting.
For over a year, the Board of Investment Trustees (BIT) and Consolidated Retiree Health Benefits Trust Board of Trustees (CRHBT) have engaged in an extensive review of governance practices with aim of strengthening protections for plan participants and beneficiaries. In July 2024, both boards approved a motion to implement critical changes, including:
- Granting both boards the autonomy to set actuarial assumptions and select consulting actuaries and service providers.
- Empowering both boards to oversee and manage their executive director’s compensation and to hire staff with competitive salaries while maintaining merit protections.
- Amending the Memorandum of Understanding between the boards and the Office of the County Attorney to prioritize fiduciary responsibilities, which could include independent counsel to clarify the roles of the County Attorney and Board Counsel.
Despite this clear and collective decision, Ms. Herman, alongside appointee Joseph Beach, has actively worked to undermine these reforms. Specific concerns include:
Interference in Operations: Ms. Herman’s behavior has been consistently disruptive. Her frequent, unsolicited communications with the MCERP Executive Director questions administrative changes and board decisions, wastes valuable staff time, and creates unnecessary confusion. These actions serve her personal agenda, rather than the welfare of plan participants. Within the first month of her appointment, Ms. Herman directed your staff to discipline the Executive Director of MCERP. Her desire to discipline the Director was never brought to the boards for consideration and oversteps her authority. Ms. Herman used her relationship with your staff (because of her previous service to your administration) to attempt to discipline the Director rather than going through proper channels as a member of the board.
Unethical Conduct: We have discovered that Ms. Herman was previously hired as a contractor by your administration for labor relations negotiations and paid with ERS funds, without BIT approval. This calls into question if Ms. Herman can act in the best interest of the plan members and beneficiaries. Furthermore, she failed to disclose this engagement in her ethics forms, raising significant questions about her integrity.
Failure to Act in Fiduciary Interests: Ms. Herman has demonstrated an inability to separate herself from her former role as MCERP Executive Director. She continues to question the Executive Director and MCERP staff on their work. She lies about prior MCERP processes to further her claim that the new Executive Director and his staff are not following the board’s governance policy. Her ongoing actions undermine current leadership, compromise the board’s decision-making processes, and pose a direct threat to the sustainability of the plans.
Recent Misconduct (December 13): As recently as Friday, December 13, Ms. Herman inaccurately referenced governance language in an attempt to call a special meeting—a privilege reserved exclusively for board chairpersons. She further escalated the issue by copying the County Attorney on the matter, seeking a legal opinion outside the appropriate channels. The County Attorney has no formal role in the boards’ governance and would not have been consulted by any other trustee. Moreover, in her email communications regarding this matter, Ms. Herman deliberately excluded the Executive Director, presumably because she anticipated his disagreement with the request for a special meeting.
These actions are not isolated incidents but part of a troubling pattern. We raised concerns about Ms. Herman’s appointment before her confirmation. Despite assurances from your office that her behavior would align with the Board’s interests, she has repeatedly acted against the collective goals of the BIT and CRHBT, further eroding trust and efficiency.
For these reasons, we demand Linda Herman’s immediate removal from the Board of Investment Trustees and Consolidated Retiree Health Benefits Trust Board of Trustees. Her continued presence is not only a distraction but a threat to the fiduciary responsibilities of the Boards and the well-being of plan participants and beneficiaries.
We urge you to prioritize the integrity of the boards and the interests of the employees and retirees they serve by taking swift and decisive action. Any further delays will only exacerbate the harm already caused.
Thank you for your attention to this important matter.
Sincerely,
Gino Renne, President, UFCW Local 1994 MCGEO
Lee Holland, President, FOP Lodge 35
Jeff Buddle, President, IAFF Local 1664
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Now, Elrich’s response.
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February 5, 2025
Dear Messrs. Renne, Holland and Buddle,
I am writing in response to your December 18, 2024, letter regarding Linda Herman’s service on the Board of Investment Trustees (BIT) and Consolidated Retiree Health Benefits Trust Board of Trustees (CRHBT OPEB). After careful review, I must firmly reject your demand for her removal.
Ms. Herman brings nearly five decades of distinguished public service in retirement plan management and investment oversight to her trustee role. Her 23-year tenure as Executive Director of Montgomery County Employee Retirement Plans (1999-2022) and previous 26 years at WSSC overseeing retirement and investments (1973-1999) represent an unparalleled depth of experience that is invaluable to the boards.
The issues you raise fundamentally mischaracterize both Ms. Herman’s actions and her role as a trustee. What you characterize as “interference” is, in fact, informed oversight drawn from decades of direct experience managing these systems. Her questions and concerns come from a place of deep institutional knowledge and genuine commitment to proper governance.
Your allegations regarding Ms. Herman’s previous work are particularly troubling, as they attempt to transform her extensive professional experience into a liability. Having served as Executive Director of these plans for 18 years, she possesses an intimate understanding of their operations, challenges, and requirements. This expertise makes her uniquely qualified to serve as a trustee and to ask pertinent questions about operational and policy matters.
The governance reforms you reference indeed warrant careful consideration and thorough discussion. Ms. Herman’s detailed understanding of these systems’ historical operations and evolution makes her perspective particularly valuable in such deliberations. Her commitment to proper procedure and governance serves to protect, not undermine, the interests of plan participants and beneficiaries.
Your demand for her removal appears to stem from a fundamental misunderstanding of both her role as a trustee and the value of her extensive experience. The boards benefit tremendously from having a member with such comprehensive knowledge of public pension administration and investment management.
I maintain full confidence in Ms. Herman’s ability to serve effectively as a trustee. Her decades of dedicated public service and deep expertise in retirement plan management make her an asset to these boards, not a liability.
I suggest we focus our collective energy on working constructively to strengthen these vital benefits systems rather than attempting to remove one of our most experienced and knowledgeable trustees.
Sincerely,
Marc Elrich
County Executive