For 14 months, Montgomery County Executive Charles W. Gilchrist paid his chief administrative officer, Robert Wilson, $5,000 more a year than the figure the County Council approved, according to the county attorney and county financial records.
The money, which Wilson can use after he leaves his Montgomery job, went into a deferred compensation account. Gilchrist said that he gave Wilson the $5,000 a year as "retirement money," because Wilson would not be in his job the five years necessary to acquire benefits under the county's regular retirement program. Wilson, a political appointee, can expect to keep his job only as long as his boss, Gilchrist, who was elected to a four-year term, remains in office. Gilchrist, however, could run for a second term.
County Attorney Paul McGuckian said that the county has "no legal authority" to contribute retirement money to a deferred compensation account in lieu of the county retirement program.
County Council member Esther Gelman also questioned the payments.
"Giving him that money may be a marvelous idea," said Gelman, "But it isn't legal."
Last month when the council found out about the payments, the council decided to give Wilson a $5,000-a-year raise so that the money could continue to be deposited in his deferred payment plan account.
"After meeting with the council staff," said McGuckian, "we decided that the cleanest way without question to treat the money he (Wilson) received was as part of his total compensation or salary."
When Wilson was hired, the council approved a salary for hm of $55,000. Now, with cost of living increases and his recent $5,000 raise, Wilson earns $64,761 -- $10,000 more than his boss, Gilchrist.
Council members decided not to ask Wilson to return the approximately $5,500 he has received illegally because it was paid to him as the result of a "good-faith error," said a county offical.
Gilchrist says that he agreed to give Wilson the $5,000 extra each year when he hired Wilson because political appointees like Wilson seldom stay in their jobs longer than four years -- too short a time a acquire pension benefits.
In Wilson's last job, as chief administrative officer of Prince George's County, he used a deferred compensation plan so that he would have money for retirement in addition to Social Security benefits. The money that went into his deferred compensation plan then was salary, according to Jack Folkins, retirement administrator of Prince George's County.
Deferred compensation plans are commonly used by persons who do not want to use, or pay taxes on, part of their salaries until a later time, such as their retirement years, when they will be earning less and will be in a lower tax bracket.
Gilchrist uses a deferred compensation plan, but unlike the system he set up for Wilson, the money is deducted from his salary -- not from county money for retirement benefits.
"I regarded it as a contribution (to Wilson) in lieu of the county contribution to a retirement plan," said Gilchrist.
As Gilchrist figures it, the county would have been required to contribute $5,826 per year toward Wilson's retirement -- rather than $5,000 -- if Wilson had been in the county's regular retirement plan.
But county officials say that the county lost money by giving Wilson the $5,000 a year for a deferred compensation plan because he would not have received any retirement money if he had been in the county's regular retirement plan.
"The county retirement system takes into account that some people will leave their jobs early and sweeten the pot for others," said one county official, who asked not to be named.
Under the retirement system, employes cannot use the county's contributions toward their retirement until they are of retirement age. They can, however, get back their own contributions toward retirement if they work for the county for five years.
Under Wilson's deferred payment plan, he can withdraw all of the county's contributions toward his retirement immediately after he leaves his county job, as long as the County Council approves it.
One county official said that political appointees like Wilson have high salaries to compensate them for their short tenures.
"We hear that we have to pay them hefty salaries because their jobs are tenuous, so we do, and we also give them hefty sums when they leave us."
Most of the high-ranking county officials Gilchrist replaced after his election were placed on three months of administrative leave before their employment was terminated, giving them, in effect, severance pay equal to three month's salary.
County officials suggest two reasons for Gilchrist's decision to give Wilson $5,000 above the $55,000 the council approved. One is that Gilchrist, a former pension lawyer, really did not know that the county cannot contribute retirement money to a deferred compensation account in lieu of the county's regular retirement program.
The other explanation is less generous. "The most money, the county can pay anyone is $66,000," said one council member, adding that future cost of living raises could have further increased Wilson's salary. "Wilson could have some day earned $71,000 if we hadn't found out about the extra $5,000."