Testifying Friday before the Senate Committee on Housing, Transportation, Infrastructure, and Telecommunications, acting Chief Operating Officer of the V.I. Waste Management Authority Ann Hanley said tier one wastewater employees should be categorized under the hazardous class employees because of a territorial law that says “eligible employees working with chlorine, sewage or carcinogens means any person employed by the Government of the United States Virgin Islands certified by such department’s chief executive officer or his designee as having worked continuously and directly for a period of at least five years with chlorine, sewage or a carcinogen.”
But Cathy Smith, general counsel of the Government Employees Retirement System, said in early 2009 the GERS told former VIWMA Chief Executive Officer May Adams Cornwall that those eligible tier one employees would need to be designated as hazardous employees and the authority would need to submit legislation to add the definition to the V.I. Code.
“However, it was not done, and Ms. Cornwall left the agency. No subsequent chief executive officer of the authority has approached the GERS to discuss this matter,” Smith said. “Further, it should be noted that without such a designation, the wastewater operators have been paying the regular contribution rate instead of the hazardous duty rate.”
She said very few wastewater operators at the authority participate in the Early Retirement Program because those eligible tier one employees were never designated by their chief executive officer.
Sen. Marvin Blyden said after listening to testimony that “it is abundantly clear that Waste Management has failed to perform their due diligence and have failed to carry out their responsibilities to the employees by failing to designate the waste water employees as hazardous duty employees for retirement purposes. I know many of those employees who have retired and died as a result of their working environment.”
Sen. Novelle Francis asked GERS representatives in respect to the conversation in 2009, “How is it that GERS missed that opportunity to encourage and track or make some suggestions that would bring these individuals into the fold?”
Smith said, “GERS did advise WMA of what they had to do in order to include these individuals, but it was up to Waste Management to take the action.”
After being pressed further by Novelle she said she was unsure if there had been any other conversations after the discussions in 2009.
“I do know GERS is focused on just trying to survive and this would not add any additional employees to the system … it would just give them the opportunity to retire earlier. There is no benefit to GERS with this.”
Segal Consulting, which had been hired to determine the impact to the GERS if certain VIWMA employees were to be designated as hazardous instead of regular employees.
The consulting firm was provided a list of 29 individuals from GERS who are eligible to be designated as hazardous employees but the testimony revealed that because the executive director of the VIWMA had not provided GERS the required hazardous designation for these individuals they were treated as regular employees, which causes a series of problems.
Segal Consulting representative Aldwin Frias said of the 29 individuals, seven have already retired, one is a terminated vested participant and four have already received refund of their employee contributions. This leaves a remaining 17 individuals who still actively work and pay the regular employee contribution rate.
To retroactively change the designation of the 24 individuals, including the seven retired participants, to hazardous employees would create an accrued liability of the GERS that Frias said would approximately increase by $860,000, including retroactive payments to the seven retired participants.
“This means that in order to fully fund the increase in the benefits for these individuals due to the higher benefit formula and the ability to retire early with no early retirement reduction to the benefits, the employer is required to pay $860,000,” Frias said.
Because employees were only paying the regular employee contribution rate, Frias said, they would have to start paying the hazardous employee contribution rates, which is two percent higher for tier one and 2.125 percent higher for tier two employees. In addition to this, the retroactive employee contributions that would have been received during their employment would also need to be collected Frias said.
“We have estimated this to be approximately $230,000 in total, without reflecting any adjustment due to interest or lost investment opportunity. If we were to use six percent interest, the total employee contributions required would be approximately $475,000 as of Nov. 30, 2019,” Frias said.
GERS is projected to exhaust all plan assets by 2023 and if providing these additional benefits were approved, this would mean that on a pay-as-you-go basis, other promised benefits would effectively be slightly lower as a result of these higher benefits, Frias said.
No testifiers or senators offered a quick fix to the situation, but Hanley said immediately after the hearing she would request an appointment with GERS.
“We will designate the employees per the instruction of GERS and whatever back pay or legislation we need to put in place … that will be a priority senator, I assure you,” Hanley said.