Same Old Song

Until last month, Helen Fischer, a 63-year-old registered nurse, received her monthly pension without a hitch. That all changed on April 28. Without warning, she suddenly received a stern letter from the Metro Employee Benefit Board stating that she owed the city $1,893.

A stunned Fischer, who had worked at Metro General Hospital for 15 years before taking an early retirement last February, later learned that because of the board’s own bureaucratic lapse in recording her time of service, she had been overpaid by $146 a month. It was their fault, not hers. But the board wanted to recoup the amount she was overpaid. And, adding insult to injury, the main office was going to readjust her pension to the correct amount starting just two days after it first warned her of the change by mail.

“I’m still going to eat, and I’ll still have a roof over my head,” she says. “But if they can do this to you, you don’t feel too secure.”

Considering the benefit board’s dismal track record, there aren’t too many Metro employees who can feel secure about their pension either. In January of last year, a scathing audit of the Metro Employee Benefit Board reported that as recently as 1995, 52 percent of a random selection of employee files contained recording errors. In a letter to the board’s executive secretary and chairperson regarding the array of miscalculations, the internal audit manager wrote, “Management has not taken adequate steps to correct operational problems that have contributed to these errors and that have been brought to their attention for a number of years.”

Soon after the audit was released, a heated Mayor Phil Bredesen proposed abolishing the embattled board altogether. Later that summer, Bredesen backed off but did urge the board to consider hiring a private firm to handle pensions.

Earlier this month, benefit board executive secretary Jim Luther recommended that the board should indeed outsource a good part of its pension delivery plan. The board unanimously concurred. But while bringing in a private company can help prevent the kinds of errors that affected Mrs. Fischer, critics are howling that the board’s decision is marred by a classic conflict of interest.

They may well have a case. Aon Consulting, Inc., the Atlanta-based firm paid by the board to study what should be outsourced and what should not, will now also receive up to $250,000 to oversee the entire outsourcing process. Aon had recommended that the board should not only seek an outside vendor to update the benefit board’s notoriously sloppy records into a sleek, electronic package, but that another company should serve as the project manager to essentially monitor the first. And while an Aon official says that the company had no interest in serving as the project manager until the benefit board asked them, others question if this arrangement is good business.

“It strikes me as something that needs to be looked at,” says Councilman at-large Leo Waters. “If nothing else, there are some perceptual difficulties when a consultant makes a report and then benefits from those suggestions.”

Adding to the controversy is that Luther endorsed Aon for the project manager position without recommending that the department seek outside bids. Luther says that no company could compete with Aon’s pre-existing knowledge of the Metro system, and that sending out requests for proposals would only delay the outsourcing project.

“It’s going to be hard to find someone that knows our operation in any more detail,” he says. “I thought it was a good recommendation to the board.”

But to some, Luther’s reliance on Aon is troubling. Under Luther’s leadership, the board began working with Aon Consulting, Inc. in early 1995, paying the firm (then known as Alexander & Alexander) as much as $46,000 a month for a broad range of services—from contract negotiations with healthcare providers to designing pension plans for Metro employees. Over the last two and a half years, Aon has billed the city nearly $670,000 in services and expenses, according to records from the Metro Finance Department.

While most on the board hold Aon in high regard, member Phyllis West abstained from voting on whether to give the firm the additional role of project manager. “I’m not convinced it’s in the best interests of the employees and Metro Government to arbitrarily give a $250,000 contract without bidding it out,” she says. “This is especially true when those same individuals conducted the study about outsourcing to begin with. Legally, it can be done. Ethically, it’s not proper.”

Fellow board member Pat Harris-Wingfield, who voted for Aon, disagrees. “I felt that they would be the best people for the job. They’ve worked with Metro for quite some time and know about the system we have in place.”

The controversy over Aon renews scrutiny of a board that, given its past history, would prefer to be out of the limelight for a while. But by most accounts, the embattled department has made strides since the mayor made it his poster boy for bureaucratic inefficiency. Recently, among other accomplishments, the board has written a comprehensive guide to employee benefits, developed a complaint resolution process, and hired an assistant director.

Helen Fischer, for one, doesn’t care whether the board outsources all or part of its pension services. All she wants is peace of mind.

“I would like them to do whatever it takes,” she says, ”to make a senior citizen feel secure.”