Skip to main content

District Pensions: Federal Options for Sharing Burden to Finance Unfunded Liability

HEHS-95-40 Published: Dec 28, 1994. Publicly Released: Jan 12, 1995.
Jump To:
Skip to Highlights

Highlights

Pursuant to a congressional request, GAO reviewed the District of Columbia's pension plans for certain employees, focusing on: (1) the history and status of the plans' unfunded pension liability and the number of plan participants prior to Home Rule; (2) a comparison of the plans' unfunded liability with other state and local plans; and (3) the District's funding formula under the proposed legislation and alternative federal funding methods.

Recommendations

Matter for Congressional Consideration

Matter Status Comments
If Congress wishes to change the law to increase federal payments to the three District pension plans, it should consider authorizing a constant annual payment rather than the escalating payments provided for in H.R. 3728. A constant annual approach would be more equitable because it would avoid shifting to future taxpayers a disproportionate share of the burden of financing the three plans. In addition, if Congress concludes that the federal share should be increased in total by the amount authorized in H.R. 3728--calculated at about $1.1 billion in value today--the appropriate constant annual federal payment would be $102.1 million.
Closed – Not Implemented
Action on the recommendation has been awaiting completion of congressional actions to address the District's financial crisis. These congressional actions were incorporated as a part of Public Law 105-33 (The Balanced Budget Act of 1997) in Title XI. The relevant sections of Title XI are chapter 1, section 11002(b)(1-4), and chapter 2, section 11011(a and b). These sections "relieve the District of Columbia government of the responsibility for the unfunded pension liabilities transferred to it by the Federal government" and obligate the federal government to "make Federal benefit payments associated with the pension plans for police officers, firefighters, and teachers of the District of Columbia."

Full Report

Office of Public Affairs

Topics

Civil service retirement systemCost sharing (finance)Employee retirement plansFinancial analysisFunds managementFuture budget projectionsGovernment liability (legal)Government retirement benefitsMunicipal governmentsPensionsProposed legislation