October 2, 2013 6:00 pm ET
Loan plus interest returned to employees pension plan.
This news release was posted on the Baltimore County Police FOP, Lodge #4’s Facebook site. It is published as written.
In July of 2012 the Baltimore County Administration sought approval from the pension board of trustees to approve a loan of up to $21.5 million in order to finance the costs of upgrading or replacing an existing transfer station and procuring and installing a single stream recyclables processing system at the Baltimore County Resource Recovery Facility.
There was great concern amongst our membership and other county employees that the County Administration was willing to use the Employee Retirement System to fund Baltimore County capital projects.
Through a series of public information act requests the F.O.P. was able to obtain documents concerning the terms and conditions of the loan. After consulting our legal counsel the executive board of directors voted to file suit against the pension board of trustees for violating their duty of prudence and loyalty to the retirement system. On January 29, 2013, F.O.P. Lodge #4 filed suit in the Baltimore County Circuit Court against, Fred Homan, Keith Dorsey, George Gay, Jim Johnson, Ed Adams, Joe Zerhusen, and Mike Day, the trustees who voted to allow the County Administration to borrow money from the pension fund.
On July 19, 2013 Judge Souder held a scheduling conference setting a time line for the production of documents, depositions of trustees, and a court date of January 2014. The F.O.P. served the county with its notice of discovery and after the discovery responses were due counsel for the F.O.P. made an inquiry regarding the status. The county responded by filing a motion to extend the time to respond to the discovery requests, and a motion for summary judgment based on the argument that the loan had been repaid in full plus interest.
Through a sworn affidavit of Keith Dorsey, the Director of Budget and Finance, the F.O.P. learned that on August 15, 2013, the Baltimore County Employees Retirement System received payment of $13,659,260.25, constituting the principal and $500,157.34 of accrued interest, to completely satisfy the debt owed by Baltimore County to the Employee Retirement System pursuant to the Loan Agreement and Promissory Note dated December 12, 2012. This allowed the suit to be withdrawn.
This Baltimore County Executive should have realized the significance of his decision and the consequences for using the Employee Retirement System as a bank account. If this Executive or any future Executive considers borrowing money from the Employee Retirement System, F.O.P. Lodge #4 is well prepared to fight against it. Borrowing money from the Employee Retirement System to fund capital projects is not an acceptable way to govern.
The original loan was approved for $21.5 million to be paid back over 12 years by April of 2024.The county borrowed over 13 million from 12/12/12 to 7/30/13 and repaid the Employees Retirement System in full plus interest $13,659,260.15 on August 15, 2013.