B-180565, MAY 31, 1974

B-180565: May 31, 1974

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DISTRICT OF COLUMBIA IS NOT AUTHORIZED TO MAKE PAYMENTS TO RETIREMENT FUNDS OF OFFICERS AND EDUCATIONAL EMPLOYEES AT FEDERAL CITY COLLEGE TO COVER AMOUNT OF INTEREST LOST BY SUCH EMPLOYEES BECAUSE OF ADMINISTRATIVE ERROR WHICH RESULTED IN LATE REMITTANCE BY DISTRICT OF COLUMBIA TO EMPLOYEES' RETIREMENT FUND SINCE SUCH PAYMENTS ARE NOT PROVIDED FOR BY AGREEMENT AND THE RESOLUTION PROVIDING FOR DISTRICT CONTRIBUTION TO THE FUND DOES NOT SET DATE BY WHICH CONTRIBUTIONS MUST BE MADE. TO THE COMMISSIONER OF THE DISTRICT OF COLUMBIA: THIS DECISION TO THE COMMISSIONER OF THE DISTRICT OF COLUMBIA IS IN RESPONSE TO A REQUEST BY THE CORPORATION COUNSEL FOR OUR VIEWS AS TO WHETHER THERE IS LEGAL AUTHORITY FOR THE DISTRICT OF COLUMBIA TO MAKE PAYMENTS TO THE RETIREMENT FUNDS OF OFFICERS AND EDUCATIONAL EMPLOYEES AT FEDERAL CITY COLLEGE TO COVER AN AMOUNT OF INTEREST ALLEGEDLY LOST BY SUCH EMPLOYEES BECAUSE OF AN ADMINISTRATIVE ERROR WHICH RESULTED IN A LATE REMITTANCE BY THE DISTRICT OF COLUMBIA TO THE EMPLOYEES' RETIREMENT FUND (THE TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA (TIAA) AND THE COLLEGE RETIREMENT EQUITIES FUND (CREF)).

B-180565, MAY 31, 1974

DISTRICT OF COLUMBIA IS NOT AUTHORIZED TO MAKE PAYMENTS TO RETIREMENT FUNDS OF OFFICERS AND EDUCATIONAL EMPLOYEES AT FEDERAL CITY COLLEGE TO COVER AMOUNT OF INTEREST LOST BY SUCH EMPLOYEES BECAUSE OF ADMINISTRATIVE ERROR WHICH RESULTED IN LATE REMITTANCE BY DISTRICT OF COLUMBIA TO EMPLOYEES' RETIREMENT FUND SINCE SUCH PAYMENTS ARE NOT PROVIDED FOR BY AGREEMENT AND THE RESOLUTION PROVIDING FOR DISTRICT CONTRIBUTION TO THE FUND DOES NOT SET DATE BY WHICH CONTRIBUTIONS MUST BE MADE.

TO THE COMMISSIONER OF THE DISTRICT OF COLUMBIA:

THIS DECISION TO THE COMMISSIONER OF THE DISTRICT OF COLUMBIA IS IN RESPONSE TO A REQUEST BY THE CORPORATION COUNSEL FOR OUR VIEWS AS TO WHETHER THERE IS LEGAL AUTHORITY FOR THE DISTRICT OF COLUMBIA TO MAKE PAYMENTS TO THE RETIREMENT FUNDS OF OFFICERS AND EDUCATIONAL EMPLOYEES AT FEDERAL CITY COLLEGE TO COVER AN AMOUNT OF INTEREST ALLEGEDLY LOST BY SUCH EMPLOYEES BECAUSE OF AN ADMINISTRATIVE ERROR WHICH RESULTED IN A LATE REMITTANCE BY THE DISTRICT OF COLUMBIA TO THE EMPLOYEES' RETIREMENT FUND (THE TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA (TIAA) AND THE COLLEGE RETIREMENT EQUITIES FUND (CREF)). THIS QUESTION HAS BEEN RAISED SPECIFICALLY WITH REGARD TO MR. JESSE J. MAYES WHO HAS FORMALLY REQUESTED THAT $168.50 BE REMITTED ON HIS BEHALF TO TIAA-CREF.

TIAA AND CREF ARE PRIVATE PROGRAMS ORGANIZED TO PROVIDE A PENSION SYSTEM AND RELATED EMPLOYEE BENEFITS FOR INSTITUTIONS OF HIGHER EDUCATION. THEY OPERATE AS COMPANION ORGANIZATIONS AND ARE BOTH RUN BY THE SAME OFFICERS AND EMPLOYEES. TIAA PROVIDES FIXED DOLLAR RETIREMENT ANNUITIES FOR EMPLOYEES AND CREF PROVIDES VARIABLE RETIREMENT ANNUITIES BASED ON COMMON STOCK INVESTMENTS.

UPON RECEIPT BY TIAA-CREF, CONTRIBUTIONS ARE CREDITED TO THE EMPLOYEE'S ACCOUNT UNDER THE RESPECTIVE PROGRAMS IN PERCENTAGES DESIGNATED BY THE EMPLOYEE (E.G., 75 PERCENT TO TIAA, 25 PERCENT TO CREF).

UNDER THE CREF PROGRAM THE EMPLOYEE IS CREDITED WITH A CERTAIN NUMBER OF "ACCUMULATION UNITS," EACH IN AFFECT A SMALL SHARE OF PARTICIPATION IN THE CREF PORTFOLIO, MUCH IN THE MANNER THAT A MUTUAL FUND OPERATES. THUS, THE COST PER UNIT AND THE TOTAL VALUE OF UNITS PURCHASED FLUCTUATES ACCORDING TO THE MARKET VALUE OF STOCKS IN THE CREF FUND.

EACH TIAA PREMIUM PAID IS ACCUMULATED FROM THE DUE DATE OF THE PREMIUM WITH COMPOUND INTEREST TO THE ANNUITY STARTING DATE OR DEATH OF THE ANNUITANT. THE TOTAL OF SUCH SUMS IS CALLED THE "ACCUMULATION." THE ANNUITY AVAILABLE AT RETIREMENT IS DEPENDENT ON THE "ACCUMULATION."

ACCORDING TO THE CORPORATION COUNSEL'S LETTER:

"IN THE CASE OF MR. MAYES, BECAUSE OF ADMINISTRATIVE ERROR CONTRIBUTIONS BY THE DISTRICT WERE NOT MADE FROM SEPTEMBER 1971 TO FEBRUARY 1973. FULL PAYMENT OF MONEY DUE WAS MADE IN MARCH 1973 UPON DISCOVERY OF THE ERROR. OFFICIALS FOR TIAA-CREF HAVE COMPUTED THAT IN ORDER TO RESTORE MR. MAYES' TIAA CONTRACT TO THE SAME STATUS HAD PREMIUMS BEEN PROPERLY REMITTED BETWEEN SEPTEMBER 1971 AND FEBRUARY 1973, AN ADJUSTING PREMIUM OF $168.50 WOULD HAVE BEEN NEEDED IN JULY 1973.

BECAUSE OF FLUCTUATING MARKET VALUES THE DELAY IN PAYMENT OF CREF PAYMENTS REPORTEDLY RESULTED IN NO LOSS TO MR. MAYES."

SECTION 103(A)(4) OF THE DISTRICT OF COLUMBIA PUBLIC EDUCATION ACT (ACT), APPROVED NOVEMBER 7, 1966, PUB. L. 89-791, TITLE I 80 STAT. 1427, D.C. CODE 31-1603(A)(4) PROVIDES THAT THE BOARD OF HIGHER EDUCATION.

"*** UPON THE RECOMMENDATIONS OF THE PRESIDENT OF THE COLLEGE, SHALL ESTABLISH, WITH THE APPROVAL OF THE COMMISSIONERS AND WITHOUT REGARD TO THE PROVISIONS OF ANY OTHER LAW, RETIREMENT AND LEAVE SYSTEMS FOR SUCH OFFICERS AND EMPLOYEES WHICH SHALL BE COMPARABLE TO SUCH SYSTEMS IN LIKE INSTITUTIONS OF HIGHER EDUCATION."

UNDER SECTION 301(A) OF THE ACT, D.C. CODE 31-1606, THERE IS AUTHORIZED TO BE APPROPRIATED FROM THE REVENUES OF THE DISTRICT OF COLUMBIA NOT TO EXCEED $50,000,000 TO CARRY OUT THE PURPOSES OF TITLES I AND II OF THE ACT AND APPROPRIATIONS HAVE BEEN MADE FOR THAT PURPOSE.

ON MARCH 16, 1968, THE BOARD OF HIGHER EDUCATION, UPON RECOMMENDATION OF THE PRESIDENT OF FEDERAL CITY COLLEGE AND WITH THE APPROVAL OF THE MAYOR, ADOPTED RESOLUTION NO. 10, WHICH PROVIDES IN PERTINENT PART AS FOLLOWS:

"BE IT RESOLVED THAT THE RETIREMENT PROGRAM FOR THE FACULTY AND ADMINISTRATIVE SALARY SCHEDULE STAFF WILL UTILIZE THE TIAA-CREF SYSTEM AND THAT THE INSTITUTIONAL CONTRIBUTION RATES WILL BE AS FOLLOWS:

(A) PROFESSORS AND ADMINISTRATIVE SALARY SCHEDULE LEVELS I THRU VI

15.0%

(B) ASSOCIATE AND ASSISTANT PROFESSOR AND ADMINISTRATIVE SALARY SCHEDULE LEVELS VII THRU XI

12.5%

(C) INSTRUCTOR, ACADEMIC AFFAIRS AND STUDENT SERVICES JUNIOR STAFF AND ADMINISTRATIVE SCHEDULE STAFF LEVELS XII AND BELOW 10.0% AND"

THERE IS NO PROVISION IN THE BOARD RESOLUTION OR IN THE CONTRACT SUPPLIED TO THE EMPLOYEES WHICH SPECIFICALLY SPEAKS TO THE DISTRICT'S RESPONSIBILITY FOR INTEREST WHICH MIGHT BE LOST BY AN EMPLOYEE BY REASON OF LATE PAYMENTS.

FURTHERMORE, RESOLUTION NO. 10, MAKES NO SPECIFIC MENTION OF WHEN INSTITUTIONAL CONTRIBUTIONS ARE TO BE MADE. BEFORE THERE CAN BE LIABILITY FOR DAMAGES, THERE MUST EXIST SOME RIGHT WHICH HAS BEEN VIOLATED. HERE THE ONLY UNDERTAKING BY THE BOARD IS THE UTILIZATION OF THE TIAA-CREF RETIREMENT PROGRAM, AND THE CONTRIBUTION OF FUNDS THERETO, AND IN THE INSTANT CASE SUCH CONTRIBUTION WAS MADE. NO OBLIGATION WAS CREATED TO SUBMIT THE CONTRIBUTION BY A CERTAIN DATE OR TO PAY AMOUNTS IN EXCESS OF THE REQUIRED CONTRIBUTIONS. CONSEQUENTLY, NO RIGHT HAS BEEN VIOLATED AND, HENCE, IN OUR OPINION, THERE IS NO LEGAL AUTHORITY FOR THE DISTRICT TO MAKE THE REQUESTED PAYMENT.

THE QUESTION PRESENTED IS ANSWERED ACCORDINGLY.