No thanks for the red herring, Councilwoman Almond.

Baltimore County Councilwoman Vicki Almond, who has been on the County Council since December 2010, has announced that she will introduce a bill that eliminates a controversial provision of Baltimore County pension law dating back to May 2010.  Why now?  In my opinion, the bill is a big fat red herring intended to distract attention from unfinished business involving the Executive Benefit Policy, a policy made public for the first time in my op ed that appeared in the Baltimore Sun on May 16th.

Since the publication of the policy, and especially since the subsequent publication by the Sun of an editorial calling for the practice of severance pay to be ended, Baltimore County politicians running for office in 2018 have fallen all over themselves with expressions of concern about the way in which backroom deals have been used to boost the benefits of high-ranking officials already receiving handsome salaries and entitled to extremely generous pensions.  The Sun’s recent editorial also referred to the 2010 sweetheart pension deal addressed, perhaps not coincidentally, by Ms. Almond’s bill.

County Administrative Officer Fred Homan revised the Executive Benefit Policy on July 21st and Mr. Kamenetz scrapped it entirely less than a week later, on July 26th.  On July 27th the County Council amended the Legislative Benefits Policy, a similar policy applicable to legislative branch employees, to eliminate severance pay.  Those were the easy things to do.  The final thing that needs to done may end up being more painful.

The unfinished business with the Executive Benefit Policy is an audit of the administration of the Executive Benefit Policy before it was terminated.  A change made to the policy by Mr. Homan on July 21st was a tacit admission that one or more department heads in the administration of County Executive Kevin Kamenetz are accruing vacation leave in violation of a provision of the policy that has been in effect since 1995.

That is significant, in part because the prohibition against department heads earning and accruing leave was used as one of the justifications for awarding severance pay to those department heads; allowing department heads to accrue leave despite the prohibition would put the lie to that justification.  Employees are paid for unused vacation leave at the time they terminate County employment, and such payments constitute compensation for County service requiring approval by law.

It also is significant because, if any department heads were paid for unused leave accrued in violation of the policy, a misappropriation of County funds has taken place and a criminal investigation will be necessary.  When you consider that just one wrongful payout of unused vacation leave to a veteran County official is likely to cost the County tens of thousands of dollars you realize that we are not dealing with chump change.      

Even in Baltimore County it is a crime to put taxpayer’s money in the pocket of a County official not entitled to it.  I have included a more detailed explanation of the issue at the bottom of this post.

We won’t know the extent of the problem until an audit is done.  Remember, the Executive Benefit Policy was drafted and administered out of public view for decades.  In my experience, “exceptions” to such informal, secretive policies are like termites – if you find one, there are likely to be more.  What are the chances that in the 22 years since the accrual of unused vacation leave was banned there has been only one “exception” (i.e., violation) allowing a department to earn and accrue vacation leave?

It is patently obvious that some members of the County Council are afraid to dig too deeply into this matter.  They know that they share the responsibility for whatever is found because they abrogated their duty under the County Charter to regulate the compensation of all County employees by allowing important components of that compensation for high-ranking officials to be decided by the County Administrative Officer through the now-defunct Executive Benefit Policy.

The County Council has the power under the County Charter to pass a resolution directing the County Auditor to perform an audit.  Some people, including the County Executive and his allies on the County Council, apparently don’t want an audit done.  I was informed by a Council staffer that opposition to the audit follows party lines, with Democrats on the County Council reluctant to do anything that could embarrass Mr. Kamenetz, a Democrat who is entertaining the idea of running for governor next year.  Ms. Almond is a Democrat.  She can prove me wrong by introducing a resolution directing an audit.

Why am I suspicious about Ms. Almond’s motives?  This is why:

Councilwoman Almond’s bill would undo provisions of County Council Bill No. 30-10, a bill approved by members of a County Council that included Mr. Kamenetz.  She touted her bill to the Sun by pointing out how County Executive Kamenetz will benefit from the provisions that he helped to enact.  The following appeared in the Sun article:  

“Almond’s office has estimated that once Kamenetz finishes his second term as county executive next year, he will be eligible for a $48,000 annual pension from his 16 years on the County Council, a $70,000 annual pension from his eight years as county executive, and a lump-sum payout of at least $384,000 that represents his “banked” council pension while he was executive.”

Here is the thing about that:  Ms. Almond waited too long to do anything about the windfall for Mr. Kamenetz, and she must know that.  Her bill won’t do a thing to change the County Executive’s benefit, because it can’t.

Mr. Kamenetz is already legally vested in both pensions.  Under County law he vested in the second pension that he is earning as County Executive as soon as he finished his first term of office in December 2014.  You’re three years too late, Councilwoman Almond, and there’s no excuse.

The Executive Benefit Policy was successfully kept out of public view until I obtained it through a Public Information Act request.  The controversial provisions of Bill No. 30-10 at issue in Ms. Almond’s bill may have been snuck through by being added at the last minute to a large pension “reform” bill, but they certainly did not escape public notice. In fact, seldom has any measure in Baltimore County attracted as much negative attention in recent years, once people figured out what the County Council had done.

The Sun ran an editorial in 2011 urging its repeal, and followed that with another editorial in 2012 critical of Mr. Kamenetz that referred to the deal.  Former Baltimore County Attorney Virginia Barnhart wrote a scathing letter to the editor in 2011 questioning the legality of the “sweetheart pension deal” and calling on the new County Council – which included Ms. Almond – to repeal it.  I’ve also included a more detailed description of the controversial provisions of Bill No. 30-10 at the end of this post.

Where have you been, Councilwoman Almond?  If you had acted before December 2014 you would have been able to do something about the County Executive’s benefit, about which you can now only complain.

Ms. Almond expresses new-found concern about the “behind closed doors” way in which Baltimore County tends to operate, citing the Executive Benefit Policy as an example.  She doesn’t, however, deny knowledge of the policy, which has been in effect since long before she took office in 2010.  In fact, since at least 1997 there has been a parallel policy called the Legislative Benefits Policy for appointed employees of the legislative branch, also approved behind closed doors.

Ms. Almond also expresses concern about the legality of placing control over who can “double dip” under the provisions of Bill No. 30-10 in the hands of the County Administrative Officer – six years after a former Baltimore County Attorney brought the issue to her attention.  C’mon, Ms. Almond, we weren’t born yesterday, even though that is about when you apparently began paying attention to the way Baltimore County has been doing business for decades.

There’s a very old trick used by politicians at all levels of government when they feel the need to create the appearance of doing something about a problem, but don’t want to upset the apple cart by doing what is necessary to solve the problem.  In my opinion, that is what is going on here with the bill proposed by Ms. Almond.  It appears that Ms. Almond and other members of the County Council are willing to make noise, but then stop short of doing anything of substance that gets them on the wrong side of Mr. Kamenetz.  Again, I’d love to see them prove me wrong.

A lot of people deserve credit for pushing the Baltimore County Council to start moving in the right direction.  Alison Knezevich of the Sun deserves credit for getting the ball rolling by reporting on the “severance package” paid to former Police Chief Jim Johnson, as does Pam Wood for continuing to report on the issue.  I deserve credit only for having both time on my hands and a cynicism that moved me to obtain the Executive Benefit Policy and the Legislative Benefits Policy through Public Information Act requests.  It wasn’t the first time I’d come across policies of dubious legality and inconsistent application; they get easier to sniff out with experience.

The Sun editorial board gets its share of the credit, and a lot of credit goes to the Baltimore County Progressive Democrats Club, which sent a letter to the County Council and County Executive urging them to act on the severance pay issue.  And, of course, there is Lodge #4 of the Fraternal Order of Police (FOP), the union that represents rank-and-file members of the Baltimore County Police Department and has been treated rather roughly by Messrs. Homan and Kamenetz over the years.

The FOP was instrumental in bringing the sweetheart pension deal hidden in Bill No. 30-10 to the attention of the public in 2010, and it has filed its own Public Information Act requests in the current matter.  The County knew that the severance pay provisions of both the Executive Benefit Policy and the Legislative Benefits Policy had legal feet of clay, and in my opinion both were jettisoned under the threat of litigation and political embarrassment – not out of any random “good government” impulses.

The Baltimore County Council, on the other hand, deserves credit for nothing at all until it finishes its business with the Executive Benefit Policy by ordering an audit.  Until it does that there will be a cloud hanging over the head of Council members.

I’m convinced that, at least at this point, some members of the County Council are going to do everything they can to avoid an audit to protect both themselves and the County Executive from embarrassment. Ms. Almond’s bill is a useful distraction.  Another member of the Council told me that the Council needs a “few months” to talk about an audit. Why?  In the hope that the idea will just go away?  What’s there to talk about?

I am not accusing anyone of impropriety in this particular matter, but I will tell you what can happen when audits are delayed.  Evidence disappears and statutes of limitation run out.  Just get it done, Baltimore County Council – order an audit, an action which, under the circumstances, would be a no-brainer in every other charter county in this state.

________________

Here is a more detailed explanation of why I believe that an audit of the Executive Benefit Policy as it was administered until its date of termination is necessary.

Under criticism for approving a policy of which he was one of the beneficiaries, County Administrative Officer Fred Homan issued a revised Executive Benefit on July 21, 2017.  In addition to removing his own position from the scope of the policy he also added language removing any “appointed department head who accrues vacation leave, notwithstanding the change in policy provided for under the heading ‘Vacation, Personal and Compensatory Leave’ of this Executive Benefit Policy.”

Here’s the significance of that:  There isn’t supposed to be an appointed department head who accrues vacation leave.  It was the first time that any reference had been made in the policy to department heads accruing vacation leave “notwithstanding” the prohibition against doing so that had been in the policy for 22 years.

The “change in policy” described in the “Vacation, Personal and Compensatory” paragraph occurred in 1995 and ended the accrual of vacation leave by department heads as of the end of 1994.  The change made by Mr. Homan was a tacit admission that one or more department heads have continued to earn and accrue vacation leave despite the fact the policy expressly prohibits it, and has prohibited it since 1995.  It was a stunning revelation.

Why else would he add that language other than to acknowledge that the policy had been violated?  I am not suggesting that he was responsible for allowing any violations of the policy to occur but it does appear that he was aware of the problem – and maybe he wanted to get out ahead of it before it was discovered in some other manner.  We won’t know until an audit is done.  No one is talking at this point.

It’s bad enough if current department heads are accruing leave with the intent that they would be able to cash it out upon leaving County employment. If, however, any former department head received cash for leave earned after 1994, there is a very serious problem indeed, because then we are talking about the misappropriation of taxpayer money by whomever approved such a payout.  If that occurred, it would require that a criminal investigation follow the audit.

I prepared a lengthy analysis of the historical relationship in the Executive Benefit Policy between payouts for unused vacation leave and the eligibility for and amount of severance pay.  At one point in time, the two were directly related in the policy.  A link to my memo appears below.  The discontinuance of the accrual of unused vacation leave in 1995 has been used as one justification for awarding department heads severance pay when they leave County government.

Less than a week after Mr. Homan revised the policy, Mr. Kamenetz scrapped it entirely.  I suspect that Mr. Kamenetz recognized the implications of Mr. Homan’s admission that one or more department heads are accruing vacation leave, and that Mr. Kamenetz wants this whole thing to go away.  It won’t.                                                                                    ___________________

 

The following is more detail on the provisions of Bill No. 30-10 referred to by the Sun (and many others) as a “sweetheart pension deal.”

In May 2010, the Baltimore County Council approved Bill No. 30-10.  An amendment added at the final hearing allows employees of the County who have retired from County service to return to service and, if approved by the County Administrative Officer, continue to receive the pension benefits from their initial retirements while collecting the salaries for their new positions.

Pension payments from the first retirement are not paid to an employee during his or her second period of employment with the County but are “banked” in a “deferral account” where, if treated in the manner as the County’s Deferred Retirement Option Plan (DROP), they earn interest at the rate of 5%.  Upon the employee’s second retirement from the County the money in the deferral account is paid to the employee in a lump sun.

But that is not the end of it.  What distinguishes this benefit from the typical DROP benefit (and DROP programs generally are limited in most jurisdictions to uniformed public safety employees, and are not available to other employees) is that the employee is eligible to earn a second pension based on the employee’s service in his or her new position, and therefore receive two pensions upon final retirement from County service.  In other words, the employee receives a lump sum payout from the deferral account, payments from his or her first pension resume, and the employee also receives a second pension based on his or her second period of service with the County.

The provision is a red-headed Eskimo, among other things.  It is limited to employees hired before July 1, 2007, and to employees who return to positions other than the positions from which they retired; in other words, it was ideally suited for sitting members of the County Council in 2010 who might end up in positions in the Executive Branch during the next administration.  Indeed, four of the Council members who voted for the sweetheart deal in 2010 stood to benefit from it: Kevin Kamenetz, elected County Executive later that year; Sam Moxley, a legislative aide to Kamenetz; Vince Gardina, now the county’s top environmental official; and Johnny Olszewski Sr., who worked for the county recreation department after leaving the council.

Councilwoman Almond estimates that when Mr. Kamenetz finishes his second term as County Executive next year, he will be eligible for a $48,000 annual pension from his 16 years on the County Council, a $70,000 annual pension from his eight years as County Executive and a lump-sum payout of at least $384,000 that represents the amount of his Council pension that was “banked” in a deferral account while he was County Executive.  Although a lump-sum payout of $384,000 and an annual pension of $118,000 pales by comparison to the pensions to which County Administrative Officer Fred Homan and other high-ranking officials of the Kamenetz administration will be entitled, it is not a bad return for 24 years of work, 16 of which were part-time.

August 2, 2017

Severance pay review 7 24 17

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