investigativevoice.com

 By Stephen Janis
Dreaming of an early retirement? Looking for a way to finance your business? You might want to ask for help from Baltimore taxpayers, who have been unwittingly financing early retirements for 184 city employees at the cost of millions of dollars, according to court filings in a lawsuit filed to prevent the granting of a controversial pension.

The suit – filed by the Baltimore police officers union in 2007 – sought to stop former Deputy Police Commissioner Marcus Brown from collecting the full pension benefits he was awarded when he left his post to head the Maryland Transportation Authority Police that year.

Brown had only 14 years on the job when the pension was granted, not enough time to qualify for a full pension.

But then-Police Commissioner Leonard Hamm sent a letter to the pension board of the Fire and Police Employees' Retirement System stating that Brown had been laid off – three days after he accepted the MdTA police job – triggering a clause in Brown’s contract that guaranteed his pension if he was terminated and setting off a storm of controversy that Brown’s pension was a political pay-off.

But Brown’s lawyers were able to beat back the lawsuit in court last year by arguing the former deputy commissioner was not the only city employee to get plum retirement benefits courtesy of taxpayers, revealing for the first time that 184 city employees had collected millions of dollars in premature pension benefits during the previous decade.

Indeed, Brown’s attorneys tried to rope in the roughly 184 city employees who got early pension deals similar to Brown’s, arguing that if he had to give back his money, so should they.

“What’s good for the goose is good for the gander,” Brown attorney Timothy Mahoney wrote in a brief, arguing the other 184 employees should be forced to join as defendants in the case.

“What happened here also appears to be consistent with the broad practice in city government in nearly 200 transactions over the last dozen years,” Mahoney argued during an October 2008 hearing. “All city retirees who are similarly situated to Mr. Brown should be joined as necessary partners to this action.”

The controversy over Brown’s pension erupted after he was appointed by Gov. Martin O’Malley to head the Maryland Transportation Authority Police. Three day later, Brown publicly accepted the position, then Hamm sent a letter to the Fire and Police Pension board stating that Brown had been “laid-off. The board granted Brown a $55,000 annual pension that he collects now – even though he did not have the 20 years of service required for full pension benefits.

But hundreds of pages of filings in the case – which Brown’s lawyers successfully had thrown out of court – include tantalizing tidbits on how city employees have been milking the pension system for years to finance a new business, pursue a different career, or even take a higher-paying job.

In a memo from City Solicitor George Nilson to Mayor Sheila Dixon arguing Brown’s pension was not unusual, the attorney outlines cases where unnamed city employees were granted early retirements.

“A person who wanted to become a first grade teacher…and follow his dream,” Nilson cited as an example in the letter as one employee who received full benefits before earning them.

A former lawyer in the city solicitor’s office wanted to pursue a “lifelong “dream” to start a private law practice was another employee who was granted early retirement.

Even a city employee in the running for a “high profile” state job with higher pay was granted full retirement benefits early, Nilson wrote.

None of these former city employees had enough years – 20 for police and 25 for city employees -– to qualify for full pension benefits under city law, Nilson’s letter states.

How much is this pension largess costing city taxpayers? Possibly millions, said Fire and Police pension board chairman Stephan Fugate.

“I think they’ve been criminally abusing the pension system for years, and the 32(k) clause,” Fugate said of the city law that provides safeguards to employees who lose pensions through no fault of their own, but has been widely abused, he said.

“It started under the O’Malley administration; there were about 12 to 14 police who received deals similar  to Brown’s pension that should not have been granted,” Fugate said. “I’ll take responsibility for my part in this, but I can tell you that they didn’t give this type of pension to anyone in the fire department.”

Nilson said that since the Brown incident, legislation was passed requiring the mayor’s office to review all early pensions, taking sole discretion away from department heads.

“I think there have only been six cases that I’m aware of since the new procedures were put in place, we have tighter controls now,” Nilson said in a phone interview Thursday.

The revelations of widespread granting of early pensions comes as the city grapples with hundreds of millions of dollars in the lost value of both the Fire and Police fund and the Employees' Retirement System fund.

Two weeks ago at a board meeting with the Fire and Police pension board an actuary for the police and fire unions said the city needed to contribute more money to that fund to close a gap of at least $1 billion between the money owed to pensioners and the cash to pay for it.

Meanwhile, city contributions to the pensions of all city employees rose by $20 million to roughly $125 million for the 2010 budget while the city struggles to fill a looming $60 million deficit for the fiscal year that starts in July.

The biggest beneficiaries of the city’s pension system are elected officials, who need only 16 years on the job before they get full, lifetime pension benefits, according to Roselyn Spencer, head of both the Elected Officials Retirement Fund and the Employees' Retirement System fund. The Elected Officials Retirement Fund is in the best shape financially out of the three funds that pay retirement benefits for city employees.

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