By Adam Pagnucco.
Recently, I have been writing about the eight billion dollar war for control of the county government’s pension and retiree health care funds. The war has already featured dueling letters of recrimination, the departure of the funds’ executive director and revelations of unnecessary office space. And now it includes the waste of public money. Where is the oversight?
The war entered public view with my post on the funds’ office space. Currently, Montgomery County Employee Retirement Plans (MCERP), which manages more than $8 billion of county pension and retiree health care funds, operates out of recently renovated space in the county executive office building which is provided at no marginal cost to taxpayers. Nevertheless, MCERP’s now-departed executive director obtained authority from the two boards overseeing MCERP (the Board of Investment Trustees and the Consolidated Retiree Health Benefits Trust) to pursue private office space. The executive director signed a lease in a Class A office building in November 2024 with a cost of more than $3 million over the next decade. Three union presidents who are also fund trustees defended the new space as being necessary to “allow retirees to receive personalized service with dignity.”
But that claim turned out to be untrue. At a joint meeting of the boards last Friday, it was revealed that only some of the funds’ employees are moving. The organization chart below shows the allocation of MCERP’s staff, who number 30 or less.
Eleven to thirteen employees who manage investments (the boxes on the left) will be moving. The other staffers in the middle (benefits management) and right (financial reporting) will remain with the county’s finance department in the county executive office building. That means at most half of the staff will move. Those providing retiree services will not move, destroying the one defense offered for the new space. And the investment staff does much of its work remotely. That means the 10,000+ square foot, multi-million dollar private office space will be mostly empty most of the time. And the trustees know it since they discussed it in a public meeting on Friday.
How do I know this? It was not easy. The members of the Board of Investment Trustees and the Consolidated Retiree Health Benefits Trust, which oversee county pension and retiree health funds, hold public meetings which are streamed over Zoom. However, they are not recorded or archived. Minutes are scanty and released months afterwards. On Friday, one of the trustees made a motion to record the meetings and store them for public view on the county’s website. That motion was tabled for study by the staff.
As a result, this article may be the only account visible to the public on what happened. There so far appears to be no other published record of this meeting. Crucially, I am unaware of the lease ever being published on the county’s website. Millions of dollars in public money are now being spent on completely unnecessary private sector office space with totally inadequate disclosure to the public.
There is more. The union trustees have sent strong letters to County Executive Marc Elrich attacking Chief Administrative Officer (CAO) Rich Madaleno, who is the plan administrator, and Linda Herman, a former executive director and now a fellow trustee, which Elrich rebutted in equally strong terms. Herman alleges that the office move is part of a broader agenda to make the funds independent of the county. (Folks, county taxpayers deposit tens of millions of dollars into these funds each year.) And the union trustees claim that Madaleno “orchestrated the suspension and eventual dismissal of the Executive Director—not for misconduct, but for doing his job: educating the board on fiduciary obligations and sustainable fund management.” This is absolute mayhem with billions of dollars at stake.
When I worked at the county council, we worried about many agencies and departments. The retiree benefits program was not one of them. Anchored by Herman and watchful Chief Administrative Officer Tim Firestine, the program did little but churn out report after report boasting of robust investment returns and sky-high pension funding ratios. Now with chaos and waste abounding, it is time to worry. But with no apparent attention from county leaders, you would never know it. What will happen to all of that money at the center of the eight billion dollar war?
We don’t need independence of the funds. We need oversight. And we need it now.