Report: Westport finance chief improperly calculated pension for ex-boss
Updated 4:17 pm, Thursday, October 18, 2012
Top Westport officials this week voiced support for town Finance Director Gary Conrad in the wake of a newly released study that found Conrad did not have the authority, in his job as New Canaan's chief financial officer last year, to increase former New Canaan First Selectman Jeb Walker's pension benefits.
Conrad's role in the New Canaan pension benefits controversy has been under scrutiny for weeks, with a focus on how the outgoing first selectman's pension was approved at a "significantly" higher rate than he was entitled. As New Canaan's chief financial officer last December, Conrad "unilaterally" approved counting Walker as fully vested in that town's pension plan, according to a report released Monday by the Milford-based law firm Bishop, Jackson & Kelly.
Conrad, who was hired in January as Westport's top finance official, acknowledges he calculated Walker's pension based on his assumption that New Canaan's Board of Finance and Town Council would soon approve an amendment to the town pension plan that would allow Walker to fully vest in the town's pension plan based on his four years of service as first selectman, a revision from the town's existing five-year pension vesting schedule.
He denies, however, that he committed any ethical violations in counting Walker as a fully vested employee, without first gaining official backing from the required town boards.
"It was an assumption that the boards and council would see this as an equitable way to treat the position of CEO/first selectman and the second selectman, since due to their terms ending prior to five years participation in the plan the last term in office would not count for vesting," Conrad said in an email Wednesday.
Despite the New Canaan report that found Conrad acted without proper authorization, Westport First Selectman Gordon Joseloff -- who hired Conrad -- expressed unequivocal support for the finance director.
"I am not familiar with the ins and outs of New Canaan politics, but am satisfied with the explanation provided to me by Gary Conrad," Joseloff said in an email Tuesday. "Gary is a fine addition to the Town of Westport and has performed admirably in his role as finance director. In his time here, he has demonstrated he believes in the highest ethical standards for town government operations."
Between November 2007 and November 2011, Walker served two two-year terms as New Canaan's first selectman. But his vesting, or accrual of guaranteed town contributions to his pension, did not go as planned.
In June 2009, New Canaan's actuaries determined that the value of the town's pension fund had dropped below 125 percent of the value of the town's pension liabilities. To comply with Internal Revenue Service regulations, that drop below the 125 percent funding threshold obligated the town to freeze Walker's vesting in the plan and stop payouts for retiree health benefits from its pension plan.
Walker was only partially vested in the New Canaan pension plan by June 2009. As a result, he should have received pension benefits based only on that amount of vesting, in addition to a cash out of his pension plan contributions, according to the Bishop, Jackson & Kelly report.
Instead, "the actions of the former CFO (Conrad) and former First Selectman (Walker) in approving the calculations of benefits resulted in the latter receiving significantly higher pension payments than he should have received," the BJ&K report added.
Conrad approved $944 in monthly pension benefits for Walker as a fully vested retiree, compared to the $373 monthly payments to which he was entitled as a partially vested pension plan member. Between December 2011 and last August, the difference between the fully vested and partially vested benefit scales for Walker totaled about $5,100. Walker has subsequently repaid the excess pension payouts he received, according to the BJ&K report.
Conrad added that he was not pressured by Walker to calculate his benefits at the higher, fully-vested amount.
New Canaan's town charter grants the New Canaan Town Council the power to change pension plans -- modifications that must be first be recommended by the town's Board of Finance. The charter does not allow New Canaan's chief financial officer nor its Pension Committee to unilaterally change the terms of the town's pension plan or grant benefits greater than those stipulated in the plan.
The BJ&K report does not judge the legality of Conrad's calculation of Walker's pension terms. Instead, it recommends that New Canaan's Pension Committee examine the case and make a recommendation as to whether the case should be submitted to law enforcement for investigation.
"Making that decision to calculate the pension based on the passage of the amendment was not done with any intent to break any rules of code of conduct," Conrad added.
Westport Board of Finance Chairman Avi Kaner also expressed backing for Conrad.
"I have found Gary Conrad to be highly competent and exhibiting high integrity during his tenure in Westport," he said in an email Tuesday. "We are fortunate to have someone of Gary's caliber in Westport. New Canaan's loss is our gain."
Conrad left New Canaan in January after he was hired as Westport's finance director. He had served since 1994 as the top fiscal officer in New Canaan.
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