Joseph Delfico, director of securities issues at the General Accounting Office, voiced concerns about shifting the funding burden for the District of Columbia Retirement Board to future federal budgets.
Proposed legislation calls for increasing the federal contribution to the pension fund by 5% each year between 1996 and 2035. He instead recommended increasing the federal government's annual flat contribution, which currently is $52.1 million, and is scheduled to expire in 2004.
"The contributions would escalate each year for 40 years, leaving future budgets burdened by this commitment," Mr. Delfico said at a recent House District of Columbia subcommittee hearing. "We propose that a flat dollar contribution would bring the fund toward full funding faster and would cost less over the 40-year amortization period."
The proposed legislation also would decrease the city's contribution and would increase participants' contribution.
Mr. Delfico said the legislation, in concert with a pending district bill, would eliminate the pension liability. Mayor Sharon Pratt Kelly and D.C. Retirement Board Chairman James A. Tydings said at the hearing they support the legislation.
Ms. Kelly said Congress is responsible for about 75% of the $5 billion estimated unfunded liability. When Congress created the pension fund in 1979 and split the funding responsibility between itself and the district council, it also transferred a $2.6 billion unfunded liability, she said. Congress promised to contribute $650 million, distributing the payment of $52.1 million annually over a 25-year period.
Recently, Ms. Kelly tried to delay payments to the pension fund in order to save the district's budget. Instead, Ms. Kelly settled with the pension board and is required to make all 1994 payments plus interest by next year.