Plans Consuming Growing Share of District Budget
T-HEHS-94-192: Published: Jun 14, 1994. Publicly Released: Jun 14, 1994.
- Full Report:
GAO discussed the District of Columbia's unfunded pension plan liability and proposed reform legislation. GAO noted that: (1) the District's required pension plan contribution could increase to about 15 percent of its total revenues by 2005 and will constitute 70 percent of its payroll for police officers, firefighters, teachers, and judges by 2004; (2) the District's unfunded liability increased to $5 billion through fiscal year (FY) 1993 because contributions did not keep up with the plans' liabilities; (3) the District has been limited to contributing on a pay-as-you-go basis and precluded from amortizing the unfunded liability beyond a specified percentage; (4) the unfunded liability can never be eliminated under current legislation and will increase to $6.1 billion in 2004 when federal contributions end; (5) proposed legislation would eliminate the unfunded liability by the end of FY 2035; (6) the current federal payment would increase 5 percent annually and extend through FY 2035; (7) participants' contributions would increase by 1 percent, pre-1980 retirees' cost-of-living adjustments would be based on the cost of living index rather than active participants' pay increases, and cost-of-living adjustments would be reduced to one per year; and (8) the District's payment formula would change to one commonly used by public sector plans, and payments would decrease initially and then rise, but would remain less than those currently required until 2020.