For nearly a decade, Baltimore City Schools didn’t enroll hundreds of cafeteria workers, bus drivers, custodians and other lower-level employees in a retirement plan, leaving a $5 million gap in their future benefits, Inspector General Isabel Mercedes Cumming reported today.
The failure to enroll the employees was brought to the attention of school administrators in 2019, Cumming said, but was not resolved until the IG brought the matter to a head this summer.
On September 7, the school system wired $5,179,434 to the Baltimore City Employees’ Retirement System (BCERS) to cover 474 school employees.
The source of the transferred school funds was not disclosed.
In response to the report, Sonja B. Santelises, who was hired as Schools CEO in 2016, blamed a “manual enrollment process” that had failed to place employees who did not choose a retirement plan into a hybrid option.
This “administrative oversight” went undetected from July 2014 until mid-2022, Santelises acknowledged, citing staff turnover and the Covid pandemic as contributory factors for the missed enrollment.
According to today’s report, “as early as 2019, City Schools’ leadership team members, including Finance and Human Capital personnel, were aware of issues with [retirement] enrollment.”
CEO Sonja Santelises blamed a manual enrollment process for the “administrative oversight.”
BCERS auditors, among others, had determined that the 5% payroll deductions by employees – matched by 5% employer contributions – were not going into some retirement accounts.
”City Schools personnel received written notification in January 2020, December 2022 and July 2023 that many employees were missing the retirement contributions,” Cumming wrote, adding:
“A City Schools Division Chief explained that Human Capital did not have a default process or a mechanism to identify these employees until May 2022.”
At that time, a school consultant implemented a script that created “an automatic trigger” when a retirement-eligible employee did not select a plan.
Despite numerous notifications, the problem was only partially resolved.
The Santelises administration ignored the zero contributions going into some retirement accounts for years, then only partially addressed the issue, Cumming said.
BCERS was eventually allowed to take over the new-hire process, but the missing contributions from previously hired employees were left hanging.
The $5.2 million payment authorized by Santelises earlier this month covers that deficit.
Santelises did not disclose the source of that money, but volunteered that “to avoid adverse impact,” she will not ask employees to reimburse the 5% retirement deductions they did not make.
The waived contributions work out to about $5,500 per employee, with higher amounts going into the accounts of employees with longer service records.