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GERS Reports $44 Million Loss Over First Half of Fiscal Year

April 24, 2007 — It was another day and another deficit for the Government Employees' Retirement System, whose board reported on Tuesday evening a loss of about $44.1 million for the first six months of fiscal year 2007.
For the period of October 2006 to March 2007, GERS pulled in approximately $60.7 million, while paying out nearly $105 million. Some of the larger expenses include annuity payments of almost $13 million, administrative expenses of about $945,000 and personal loans totaling close to $1.4 million.
For the month of March alone, the system took in a total of $10.3 million in receipts (including employer and employee retirement contributions), but paid out about $15.7 million, resulting in a $5.3 million deficit.
According to the agency's financial documents, the deficit is up from last fiscal year, which was reported at about $42.7 million in March 2006.
While board members had little to say about the figures, many requested that the financial reports begin to include a detailed account of the system's administrative expenses.
Currently, GERS' financials indicate expenditures of nearly $463,200 for salaries and wages, $129,070 for fringe benefits and $171,698 for professional services, among other things.
Discussion on the system's looming financial obligations took center stage during Tuesday's emergency meeting, as board members said they were awaiting correspondence from Gov. John deJongh Jr. about plans to pay down on the estimated $1.2 billion unfunded liability.
Board chairman Vincent Liger said deJongh had already made contact with GERS' actuary, Howard Rog, asking for an update on the system's financial position.
"I felt this was good, that the governor will be meeting with our actuary to work on a proposed plan to meet the unfunded liability," Liger said. "He [deJongh] said that in a few weeks he will be sending something to the board for consideration."
While board members acknowledged that the new administration would not immediately be floating pension obligation bonds to pay off a portion of the mounting debt, they also ruled out the idea of submitting alternate plans to deJongh for consideration.
Instead, they decided to wait until a proposal is submitted by the governor.
"We have come up with an alternate plan before — that was the Tier II, which put retirement at 25 years instead of 20. But the Legislature has reversed that decision," said board member Yvonne Bowsky. "People have to realize that any way we go, tough decisions will have to be made, that whatever alternative we come up with, someone is going to have to bite the bullet. Since it's the government that got the system in this mess, it's the government that's got to get us out."
Adding to the unfunded liability, board members said, is the fact that $1.5 million recently paid out by the system to cover one-time cost-of-living increases to a certain group of retirees has not yet been reimbursed by the Department of Finance.
The bonuses were passed by the Senate in 2005, sponsored by Sens. Liston Davis and Celestino A. White Sr., who proposed that $4.5 million be distributed to retirees working prior to and after 1990.
According to GERS' acting administrator Joanne U. Barry, the system has been given $3 million to cover the bonus, and is waiting to be reimbursed for the additional $1.5 million.
Board members said that GERS should not pay out the other bonuses until Finance allocates the funds and should send a letter to the governor and senators explaining the situation.
The board wrapped up Tuesday's meeting with an executive session, still releasing no information about the recent resignation of former GERS administrator Willis Todmann and the discovery of "financial irregularities" in the agency's budget.
After the meeting, Liger said he did not know when details will be released.
Tuesday was Todmann's last day on the job.
All board members were present during Tuesday's meeting.
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