OUT OF THE CORNER of his eye, he sees the other car. It's coming surely and steadily. But foot to the gas pedal, he ignores the stop sign and keeps driving.
The driver is Mayor Barry, and the passengers in the car are the city's police officers, teachers, firefighters, judges and residents.The car the mayor is driving is the city's pension plan. Every year the projections grow worse and show that a more terrible crash is coming. The projections now show that the city will not have enough money set aside to cover pension checks some time in the next 20 years. In 1976, city officials estimated that by 1999 there would be a $2.1 billion unfunded liability in the pension fund. Inflation pushes up the amount of that deficit daily.
The problem seems remote today; no one can believe that nothing will be done in the next 20 years to avoid a crash that everyone can see coming. But this year, Mayor Barry has made the forecast of disaster even worse. He has opted not to put $23 million in pension obligations into the city budget, making the size of the unfunded pension liability that much bigger. Then he failed to make the scheduled quarterly deposits of $30 million into the pension fund -- until the Reagan administreation ordered that he do so.
At the beginning of Fiscal Year '81, the federal government miscalculated the amount the city is legally obligated to put in the pension fund. After the year began, the federal government notified the District of its mistake and said the city would have to pay $23 million more. Mayor Barry has used the late notice as an excuse not to pay. White le is right on the small point that the city is not legally required to pay the extra money this year, he is wrong on a larger point. By not making that payment, he is adding to the city's massive pension problems. By not paying the $23 million out of this year's budget, he is putting next year's budget out of balance because it was not designed to handle the extra cost of pension debts that are not paid this year.
Similarly, if the federal government had not demanded that the city make its payments on time, the city would have had to make up for lost interest in future budgets. The amount of interest already lost to the city is about $1.8 million, according to Frank Higgins, chairman of the D.C. Retirement Board, which oversees the fund. City administrator Elijah Rogers' explanation for not having made the quarterly payments -- until the federal government required the city to do so -- is that some interpretations of the law have it that payments are not required on a quarterly schedule. A reading of the law shows that its intent is clearly that the city should make payments to the pension fund every three months. But Mr. Rogers' thinking parallels the city government's attitude on other matters of Get-Away-With-What-You-Can. That is an attitude that ignores all signals warning the city to step on the brakes or risk a deadly crash of the pension fund. Does the mayor think he is best serving the city by pushing the pension debt up higher and higher and bringing the city closer to the day when retirees may not get pension checks?
The federal government was right to force the city to make its quarterly payments. The city should also deposit the additional $23 million the federal government says it owes the pension fund. Those payments are properly part of the city budget, and the mayor must balance that budget without hiding expenses.
The pension fund's long-term prognosis is more troubling and requires even tougher action. First, the city must go to Congress to get the federal government to completely pay its share of the unfunded liability that accrued before the city gained home rule. Second, the city must renegotiate pension benefits, particularly inflation clauses on pensions in the District workers' contracts, to lower the exorbitant costs of pensions. The warning signals of an impending crash of the city's pension system are there to be seen; it's up to the mayor to step on the brakes.