During the 2008 stock-market debacle, the El Paso County Retirement Plan suffered a crushing $82 million loss. It still hasn't fully recovered, even as plan overseers have cut retiree benefits and jacked up payments from participants — including county taxpayers.
It's against this backdrop that El Paso County officials are raging over an information technology contract that will cost retirees $1.2 million over 11 years, and already has cost $200,000 up front.
"This deal smells," Imad Karaki, who oversees county IT, says in an interview.
Karaki, County Attorney Bill Louis, Assessor Mark Lowderman and Commissioner Peggy Littleton are angry that the pension board — consisting of the county treasurer, two members elected by plan members and two appointed by commissioners — approved the contract late last year before finding out if the county could handle the work more cheaply. Nor did the board ask for help from county legal or procurement offices, which handle dozens of similar deals annually.
They also complain the contract, with Buck Consultants of Denver, contains few specifics and is "a one-sided giveaway" to Buck, as Karaki put it during his tirade at a Jan. 23 pension board meeting.
In response, pension board member and Sheriff Bureau Chief Joe Breister said, "I'm taking [Buck] at their word this is what [they] can do."
In an e-mail to the Indy, pension plan executive director Howard Miller accused the county of waging a "vendetta" against the plan, though he didn't elaborate. He also said the county has "no expertise in pension administration. I do."
The contract is a done deal. But County Administrator Jeff Greene says the dispute has prompted commissioners to require their two appointees to report to them following every retirement board meeting.
At issue is the pension fund's goal to combine three IT functions now handled by different entities including Buck, which also acts as the fund's actuarial by computing future liability.
Miller says the county was invited to propose a solution, but dawdled. County officials finally asked for a spot on the January agenda, he says; the board had approved the contract in November.
Karaki says the county hadn't been invited. In fact, Karaki says, at Littleton's behest, he'd told an IT employee to contact Miller several times: "We never got a response."
Later, when county IT and procurement people read the Buck contract, "their jaws dropped," Karaki says. "A 10-year-old could have negotiated a better contract."
He says IT contracts should tie payments to the "deliverables" of work when they're completed and performing as required; the Buck contract doesn't. Others, including Littleton, say it's unclear what that up-front $200,000 payment covered.
"There's at least a feeling the contract is extremely one-sided and not in the favor of the retirees but more in favor of Buck Consulting," Lowderman says.
Louis told the board that though the fund is by law separate from the county, "It does not mean that you are prohibited from taking advantage of economies of scale by using existing county resources to help you carry out your tasks. IT and procurement can do it better, faster and less expensively than others can." He noted Karaki has done "incredible things," including negotiating a $20 million bid for IT services down to $5 million for the county.
Breister said Jan. 23 that the IT work will increase the system's functionality, free the plan from bank check charges of up to $50,000 a year, and help separate the plan from the county, erasing concerns that retirement data is accessed by county officials illegally.
Karaki said that never happens, because data is stored on a dedicated server.
Meanwhile, Lowderman, noting the fund's financial woes, asked if this is the right time to spend so much money to improve a system that's been serviceable for nearly two decades.
"All I know is the board feels now is the correct time," Breister said.
A Buck spokesman says corporate policy prohibits comment to the media on client matters.
Created in the 1960s, the fund covers roughly 3,800 current and retired workers at the county, Pikes Peak Library District, Public Health and the 4th Judicial District, excluding judges and the district attorney, who participate in the state system.
In 2002, it was fully funded; by 2011, it had only 76 cents for every dollar it's obligated to pay in benefits.
Decisions to increase benefits in the '90s have haunted the fund since. In 2003, $7 million in benefits was paid to 600 retirees. In 2007, $11.4 million was paid to 805 retirees. And when the stock market went south in 2008, the plan's asset value plunged by 29 percent.
In 2009, the retirement board lowered benefits and raised contributions — from 6 percent of pay from employees and 6 percent from employers to 6.5 percent each in 2010, 7 percent in 2011 and 7.5 percent this year. Miller says it will jump to 8 percent next year, but county officials say commissioners haven't yet approved that.
The increases have caused county taxpayers' obligation to go up to $7.6 million this year from $5.4 million in 2008, a jump of 41 percent. Other tax-supported agencies in the fund also have upped their contributions, further increasing taxpayer obligations.
But work is still to be done; Buck Consultants says 16.9 percent of payroll, rather than the current level of 15 percent, is needed. Miller says the board hasn't decided how to close the gap.
ALL THANKS TO DR WILLIAMS FOR CURING ME FROM A DEADLY DISEASE HEPATITIS B. Appreciation…
Medical scientists have discovered a new way to battle HIV AIDS by using a man…
"Nationally, trends show more people want to live and work in an urban environment. With…