Atlanta Mayor Kasim Reed’s administration has proposed a merger of the city’s three pension boards — a controversial move critics see as the mayor rushing to consolidate power on a body that controls $3 billion in investments.
City council could vote on the measure as early as Monday — just a month before Reed leaves office.
Administration officials say the consolidation will improve decision-making and save money. Critics say it will allow the mayor’s office to control the board by appointing a majority of the trustees.
The city has three separate pension boards: for firefighters, police officers and general employees.
Currently, the general employees’ board has nine members: five are elected by government employees or retirees; one is a member of the Atlanta school board; and three are appointed by the mayor’s office.
The police and fire boards have six-members, three elected by employees or retirees and three appointed by the mayor’s office.
The proposed super board would have 15 members — 10 members who are members of or appointed by the mayor’s office; one school board members, and four elected by employees or retirees.
Lou Arcangeli, retired police officer who served on the board for two terms, said the merger would diminish the voice of employees and retirees.
Even on the police and fire boards, where membership is split between elected and appointed board members, Arcangeli said “the city can’t pass anything without convincing one” elected trustee.
“It appears the Reed administration is trying to lock down future profits for friends of the administration,” Arcangeli said. “I don’t know what Mayor Reed’s future plans are, but it would appear to me he is trying to satisfy future political donors by creating a well that they can drink from.”
A Reed spokeswoman said the recommendation to consolidate the boards came from a 2014 commission that studied cost-saving strategies. She did not say why the administration waited until it’s last month to try and implement the measure.
“The changes we have proposed ensure that the investment decisions for employee pensions are the best they can be by bringing financial expertise to the pension investment decisions,” spokeswoman Anne Torres said.
She said they will also reduce “administrative costs of servicing three separate boards and ensure investment performance is optimized, so the annual pension contribution cost from the General Fund is the lowest it can be.”
All three boards already employ professional financial advisers, said Rick “Bud” Light, vice chairman of the police pension board. Light said he also believes consolidation is a move to to seed control of the board to the mayor’s office.
“What else can it be?” Light said. “Would you want your money being invested by people who don’t care about it, who aren’t in the pension and aren’t going to receive that pension? Are they going to hire their friends to be consultants and money managers? Who knows.”
The proposal passed out of the council’s Finance Committee last week, after a heated meeting. Councilwoman Carla Smith was the only no vote among the seven committee members present. She said the process needs to slow down.
“There were a lot of people on all of the pension boards that have raised concerns with me,” Smith said. “If all of them are that unhappy, we probably need to take a closer look.”
Doug Strachan, chairman of the general employees’ pension board, reminded council members that the Securities and Exchange Commission just suspended and heavily fined the city’s former pension advisor Larry Gray for lying to the boards about the legality of $77 million in investments.
Angela Green, a retiree on the general employees’ board, filed the complaint against Gray.
“We just came out of a situation here where we’ve been dealing with a multi-year debacle,” Strachan said. “All of the very highly paid very qualified people didn’t catch it.
“It was only a few trustees that shown some light on this.”