In May 1989, a year and a half before leaving office, the Lighthizer administration won unanimous County Council support for a bill that increased retirement benefits for top Anne Arundel officials by 25 percent.
Since then, the bill has become a punching bag for former County Executive Robert R. Neall and current County Executive John G. Gary, both Republicans, and a symbol of Democratic extravagance.
"It's taken on a life of its own as a political issue," said former County Executive O. James Lighthizer in the first interview in which he has agreed to talk about the bill since it passed.
"John's out there shadow boxing," Lighthizer said. "He's got to be perceived as fighting the good fight."
While the legislation has been a useful campaign issue, subject of a taxpayer-financed private investigation, and target of two lawsuits, Lighthizer's rationale for raising pension benefits has been largely missing from the debate.
A review of memos, court records and actuarial reports -- as well as interviews with Lighthizer and his top officials -- reveals that Republican and Democratic administrations share the blame for problems with the pension plan, which in 1993 fell $13.8 million in debt.
In 1989, Lighthizer, a garrulous, cigar-smoking Democrat, stood astride a county economy exploding with housing development, defense contracting and tourism.
Tax revenues were rising annually by double-digit percentages. County workers received regular pay raises.
But Lighthizer was approaching the end of his second term, a lame duck, and members of his executive staff were polishing resumes, looking for new jobs. Some already were jumping ship.
Planning and Zoning Officer Tom Osborne had announced he was leaving for a job with the Virginia-based engineering firm Dewberry & Davis, doubling his salary by doing so.
Lighthizer feared he was losing his staff. So he set about designing a generous pension bill, which increased the annual benefit by 25 percent, raised the minimum pension payment and lowered the retirement age from 60 to 50, as a reward for staff members who stayed the course. As written, the legislation would only benefit officials who stayed through June 1990.
"I was afraid of the exodus," said Lighthizer, waving an unlighted cigar for emphasis. "You have to put it in the context of the 1980s. Business was booming."
Now, Anne Arundel operates under a tax ceiling approved by voters in 1992.
County employees haven't had an across-the-board raise in three years. And Lighthizer has been blamed for bloated government, even though his administration left a $67.5 million cash surplus.
Gary, who promised in his 1994 campaign to repeal the increased pension benefits, did just that months after taking office. But 13 former county officials sued the county for rolling back their retirement benefits.
In May, a U.S. District judge in Baltimore ruled that Gary's repeal violated the constitutional rights of the pension plan's 93 members. The Gary administration has appealed.
In court documents, county lawyers allege that Lighthizer officials conspired with the county auditor to withhold a fiscal analysis of the bill from the council and polled the Pension Oversight Commission by telephone for its endorsement.
They described the conduct as "a breach of public trust" and say former chief administrative officer Adrian G. Teel, former personnel officer Richard F. Mayer, and former county auditor Joseph H. Novotny were the masterminds.
"We're talking about a pattern of conduct that enriched certain people that either did or should have known the impact of this pension bill on the taxpayers," said county attorney Phillip F. Scheibe.
Former Lighthizer officials say the Gary administration is using the pension legislation as an excuse for the county's financial concerns. But the pension fund for appointed and elected officials, known as the A&E; plan, only lapsed into financial danger well into Neall's term.
The 1989 bill was expected to cost the county an additional $275,000 a year, or a 50 percent increase, according to an actuarial review by Baltimore's Herget & Co.
A memo to Mark A. Anderson, then-chairman of the Pension Oversight Commission, from Mayer included those figures. The memo was dated May 10, 1989, five days before the council approved the bill.
In 1991, the first year the bill kicked in, the A&E; plan was $3 million in debt. But by 1993, the plan had slipped $13.8 million in debt, according to that year's financial audit.
The reason is threefold: a 1987 bill allowed former Lighthizer officials to buy service years at cut-rate prices to boost pensions; the 1989 legislation increased retirement payments; and Neall, who took office in 1990, recruited seven state employees to fill top appointed jobs. They transferred a combined 129 years of state service to the county pension fund without any financial contribution.
Those years became an instant liability.
"Not only did the Lighthizer officials leave and receive a payout, but Bob Neall brought in people with extensive service in government and the state didn't send us any cash to cover them," said Thomas W. Mullenix, the county's assistant financial officer. "That could not have been anticipated."
Compounding matters, retiring Lighthizer officials purchased service time before leaving office to improve pension benefits. That was allowed under the 1987 bill sponsored by the administration. In one case, an official with 15 1/2 years of service needed six more months for full pension benefits. He bought the time for $35 and increased his retirement benefits.
On Aug. 3, 1992, an actuary with Aetna Pensions and Financial Services wrote a memo to then-personnel officer Donald Tynes Sr. -- the first warning that the A&E; plan was in financial peril.
Reasons for increase
Donald B. Onnen, the Aetna actuary, stated that the county's required annual contribution to the pension fund doubled to $1.6 million from 1991 to 1992. He gave five reasons for the increase.
Twenty new appointed officials joined the plan Jan. 1, 1992, when they came to work for Neall, "many at high salaries," he wrote.
In addition, several Lighthizer aides "bought back service as they retired, increasing the plan liability even further," he said.
"It's not fair to blame just Lighthizer, and it's not fair to blame just Neall," said county auditor Teresa Sutherland. "It was a combination of very costly decisions."
To former Lighthizer officials, the intrigue surrounding the 1989 pension bill has assumed absurd proportions.
Last year, Gary secretly paid investigator Kevin Keane and attorney John R. Greiber $10,000 to collect evidence of criminal conspiracy that could be used to sink the 1989 legislation.
Allegations of concealment
"[Gary officials] are just trying to cover up what happened when [Neall] brought all those people over from the state," said Novotny, described as the "eighth councilman" during 29 years as auditor.
In 1994, during a Gary campaign event, former Anne Arundel benefits coordinator George Fox told the future county executive that Teel, Mayer and former benefits coordinator Michael Milanowski had told Cigna Insurance actuaries not to reveal the cost of the pension changes in a meeting days before the council approved the plan.
At the time, Cigna managed two of the county's pension plans.
Fox, now deceased, told Gary he would find incriminating evidence if he visited Cigna headquarters in Hartford, Conn. But no one ever went to Hartford.
On Dec. 7, Keane and Greiber went to Cape Coral, Fla., to interview Milanowski. They never met with him during the 30-hour trip, instead interviewing him by phone from their room at the Comfort Inn.
Milanowski told them he'd never been to Hartford, nor, to his knowledge, had his supervisors at the time in question.
Keane and Greiber were set to go to Hartford when Gary pulled the plug on the investigation in December.
But Lighthizer points out a problem with the story.
Fox did not work for the county in 1989, he said. Teel fired him in 1987 after he opposed a plan to move about $60 million of the county's pension funds from Cigna to professional investment specialists.
"It would have been unlikely, impossible almost, to have made those decisions or any of those changes without me knowing about it," said Lighthizer, who is not directly linked in court documents to any of the alleged conspiracy and does not receive a county pension. "I would have known."
Pub Date: 10/13/96