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Politics : Bill Clinton Scandal - SANITY CHECK -- Ignore unavailable to you. Want to Upgrade?

To: Les H who wrote (9785)	10/16/1998 11:58:00 AM
From: Les H	Respond to of 67261

CLINTON RAIDS PENSION FUND Clinton Plan to Tap D.C. Pension Fund Stirs Protest By David A. Vise Washington Post Staff Writer Friday, October 16, 1998; Page B01 washingtonpost.com District and congressional officials reacted angrily yesterday to a provision in the federal budget deal that would use a $2.4 billion pension fund for retired D.C. police, firefighters and teachers to fund a major White House education initiative and other federal programs instead. Betty Ann Kane, chairman of the D.C. Retirement Board, said it was "irresponsible" of the White House to use the money to pay for President Clinton's proposal to hire 100,000 teachers across the country. She said the maneuver increases the risk that District retirees will not receive pensions in future years. "It is totally irresponsible," Kane said. "It came from the White House. . . . If they can do this kind of thing in 48 hours with no notice to anybody, they could do anything. It makes [retirees] nervous and apprehensive. It puts them at greater risk." Ken Cox, a retired firefighter who serves on the retirement board, said the panel is exploring filing a lawsuit to block the use of the pension funds. He and other retirees are worried that a future Congress might decide not to honor its obligation to D.C. retirees. "I'm very upset about it," he said. Clinton administration officials said yesterday that the federal government remains fully committed to paying the pensions of District retirees. "The federal commitment to back the pensions of these D.C. workers has the full faith and credit of the U.S. government, just as the government is committed to paying the pensions of the president of the United States or a librarian at the Library of Congress," said Linda Ricci, spokeswoman for the federal Office of Management and Budget. "D.C. pensions are safe." Del. Eleanor Holmes Norton (D-D.C.) also said the federal government would meet all of its obligations to District retirees. "I have been consulted and assured that employee pensions are fully protected," Norton said in a statement this week. Rep. Thomas M. Davis III (R-Va.), chairman of the House Government Oversight subcommittee on the District, agreed that the federal government would honor the commitment it made as part of a District rescue package to pay all of the pension benefits earned by city retirees through June 1997. The greater political problem posed by the transfer of funds, Davis said, is for the District as a whole. Because money that initially had been set aside to pay retirees for the next decade or more is all being used by the White House in fiscal 1999, the city will get a mandatory annual congressional appropriation beginning next year to pay the pensions, he said. That sum, estimated at $422 million next year, could crowd out other District requests for money. "The greater risk is to the District of Columbia than to the pensioner," Davis said. "I don't see Congress or the president in any way not honoring the obligation to the pensioners. But the city may have to trade down other assets to get these [pensions] in the legislative sausage grinder." Mary Collins, who teaches high school math at the School Without Walls, said the Clinton administration ought to look elsewhere for money to fund education reforms and leave the D.C. pension funds intact. "If we use this money now, what about in five years or in 10 years?" Collins asked. "We would like to have a healthy plan where the members can be assured they are going to have enough money to receive the pension promised to them." Davis said he would not object to the White House plan to tap pension funds because the Clinton administration agreed in 1997 to a federal guarantee of D.C. pension obligations, even though it will cost the U.S. Treasury billions of dollars. Until the summer of 1997, the District's single biggest financial threat was a multibillion-dollar shortfall in its pension program for police, firefighters and teachers. As part of a broad-based District rescue package, the federal government took over both the investments and the shortfall in the pension program. Since then, the D.C. Retirement Board, under an agreement with the U.S. Treasury, has invested the pension fund's assets in a diversified mix of stocks, bonds and other holdings. To comply with the budget deal reached yesterday, Kane said the D.C. Retirement Board would be forced to sell its entire $2.4 billion investment portfolio over the next year and convert the holdings to low-yield, short-term government bonds. In a strongly worded letter to House Speaker Newt Gingrich (R-Ga.), Rep. John L. Mica (R-Fla.), chairman of the civil service subcommittee, said he was adamantly opposed to using pension funds to pay for other programs. "It provides for immediate spending capabilities while lumping the cost onto future generations," Mica wrote. "It should not be part of any last-minute spending agreement." Some of the additional federal funds going into education would find their way back into this region. A U.S. Education Department spokeswoman said the largest share of the money for new teachers would go to states and school districts with the most low-income students. The department's preliminary estimate was that the legislation would provide about $5.6 million to the District, $21 million to Virginia and $17.5 million to Maryland for the 1999-2000 school year. Federal officials estimate that each new teacher would cost an average of $35,000 in annual salary and benefits, meaning about 160 teachers for the District, 600 for Virginia and 500 for Maryland. Those numbers could be smaller if the school districts use 10 percent of the money for teacher training and 3 percent for administration, as allowed under the original version of the bill. Staff writer Jay Mathews contributed to this report. © Copyright 1998 The Washington Post Company