West feels heat for firing pension chief

Spokane Mayor Jim West has been trying to quell a political firestorm that broke out at City Hall after he fired the city’s retirement director this fall.

Dan Daniels was let go in September, the mayor said, because he did not meet the mayor’s standards for professionalism. West has declined to elaborate.

Daniels said he was told by West that he did not meet the mayor’s management style. “I don’t know how Mayor West would know my management style. I’d only seen him twice in nine months,” Daniels said. West took office in January.

But the dismissal has led to questions about the integrity of the non-uniformed employees retirement system and its $200 million in assets. One city employee said he is concerned that the mayor’s political influence could undermine the independence of the retirement system, but West said he is seeking higher professionalism in a new director.

West appeared last week at a meeting of the Spokane Employees Retirement System board and told board members that he is seeking a replacement to Daniels, and has offered the job to a “very good candidate.” The name of the appointee was not given.

The retirement director is an “at-will” employee who can be hired and fired by the mayor at the mayor’s discretion. West had notified the retirement board members that he was dismissing Daniels prior to the firing, he said.

West showed anger in describing a rumor that he was seeking to use pension funds to balance the city budget. “I think calmer heads should prevail over a period of time,” West said.

The city is facing a $12 million cut in January from its $118 million general fund for 2005. The mayor has offered employees early retirements to reduce the number of layoffs needed. Money to fund medical care for early retirees is being taken from a general fund reserve account, not the pension system, West said.

John Bjork, a former city employee who once served as pension board chair, asked whether the early retirements would hurt the pension fund, and said the mayor should have notified employees and retirees about his plans for early retirement.

West said there would be no up-front cost to the pension system beyond the additional pension benefits that would be paid.

Jim Guyor, a Civil Service department employee, said the mayor’s control of the retirement director appointment introduces a political element to the retirement system, and that he is concerned about the independence of the retirement board, which he said is the best hope of preventing misuse of funds.

“Jim, this is not a crisis situation,” said retirement board member Mike Coster, referring to the pension system.

The city manages seven different retirement systems, and has three separate boards. Fire and police pension boards each oversee three separate retirement systems, created as a result of changes in state laws over the years. The largest retirement system is the one for non-uniformed employees. It is funded through contributions from employees and the city.

As director, Daniels was overseeing investments through Merrill Lynch, and those investments included a mix of stocks, bonds and Treasury notes. The city uses other consultants to help guide the investments.

Daniels said he believes that the city administration has been seeking to take over control of the retirement money and the retirement system, and the effort dates back to former Mayor John Powers.

Chief Financial Officer Gavin Cooley said the mayor “was absolutely looking out for the best interests of the retirees of the fund” when he dismissed Daniels.

Cooley said a recent actuarial report shows that the Spokane Employees Retirement System is funded at 85 percent of its “actuarially accrued liability” and at 98.3 percent of its “accrued benefit obligation.”

Both terms are used by experts to analyze how much money is needed to meet future obligations for pensions. Cooley said those numbers show the system is currently strong.

A recent quarterly report showed that the fund has nearly $200 million, up from $160 million in 2002 after a decline in stock market investments. The City Council appoints the retirement board, which has authority over investment decisions. Retirement rules require that all funds must be used for benefit of members of the system and their beneficiaries.

City officials said that provides a check and balance to the mayor’s appointed director.

Cooley said the city administration would never use the retirement trust fund “to leverage or enhance the financial position of the city.”