DEPARTMENT OF THE TREASURY 

OFFICE OF D.C. PENSIONS 

ANNUAL REPORT 

Fiscal Year 

20 22 1

D1ISTRICT Of COLUIMBIA PENSIONS PROGRAM

Nancy A. Ostrowski, Director 

Office of D.C. Pensions 

Department of the Treasury 

MESSAGE FROM THE DIRECTOR 

December 2022 

On behalf of the Office of D.C. Pensions, I am pleased to present the Fiscal 

Year (FY) 2022 Annual Report, which provides highlights of the program’s 

significant accomplishments, as well as plans for upcoming years. 

Pursuant to the Balanced Budget Act of 1997, as amended (the Act), the 

Office of D.C. Pensions is responsible for carrying out the Secretary of the Treasury's responsibility 

to fund and administer the District of Columbia Judges' Retirement Plan and the federal portion of 

the District of Columbia Police Officers and Firefighters’, and Teachers’ Retirement Plans. As of 

September 30, 2022, the District of Columbia Judicial Retirement and Survivors Annuity Fund, and 

the District of Columbia Teachers, Police Officers and Firefighters Federal Pension Fund held assets 

totaling $4.2 billion. During FY 2022, $826.2 million in benefit payments were processed for 

annuitants, beneficiaries, and Qualified Domestic Relations Orders (QDROs). Refunds of employee 

contributions were made upon request to former active employees or their beneficiaries. 

The Office of D.C. Pensions continued to efficiently manage finances while making all benefit payments 

to annuitants on time. An independent public accounting firm rendered an unmodified opinion on the 

FY 2022 financial statements of the Office of D.C. Pensions. This was accomplished through 

partnership with the District of Columbia Retirement Board, the Bureau of the Fiscal Service, and other 

Department of the Treasury and District of Columbia entities. The Office of D.C. Pensions continues to 

assess the systems and processes for capturing and consolidating the financial and performance data 

presented within this Annual Report as reliable and complete. 

The Office of D.C. Pensions and our service providers and business partners continued to enhance 

the System to Administer Retirement (STAR), our pension/payroll system, with expanded access to 

self-service for all annuitants. An additional STAR enhancement included the development of a 

tracking tool for debt and due process cases, which will be implemented in FY 2023. During 

FY 2022, the implementation of a new quality management strategy streamlined processes and 

introduced new quality review activities. 

The entire staff from the D.C. Pensions Program continued to demonstrate great resilience during the 

COVID-19 global pandemic where the interruption changed the work environment. In FY 2022, the 

Office of D.C. Pensions staff transitioned to a hybrid work environment, which continued to require 

flexibility and communication. With support from our service providers and business partners, the 

Office of D.C. Pensions continued to perform all program activities without interruption. The Office 

of D.C. Pensions continues to evaluate internal and external business processes to ensure the wellbeing of staff while exploring opportunities to enhance efficiency and effectiveness. 

The Office of D.C. Pensions continued to work collaboratively with all entities associated with the 

District of Columbia Pensions Program to provide high quality service to the annuitants and to carry 

out the Department of the Treasury’s responsibilities under the Act. 

 
The Office of D.C. Pensions contact information is: 

Address: U.S. Department of the Treasury 

Office of D.C. Pensions 

1500 Pennsylvania Avenue NW 

Washington, DC 20220 

Telephone: (202) 622-0800 

E-mail: DCPENSIONS@treasury.gov 

Website: https://home.treasury.gov/about/offices/management/human-resources-and-chiefhuman-capital-officer/dc-pensions 
 

 

Table of Contents
 

PART 1 MANAGEMENT’S DISCUSSION AND ANALYSIS (Unaudited) PAGE 

I. Introduction.......................................................................................................................1 

II. Executive Summary ..........................................................................................................3
	

III. Strategic Goals, Objectives, Outcomes, Performances Measures, and Results ................5
	

IV. Limitation of the Financial Statements...........................................................................34
	

PART 2 INDEPENDENT AUDITORS’ REPORT 

Independent Auditors’ Report .........................................................................................37 

PART 3 FINANCIAL STATEMENTS AND NOTES
 

Consolidated Balance Sheets ..........................................................................................45 

Consolidated Statements of Net Cost .............................................................................46 

Consolidated Statements of Changes in Net Position.....................................................47 

Combined Statements of Budgetary Resources ..............................................................48 

Notes to Financial Statements.........................................................................................49 

PART 4 REQUIRED SUPPLEMENTARY INFORMATION (Unaudited) 

Combining Statements of Budgetary Resources.............................................................65 

PART 5 OTHER INFORMATION (Unaudited) 

Consolidating Balance Sheets – By Fund .......................................................................69 

Consolidating Statements of Net Cost – By Fund ..........................................................70 

Consolidating Statements of Changes in Net Position – By Fund..................................71 

Schedule of Pension Expense – By Fund .......................................................................72 

Actuarial Valuation Report FY 2022 (Executive Summary) ..........................................73 
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PARTI

Management’s 

Discussion and 

Analysis 

(Unaudited)

 

 

 

 

 

 

MANAGEMENT'S DISCUSSION AND ANALYSIS
 

FISCAL YEAR 2022 (Unaudited)
 

Vision: 

The vision of the Office of D.C. Pensions is successful stewardship of the pension funds; high 

quality benefits administration services; and effective use of program resources, while fostering 

mutually beneficial relationships with our business partners at the District of Columbia, the 

Treasury’s Bureau of the Fiscal Service, and other Treasury entities. 

Mission: 

The mission of the Office of D.C. Pensions is to implement the Secretary's responsibilities under 

Title XI of the Balanced Budget Act of 1997, Public Law 105-33 (111 Stat. 251, 712), as amended. 

The responsibilities are to make timely and accurate benefit payments associated with the District 

of Columbia retirement programs for police officers and firefighters, teachers, and judges by 

managing investments, providing oversight and program management, and ensuring funding is 

available for future payments. 

I. Introduction 

A. Statutory Basis and Responsibilities 

Under provisions in Title XI of the Balanced Budget Act of 1997, as amended (the Act1), 

the Secretary of the Treasury (the Secretary) assumed certain responsibilities for a 

specific population of annuitants under the following District of Columbia (District) 

retirement plans: the Police Officers and Firefighters’ Retirement Plan, the Teachers’ 

Retirement Plan, and the Judges’ Retirement Plan. Specifically, the Secretary is 

responsible for administering the retirement benefits earned by District teachers, police 

officers, and firefighters based upon service accrued on or before June 30, 1997, and 

1

There have been six amendments to the Balanced Budget Act of 1997. These include the District of Columbia 

Courts and Justice Technical Corrections Act of 1998, Pub. L. 105-274, 112 Stat. 2419 (Oct. 21, 1998); the 

Technical and Clarifying Amendments Relating to District of Columbia Retirement Funds, Title VIII of Pub. L. 

105-277, 112 Stat. 2681-530 (Oct. 21, 1998); the Law Enforcement Pay Equity Act of 2000, Title IX of Pub. L. 106-

554, 114 Stat. 2763A-303 (Dec. 21, 2000); an Act to Amend the District of Columbia Retirement Protection Act of 

1997, Pub. L. 107-290, 116 Stat. 2051 (Nov. 7, 2002); the District of Columbia Military Retirement Equity Act of 

2003, Pub. L. 108-133, 117 Stat. 1386 (Nov. 22, 2003); and the District of Columbia Retirement Protection 

Improvement Act of 2004, Pub. L. 108-489, 118 Stat. 3966 (Dec. 23, 2004). 

1 
 

 

 

Management’s Discussion & Analysis (Unaudited)
	

administering the retirement benefits earned by District judges, regardless of when 

service accrued. These benefits are referred to as Federal benefit payments. Benefit 

payments to which an individual is entitled under the District of Columbia Replacement 

Plan (pertaining to police officers, firefighters, and teachers based upon service accrued 

after June 30, 1997) are referred to as District benefit payments. Police officers, 

firefighters, and teachers’ benefit payments based upon service accrued before and after 

June 30, 1997, are the financial responsibility of both the Department of the Treasury 

(Treasury) and the District. Payments resulting from such service are referred to as split 

benefit payments. 

The Secretary’s responsibilities include: (1) making accurate and timely benefit 

payments; (2) investing fund assets; and (3) funding pension benefits. To carry out these 

responsibilities, Treasury’s Office of D.C. Pensions (the Office) engages in a wide range 

of legal, policy, and operational activities in the areas of benefits administration, 

information technology, financial management, program management, and office 

administration. The Office coordinates with many District entities and business partners 

to administer its responsibilities. 

Since September 26, 2005, the District of Columbia Retirement Board (DCRB) has 

served as the interim benefits administrator for the Police Officers and Firefighters’, and 

Teachers’ Retirement Plans. The Office reimburses DCRB for expenses associated with 

administrating the Federal benefit payments. Also, as of that date, the Office assumed 

benefit administration responsibility for the Judges’ Retirement Plan. 

B. Organizational Structure and Staffing 

The Office reports to the Deputy Assistant Secretary for Human Resources and Chief 

Human Capital Officer (DASHR/CHCO). The DASHR/CHCO reports to the Assistant 

Secretary for Management (ASM). The ASM reports through the Deputy Secretary to 

the Secretary. 

The Office fulfills its responsibility through key functional areas: Benefits 

Administration, Finance and Resource Administration, Information Technology Systems 

Administration, Program Management, and Office Administration. 

 Benefits Administration: The Office provides oversight of the benefit administration

functions for certain District of Columbia retirement plans. The Office made

approximately $826.2 million in Federal and District benefit payments to annuitants

and beneficiaries for the year ended September 30, 2022.

 Finance and Resource Administration: The Office is responsible for ensuring

compliance with various financial laws and regulations. The Office provides

oversight for investments in Government Account Series (GAS) securities in the

federal pension funds totaling approximately $4.2 billion as of September 30, 2022.

The Office contracts with a third-party enrolled actuary to perform an annual actuarial

2 
 

 

 

Management’s Discussion & Analysis (Unaudited)
	

valuation to determine the pension liability of the retirement plans and the annual 

contributions from the Treasury General Fund to the District of Columbia Teachers, 

Police Officers and Firefighters Federal Pension Fund (D.C. Federal Pension Fund) 

and the District of Columbia Judicial Retirement and Survivors Annuity Fund 

(Judicial Retirement Fund). 

 Information Technology Systems Administration: The Office operates and maintains

the System to Administer Retirement (STAR), an automated pension/payroll system,

in support of benefits administration and annuitant payroll. The Office conducts

annual assessments of STAR security requirements to ensure compliance with the

Federal Information Security Management Act (FISMA). The Office continues to

utilize the STAR Change Control Board (CCB), first established in 2002, which acts

as the approving authority for all STAR requirement changes.

 Program Management: The Office executes its responsibilities through program

management activities, which include planning and project management, quality

management, and risk management. The Office also produces, analyzes, and acts

upon performance management information to continually improve operations.

 Office Administration: The Office provides management and administrative support

to ensure operations are effective and efficient.

As of September 30, 2022, the D.C. Federal Pension Fund and the Judicial Retirement 

Fund paid for 19 Treasury positions. In addition, the Office funds three positions in other 

Treasury offices performing critical functions to accomplish the Office’s mission. 

Pursuant to Interagency Agreements (IAA) with the Treasury’s Bureau of the Fiscal 

Service (Fiscal Service), the Administrative Resource Center (ARC) provides financial 

management, annuitant payroll, and information technology support services. The 

financial management services include financial management system platforms, budget 

processing, financial reporting, and investment accounting. Annuitant payroll services 

include: STAR payroll processing, debt management, split benefit reconciliation and 

reporting, third party payroll reporting, and mailings. Information technology support 

services include systems administration and hosting for STAR and security support 

services which include FISMA compliance. 

II. Executive Summary

During Fiscal Year (FY) 2022, the Office of D.C. Pensions (the Office) successfully

worked with the District of Columbia Retirement Board (DCRB), the Treasury’s Bureau

of the Fiscal Service (Fiscal Service), Administrative Resource Center (ARC), and other

Department of the Treasury (Treasury) and District of Columbia entities to execute

responsibilities under the provisions in Title XI of the Balanced Budget Act of 1997, as

amended (the Act). With the support of these organizations, the largest dollar amount of

3 
 

 

 

Management’s Discussion & Analysis (Unaudited)
	

benefit payments was processed during FY 2022. In addition, almost 99 percent of these 

payments were made via Electronic Funds Transfer ensuring safe and secure benefit 

payments to our annuitants. 

The COVID-19 global pandemic interrupted and changed the way the Office operated. 

During the pandemic, the Office transitioned to a maximum telework posture. In 

FY 2022, the Office transitioned to a hybrid work environment. During this time, the 

Office continued to execute its missions in a manner where staff, our service providers, 

and business partners worked closely together which continued to require extensive 

coordination. The Office adapted and continued to perform all program activities without 

interruption. 

The Office did not require or receive additional budgetary resources to accommodate 

these challenges and there was no financial impact to annuitants who continued to be paid 

on-time. The Office received exceptional support from our service providers and 

business partners to continue to deliver results under these difficult circumstances. The 

Office continues to evaluate internal and external business processes to minimize 

program risks, ensure the well-being of staff, and explore opportunities to enhance 

efficiency and effectiveness. 

The Office Leadership Team focused on program oversight, quality management, risk 

management, and performance management. A team, comprised of the Director, two 

Senior Program Managers, Assistant Director for Benefits Administration, Assistant 

Director for Finance and Resource Administration, and the Assistant Director for 

Information Technology Systems Administration, developed a new FY 2023 - 2025 

Multi-Year Plan which directs the Office in its strategic approach. The Office Leadership 

Team tracked performance indicators to direct decision making. 

The Office continues to focus on promoting a program-wide perspective, maintaining an 

effective oversight and advisory role, optimizing benefits administration, enhancing 

System to Administer Retirement (STAR) operations and maintenance, and pursuing 

financial management and operational efficiencies. The Office collaborated with DCRB 

to implement certain Annuitant Self-Service functionality in the STAR system for all 

annuitants. The Office closely coordinated with the District Courts to timely process 

benefit payments and resolve questions from members related to the Judges’ Retirement 

Plan. 

The following sections of the Management’s Discussion and Analysis provide further 

details about the FY 2022 program results and plans for future years. 

4 
 

 

Management’s Discussion & Analysis (Unaudited) 

III. Strategic Goals, Objectives, Outcomes, Performance Measures,

and Results

The Office of D.C. Pensions (the Office) has three Strategic Goals that contribute to the

achievement of one of the five Department of the Treasury (Treasury) Fiscal Year (FY)

2022 - 2026 Strategic Goals and Objectives. The Treasury Strategic Goal that the Office

contributes to is Modernize Treasury Operations, as shown below.

Treasury Strategic Goal: Modernize Treasury Operations

Treasury Strategic Objectives:

 Better Use of Data

 Customer Experience Practices 

Office Strategic Goals that contribute to the Treasury Strategic Goal: 

Office Strategic Goals: 

 Effectively Managed Finances

 Benefit payments are accurate and timely

 Pension funds are effectively invested

 Pension funds are effectively managed

 Pension funds meet future needs

 Management and Organizational Excellence

 Program is effectively managed

 Effective Quality Assurance Program

 Program creates continuous improvement

The table on the following pages display the Office’s Strategic Goals, Objectives, and 

Outcomes linked to Treasury’s FY 2022 - 2026 Strategic Goal. It also identifies the 

Office’s Performance Measures and Results. 

5 
FY 2022 minimum daily cash

balance exceeds the minimum

balance as defined in the FY

2022 investment strategy

Target: 100% Actual: 96% (See 

footnote 2)

FY 2022 aimual contribution 

from General Fimd received 

timely into pension fluids 

Target: September 28, 2022 

Actual: September 28, 2022

Skilled staff and 

funds are available to 

manage financial 

activities

Management’s Discussion & Analysis (Unaudited)

Office of D.C. Pensions Strategic Goals, Objectives, Outcomes, Performance Measures, and Results

Fiscal Year 2022 - 2026 Fiscal Year 2022

Treasury Goals and Objectives Office Strategic Goals, Objectives, and Outcomes Office Performance

Measures and Results Treasury

Strategic Goal

Treasury

Strategic Objective

Office

Strategic Goals

Office

Strategic Objectives

Office

Outcomes

Modernize

Treasury

Operations

Better Use of Data Effectively

Managed

Finances

Skilled staff and 

technology aie available 

to administer benefits

Benefit payments are 

accurate and timely

FY 2022 projected monetary error 

rate for benefit calculations 

Target: 5% or less 

Actual: 5.66% (See footnote 1)

STAR is available to users 

Target: 99% or more 

Actual: 99.97%

Pension fiinds are 

effectively invested

FY 2022 investment strategy 

executed timely 

Target: 100%

Actual: 100%

FY 2023 investment strategy 

developed timely 

Target: September 23, 2022 

Actual: September 22, 2022

Pension fiinds are 

effectively managed

6
Management’s Discussion & Analysis (Unaudited)

Fiscal Year 2022 - 2026 Fiscal Year 2022

Treasury Goals and Objectives Office Strategic Goals, Objectives, and Outcomes Office Performance

Measures and Results Treasury

Strategic Goal

Treasury

Strategic Objective

Office

Strategic Goals

Office

Strategic Objectives

Office

Outcomes

Modernize

Treasury

Operations

(continued)

Better Use of Data 

(continued)

Effectively

Managed

Finances

(continued)

Skilled staff and fluids 

are available to manage 

financial activities 

(continued)

Pension fiinds are 

effectively managed 

(continued)

Monthly benefit payments made 

to annuitants by the first business 

day of the month 

Target: 100%

Actual: 100%

Electronic benefit payments made 

to annuitants as of 

September 2022 

Target: 98.8%

Actual: 98.9%

Pension fiinds meet 

future needs

FY 2022 request for annual 

contribution from General Fimd 

prepared timely 

Target: September 23, 2022 

Actual: September 23, 2022

Customer

Experience

Practices

Management

and

Organizational

Excellence

Skilled staff and 

management tools aie 

available

Program is 

effectively managed

Risks are reviewed in accordance 

with the schedule outlined in the 

Risk Management Plan 

Target: Quarterly Meetings 

Actual: Quarterly Meetings

FY 2022 financial statement audit 

opinion received from ail 

independent external auditor 

Target: Unmodified opinion 

Actual: Unmodified opinion
Management's Discussion & Analysis (Unaudited) 

Fiscal Year 2022 - 2026 Fiscal Year 2022 

Treasury Goals and Objectives Office Strategic Goals, Objectives, and Outcomes Office Performance 

Measures and Results 

FY 2022 Annual Report and 

Financial Statements finalized 

Target: December 16, 2022 

Anticipated: December 16, 2022 

FY 2022 Acturuial Valuation 

Repo1t delivered timely 

Target: September 21, 2022 

Actual: September 21, 2022 

Treasury Treasury 

Strate2ic Goal Strate2ic Obiective 

Modernize Customer 

Treasmy Experience 

Operations Practices 

( continued) ( continued) 

Office 

Strate2ic Goals 

Management 

and 

Organizational 

Excellence 

( continued) 

Office 

Strate2ic Obiectives 

Skilled staff and 

management tools are 

available ( continued) 

Office 

Outcomes 

Program is 

effectively managed 

( continued) 

Effective Quality plans are Program creates FY 2022 Quality Assmance Plans 

Quality operational in each area continuous approved by September 30, 2022 

Assmance improvement Target: 100% 

Program Actual: 100% 

Footnotes: 

1) The moneta1y enor rate for FY 2022 showed a decrease from the 6.67% monetaiy enor rate in FY 2021. The decrease in the

enor rate may be attributed to training led by the Office targeted to address common causes of moneta1y enors.

2) The Office fell short of the FY 2022 investment strategy recommended minimum daily cash balance for 15 days as a result of

an unplanned disbursement.

8 
 

 

Management’s Discussion & Analysis (Unaudited)
	

A. Benefit payments are accurate and timely 

1. Program Results

a. Benefits Administration

General Operations 

Benefits administration services were provided to annuitants and beneficiaries in three 

District of Columbia retirement plans: the Police Officers and Firefighters’ Retirement Plan, 

the Teachers’ Retirement Plan, and the Judges’ Retirement Plan. The total annuitant and 

beneficiary population as of September 30, 2022 is 14,213 and the breakdown is as follows: 

teachers 5,461; police officers and firefighters 8,639; and judges 113. 

Judges 0.8% 

Teachers 

38.4% 

Police Officers 

& Firefighters 

60.8% 

The average monthly Federal and District benefit payments in FY 2022 was $68.9 million. 

All annuitant payroll files were submitted on time, ensuring timely payment of annuitant 

benefits on the first business day of the month. With oversight and support by the Office, the 

District of Columbia Retirement Board (DCRB) performed benefits administration services 

for the Police Officers and Firefighters’ Retirement Plan and the Teachers’ Retirement Plan. 

The Office performed benefits administration for the Judges’ Retirement Plan. 

General benefit administration operations focused largely on transaction processing and 

customer service activities. On a monthly basis, benefit administration activities included the 

processing of new retirements and/or survivor benefits, identifying individuals no longer 

eligible for benefits, and updating annuitants’ personal and benefits information. In addition 

to focusing on the accuracy and timeliness of transaction processing, the Office and its 

business partners strive to deliver high quality customer service. 

The Office encourages annuitants to receive their benefit payments through direct deposit, as 

it is a more convenient, secure, and timely method of delivering benefits. At the end of the 

fiscal year, the Electronic Funds Transfer (EFT) participation rate for annuitants in all 

retirement plans was 98.9 percent. 

9 
Management's Discussion & Analysis (Unaudited) 

The table below illustrates the EFT paiiicipation rates for annuitants by retirement plan as of 

September 30: 

Electronic Funds Transfer (EFT) 

District Participation Rate of Columbia Retirement Plans 

FY2022 FY 2021 

Police Officers & Firefighters 98.8% 98.7% 

Teachers 99.1% 99.1% 

Judges 100.0% 100.0% 

In FY 2022, a vai·iety of outreach efforts continued to ensure that accurate and timely 

infonnation was provided to annuitants, including: 

• Letters notifying annuitants when their benefits changed; • DCRB newsletters providing retirement plan infonnation to active and retired police

officers, firefighters, and teachers; • Eaining statement messages ale1iing annuitants to changes in benefits such as a cost-ofliving adjustments (COLA), informing annuitants of the oppo1iunity to make changes to

the annuitant data (e.g., signing up for direct deposit, changing tax withholdings or

updating mailing addresses), and providing info1mation regai·ding customer service

improvements; and • Letters to annuitants announcing open seasons for health benefits and other applicable

programs.

Annuitant Payroll Operations 

Pursuant to an Interagency Agreement (IAA) with the Treasmy's Bureau of the Fiscal 

Service (Fiscal Service), Administrative Resource Center (ARC) Pension Payroll utilizes the 

System to Administer Retirement (STAR), the automated pension/payroll system that 

supports benefit administration and annuitant payroll operations, to process month

ly benefit

payments. ARC Pension Payroll works closely with DCRB to process monthly benefit 

payments, and is responsible for reconciling the payroll repo1is generated from STAR to 

ensure the annuitant payroll is processed conectly. 

In FY 2022, ARC Pension Payroll staff processed 170,753 Federal and District benefit 

payments totaling approximately $826.2 million for a monthly average of $68.9 million. 

These month

ly benefits represent payments for annuitants, beneficiai·ies, and Qualified

Domestic Relations Orders (QDROs). In addition, off-cycle payments totaling 

approximately $1.2 million were paid to annuitants when benefits were not processed in time 

for the regulai· on-cycle schedule. 

10 
 

 

 

 

 

 

 

Management’s Discussion & Analysis (Unaudited)
	

During FY 2022, ARC Pension Payroll reported the share of Federal and District benefit 

payments. This information is calculated by STAR and is included in the Split 

Reimbursement Summary Report (SRSR). The SRSR supports the monthly reimbursement 

to the Office from DCRB for District benefit payments. Additionally, ARC Pension Payroll 

provided mail management support to ensure that monthly earnings statements and other 

annuitant communications are distributed in an efficient and timely manner. 

In FY 2022, the Office continued to focus on making accurate and timely payments. 

ARC Pension Payroll generates the Preliminary Statistics Report to conduct a preliminary 

review of the monthly payroll statistics before the close of pension processing. Meetings will 

continue to be held with the Office, DCRB, and ARC Pension Payroll to review the statistical 

data for consistency from month-to-month, percentage differences, large payment amounts to 

annuitants, and variations in the gross and/or net pay to individual annuitants. All identified 

anomalies will be explained, validated and/or corrected before the close of pension 

processing. 

Benefit Administration Activities and Projects 

During FY 2022, the Office continued to collaborate with DCRB to focus on key benefit 

activities and data integrity. 

Quality 

In FY 2022, the Office continued to conduct quarterly Quality Assurance Forums (QA 

Forums) for DCRB staff. The QA Forums cover a broad spectrum of topics and include 

DCRB staff participation in developing and delivering materials addressing the quality 

review process and filling in knowledge gaps. 

During FY 2022, the Office began implementation of a new quality management strategy for 

monitoring benefit administration activities. The strategy streamlined certain quality review 

processes and introduced new quality review activities. The Office will continue to 

implement and update the quality review strategy in FY 2023. 

Judges Life Insurance Premiums 

In FY 2022, the Office discovered that some Judges who elected federal life insurance 

coverage were not paying premiums after turning age 65. The Office communicated with the 

affected Judges about their prospective options and covered the cost of the missed premiums. 

Purchase of Service Installment Payments 

During FY 2022, the Office coordinated with DCRB to review the analysis of purchase of 

service installment payments that began prior to June 30, 1997, and were completed after that 

date. The Office transferred the installment payments made before June 30, 1997, to DCRB 

in FY 2022. 

11 
 

 

 

 

 

Management’s Discussion & Analysis (Unaudited)
	

Summary Plan Description (SPD) 

The SPDs are designed to provide retirement plan members accurate and easy to understand 

information about the retirement plans. The SPDs are updated in five-year increments. The 

SPDs for the District of Columbia Teachers’ Retirement Plan and the District of Columbia 

Police Officers and Firefighters’ Retirement Plan are scheduled to be updated in calendar 

year 2022. The Office is working with DCRB to coordinate review of the updated SPDs in 

early FY 2023. The District of Columbia Judges’ Retirement Plan SPD is scheduled to be 

updated in calendar year 2024. 

Former District Employees Retirement Contributions 

Former District employees who have not requested a refund or retirement benefits and have 

retirement contributions remaining in the retirement funds are entitled to a deferred 

retirement benefit or a refund of the contributions. Former employees with service totaling 

less than five years are entitled to a refund. Former employees with service totaling five 

years or greater are entitled to a deferred retirement benefit. During FY 2022, the Office 

continued to work with DCRB to analyze the data to identify the former District employees 

who may have been entitled to a deferred benefit or refund of retirement contributions. In 

FY 2023, the Office and DCRB will collaborate to determine the necessary next steps. 

STAR Annuitant Self-Service 

In FY 2021, the Office collaborated with DCRB to identify the requirements to implement 

Annuitant Self-Service functionality in the STAR system. In the past, annuitants were 

required to submit a request in writing for information about their benefit or to make changes 

to their retirement records. To make the process more efficient for annuitants and staff, the 

Annuitant Self-Service functionality allows annuitants of the retirement plans to have access 

to the certain retirement information maintained in STAR. The self-service functionality 

allows annuitants an opportunity to view and edit certain information. Allowing annuitants 

to view and, in some cases, make changes to their information makes it easier and more 

convenient and reduces the level of effort required for DCRB and the Office. 

As part of implementing the Annuitant Self-Service functionality, the Office utilizes 

Treasury’s Office of the Chief Information Officer (OCIO) contract with ID.me. ID.me is a 

private company which provides multi-factor authentication services and a complete online 

identity verification process. Annuitants must first create an ID.me account to verify their 

identity. After the ID.me account is created, annuitants can safely and securely access STAR 

to view and make certain changes to their information. 

The self-service functionality was implemented with a pilot group covering a broad spectrum 

of annuitants in FY 2021. In FY 2022, DCRB and the Office evaluated the success of the 

pilot and agreed to open the self-service option to the full annuitant population. DCRB and 

the Office coordinated on the communication effort, which was completed in the third 

quarter of FY 2022. 

12 
 

 

Management’s Discussion & Analysis (Unaudited)
	

For FY 2023, the Office and DCRB will begin planning enhancements to add capabilities to 

the Annuitant Self-Service functionality. 

Training and Resources 

In FY 2022, the Office began evaluating replacements for the User Productivity Kit (UPK), 

which is the repository for help documentation in STAR. Included in the evaluation for a 

replacement will be plans for assessing the current content and the ongoing management of 

STAR help documentation. The Office expects to select and begin implementation of a 

replacement in FY 2023. The Office will continue assessing training requirements to ensure 

skills and knowledge exists to effectively manage and execute benefits administration 

activities. 

Data Tool 

In FY 2022, the Office developed a data tool to assist with the review and reconciliation of 

the participant data used to prepare the actuarial valuation. The data tool will provide a 

consistent, repeatable process for preparing the participant data and enable the Office to 

eliminate some manual processes. The data tool will be implemented with the FY 2023 

actuarial valuation. 

Debt and Due Process Tracking Tool 

In FY 2022, the Office began gathering requirements and initiated development of a Debt 

and Due Process Tracking Tool (DDPTT). The tool will reside in STAR to track and report 

debt and benefit due process cases. The DDPTT will provide a single platform for managing 

and tracking debt and benefit due process case information from initiation through resolution. 

Currently, all tracking of debt and due process cases is done outside of STAR and requires 

manual reporting, tracking, and communication between organizations. The ability for each 

organization to instantly access the status of a debt or due process case will benefit all 

organizations. Implementation is expected in early FY 2023. 

b. System to Administer Retirement (STAR) 

Background and History 

STAR is an automated pension/payroll system developed by the Office in cooperation with 

the District. STAR supports the end-to-end business processes for retirement, streamlines the 

administration and payment of pension benefits to annuitants, and enhances customer 

service. STAR enables retirement analysts to quickly access information and provide 

annuitants with real-time customer service. In addition to processing retirements, STAR 

calculates the Federal and District share of benefit payments. 

13 
 

 

Management’s Discussion & Analysis (Unaudited)
	

STAR is based on Oracle/PeopleSoft’s “commercial off-the-shelf” (COTS) software for 

human resources, pensions, and payroll administration. The STAR implementation was 

phased and deployed in bundles known as releases. 

 Release 1 was implemented in December 2002 to serve all annuitants of the Judges’

Retirement Plan.

 Release 2 was implemented in September 2003 to serve teachers, police officers, and

firefighters who retired on or before June 30, 1997, and their survivors.

 Release 3 was deployed in August of 2005 for teachers, police officers, and firefighters

whose initial retirement was processed in STAR after August 1, 2005 (and their

survivors). This release also converted teachers, police officers, and firefighters who

retired after July 1, 1997, and before August 1, 2005, and whose initial retirement

processing took place in the District’s legacy system, the Pension Administration and

Payroll System (PAPS).

 Release 4 started the implementation of the split benefit calculation to enable STAR to

calculate the Federal and District share (split) for benefit payments. Release 4 was

implemented in June 2007 to calculate the split for future payments to those annuitants

who were brought into pay status on or after June 4, 2007. This release also included an

upgrade of Oracle/PeopleSoft from version 8.0 to 8.9.

 Release 5 was implemented in November 2007 and completed the implementation of the

split benefit calculation. The split was calculated for future benefit payments to

annuitants whose initial retirement processing took place in STAR between August 2005

and June 2007. In addition, STAR calculated the split for the future benefit payments to

annuitants who retired after June 30, 1997, and whose initial retirement processing took

place in PAPS.

 Release 6 was deployed in May 2012, which upgraded the Oracle/PeopleSoft version

8.9 to version 9.1, and included the implementation of the “person model.” The upgrade

leveraged existing and newly delivered functionality to reduce the overall number of

Oracle/PeopleSoft application customizations.

 Release 7 was deployed in April 2017, which upgraded the Oracle/PeopleSoft version

from 9.1 to version 9.2. The 9.2 upgrade introduced a new model for future upgrades.

STAR Highlights 

After the implementation of STAR Release 7, the Office has continued an ongoing effort to 

maintain the system’s operational integrity and look for opportunities to make positive 

system enhancements. 

In FY 2022, the Office made the following enhancements to STAR: 

 Annuitant Self-Service for all populations completed in May 2022; and

 Update from PeopleTools 8.57 to 8.59 completed in July 2022.

The Office continues to expand the use of STAR and enhance the customer experience. 

Annuitant Self-Service is an enhancement to STAR allowing annuitants to view and edit 

14 
 

 

 

Management’s Discussion & Analysis (Unaudited)
	

certain information. PeopleTools is the underlying software used by the developers to 

maintain and enhance STAR capabilities. In July 2022, the PeopleTools software was 

upgraded from 8.57 to 8.59. This upgrade provided cosmetic changes to the STAR 

application along with the enhancements to the tools used by the developers. 

In FY 2023, the Office will be working on the following changes to STAR: 

 Begin the implementation of a new STAR user training/help platform;

 Begin enhancements to add additional capabilities to the Annuitant Self-Service

functionality;

 Complete the implementation of the Debt and Due Process Tracking Tool which was

developed during FY 2022; and

 Enhance the performance reporting information currently collected from STAR by

implementing additional data analytics capabilities provided as part of PeopleSoft.

STAR Technical Production Support and Hosting 

System hosting and technical production support for STAR is performed by Fiscal Service, 

Information Security Services (ISS). Since September 2003, ISS staff members have 

provided production support activities, including routine system operations, application and 

database administration, help desk operations, and problem resolution. A supplemental 

support contract is also in place to provide assistance to ISS in both operations and 

maintenance activities. In FY 2022, STAR was available 99.97 percent of the time. 

STAR System Security 

In FY 2022, as a part of the Security Assessment and Accreditation (SA&A) process, the 

Office conducted an annual security assessment of the STAR system. The SA&A is a 

process that ensures that federal systems are well-documented, authorized to operate, and 

adhered to formal and established security requirements. An annual security assessment is 

required every year in-between the full assessment which occurs every three years following 

a system’s Authorization to Operate (ATO) or when security-relevant changes occur which 

constitute a 'significant change' necessitating a new ATO. The annual assessment is a part of 

the Office’s continuous monitoring effort to test STAR’s security-relevant changes that occur 

outside of the SA&A cycle but do not necessarily constitute a 'significant change' 

necessitating a new SA&A. This effort was conducted to ensure the STAR system remains 

in compliance with all relevant security requirements and to renew the system’s ATO. 

There were twenty-four vulnerabilities identified during the assessment. Of the twenty-four 

vulnerabilities: seven have been identified as false positive; six and a half have been risk 

accepted due to their operational and user impact; ten and a half have been mitigated – two of 

which were closed due to a difference in policy between Departmental Offices (DO) and 

Fiscal Service and the remaining eight and a half were fixed. The next assessment for STAR 

will be an annual assessment since it will be the second of the three years following the latest 

ATO. It is scheduled for FY 2023. 

15 
 

 

 

 

Management’s Discussion & Analysis (Unaudited)
	

STAR security management adheres to the Federal Information Security Management Act 

(FISMA) calendar year which starts July 1 and ends June 30. As required by National 

Institute of Standards and Technology (NIST), Security and Privacy Controls for Information 

Systems and Organizations (NIST 800-53 Rev. 4), the Office conducted the second 

scheduled FISMA required backup data test from FISMA year 2021, a contingency test, and 

the first of two backup data tests for FISMA year 2022. 

The second backup test consisted of testing the data mirroring process between the STAR 

Production and STAR Contingency sites. Data mirroring refers to the real-time operation of 

copying data, as an exact copy, from one location to another location. This test successfully 

validated the mirroring process between STAR Production and STAR Contingency. 

This year’s combined contingency and backup data test consisted of testing accessibility and 

connectivity to the STAR Contingency site. The test was done to validate that STAR users 

could still access STAR Contingency through ID.me or SSO/PIV log in. The ability to log 

into STAR Contingency confirmed that the authentication data gathered for STAR 

Production is used to authenticate users to STAR Contingency, as well. 

The second information system backup exercise is scheduled for March 2023. 

Lessons learned from all the tests/exercises are used to update STAR security documentation. 

In addition to updating STAR security documentation after the above-mentioned 

tests/exercises, STAR security documentation is reviewed and updated prior to each security 

assessment and following each assessment. 

STAR Change Control Board 

The Office’s STAR Change Control Board (CCB) acts as the approving authority for all 

STAR requirement changes. The Board is comprised of representatives from the Office, 

Treasury’s Office of General Counsel (OGC), DCRB, Fiscal Service ISS, and ARC Pension 

Payroll. The CCB evaluates the benefits and risks associated with any proposed change, 

makes a determination as to whether the proposed change should be implemented, and 

establishes the priority for each approved change. 

In FY 2020, the Office updated the STAR Change Control Plan, which establishes the STAR 

Change Control Board and defines its mission, roles, responsibilities, and processes. The 

updated STAR Change Control Plan incorporated the STAR Change Control Charter into 

one consolidated document. Updates to the STAR Change Control Plan including a revised 

Change Request format were coordinated with DCRB and accepted by a CCB vote in 

FY 2022. 

16 
 

 

 

 

 

Management’s Discussion & Analysis (Unaudited) 

B. Pension Funds are effectively invested, managed, and meet future needs 

1. Program Results 

a.	 Pension Funds 

Pursuant to the Balanced Budget Act of 1997, as amended (the Act) (as amended by Public 

Law 105-277) and pursuant to the District of Columbia Retirement Protection Improvement 

Act of 2004, Public Law 108-489, the Office administers Federal benefit payments through 

two funds: 

 The District of Columbia Teachers, Police Officers and Firefighters Federal Pension 

Fund (D.C. Federal Pension Fund) makes Federal benefit payments and pays necessary 

administrative expenses for the Police Officers and Firefighters’, and Teachers’ 

Retirement Plans. The D.C. Federal Pension Fund is not a typical pension fund in that it 

does not receive employee and employer contributions. The sources of funding for the 

D.C. Federal Pension Fund are: 

	 An annual federal payment from the Treasury General Fund which amortizes the 

original unfunded liability and any additional liabilities identified in annual actuarial 

valuations; and 

	 Interest earned on investments. 

Total assets for the D.C. Federal Pension Fund as of September 30, 2022 are $4.0 billion. 

 The District of Columbia Judicial Retirement and Survivors Annuity Fund (Judicial 

Retirement Fund) accumulates funds to finance Federal benefit payments and necessary 

administrative expenses of the Judicial Retirement Plan. There are three funding sources 

for the Judicial Retirement Fund: 

	 An annual federal payment from the Treasury General Fund which amortizes the 

original unfunded liability and any additional liabilities identified in annual actuarial 

valuations; 

	 Interest earned on investments; and 

	 Judges’ employee contributions. 

Total assets for the Judicial Retirement Fund as of September 30, 2022 are $197.0 million. 

To ensure the Office achieves its strategic goal #1 (Effectively Managed Finances), our Risk 

Management Program tracks several risks related to the stated outcome, “pension funds meet 

future needs” for both the D.C. Federal Pension Fund and the Judicial Retirement Fund. 

These risks have been evaluated and categorized as low. 

17 
Management’s Discussion & Analysis (Unaudited)

b. Fund Deposits

Warrants

As authorized by the Act, the D.C. Federal Pension Fund and the Judicial Retirement Fimd 

receive annual payments from the Treasmy General Fund to cover administrative expenses 

for the year and amortize the unfunded liabilities of the retirement programs assumed by the 

Federal Government over 30 years, the annual net experience gains or losses over 10 years, 

and any annual changes in actuarial liabilities over 20 years. The annual payment to the 

Judicial Retirement Fund also includes amounts necessaiy to fimd the noiinal cost of the 

retirement program.

In accordance with the Act, the annual payments to the D.C. Federal Pension Fund and the 

Judicial Retirement Fund are calculated by an emolled actiiaiy. These fluids are requested in 

September each year and invested upon receipt in Government Account Series (GAS) nonmarketable Treasury securities, with maturities and par amounts consistent with the expected 

payment dates and payout ainoimts of the pension liabilities.

The table below reflects FY 2022 and FY 2021 annual payments from the Treasmy General 

Fimd as of September 30:

Office of D.C. Pensions’ Funds

Annual Payments from the

Treasury General Fund

(in Millions)

FY2022 FY2021 $ Change

District o f Columbia Federal Pension Fund $539.5 $576.5 $(37.0)

District of Columbia Judicial Retirement and

Survivors Annuity Fund $19.4 $18.7 $0.7

Totals $558.9 $595.2 $(36.3)

A major component of each of the above aimual payments is the 30-year payment established 

in 1997 to amortize the unfunded liabilities of the retirement programs assumed by the 

Federal Government. There are five years remaining of these 30-year payments of 

$348.6 million for the D.C. Federal Pension Fimd and $2.1 million for the Judicial 

Retirement Fund after which the original unfunded liabilities will be flilly amortized.

The year-to-year differences in the annual payments from the Treasmy General Fund are 

iiv en primarily by the amortization of actuarial gains or losses in the current year, the 

continued impact of amortizations scheduled from previous years, and the completion of 

some prior year amortizations reaching the end of their applicable amortization period.

18
Management’s Discussion & Analysis (Unaudited)

Interest

The amount of Interest Payments (deposits) in the table below reflects three sources of 

interest: interest earned on GAS long-teiin secmities, interest earned on overnight secmities, 

and interest earned through the amortization of discounts. In the table below, the Interest 

Earned (recognized) reflects the Interest Payments collected less the amortization of 

premiums and discounts from GAS securities while the Rate of Return is calculated by 

dividing interest earned from GAS secmities by the average par value of investments in GAS 

securities.

The FY 2022 and FY 2021 annual interest as of September 30 from the pension fluids are 

summarized in the following tables:

Office of D.C. Pensions’ Funds

FY 2022 Annual Interest

(in Millions)

Interest

Payments

(deposits)

Interest

Earned

(recognized)

Rate of

Return

District o f Columbia Federal Pension Fund $73.6 $56.6 1.56%

District of Columbia Judicial Retirement and

Survivors Annuity Fund $3.6 $3.5 1.92%

Totals $77.2 $60.1

Office of D.C. Pensions’ Funds

FY 2021 Annual Interest

(in Millions)

Interest

Payments

(deposits)

Interest

Earned

(recognized)

Rate of

Return

District o f Columbia Federal Pension Fund $71.5 $56.0 1.58%

District of Columbia Judicial Retirement and

Survivors Annuity Fund $3.6 $3.4 1.94%

Totals $75.1 $59.4

Year-to-year differences in the Interest Earned (recognized) and Rates of Return are driven 

primarily by the interest rates for available GAS non-maiketable Treasmy secmities available 

at the time investments are placed.

Judges7 Employee Contributions

Active judges are required to contribute 3.5 percent of salary to the Judicial Retirement Fund 

to pay for part of the cost of their retirement benefits. Active judges who elect a sm^vivor

19
Management’s Discussion & Analysis (Unaudited)

annuity contribute an additional 3.5 percent of salaiy.

The table below summarizes the contributions of active judges5 contributions for the most 

recent fiscal years as of September 30:

Office of D.C. Pensions’ Fund

Employee Contributions

from Active Judges

(in Thousands)

FY2022 FY 2021 $ Change

District of Columbia Judicial Retirement and

Survivors Annuity Fund $678.9 $625.5 $53.4

Summary of Fund Deposits

The table below reflects the firnd deposits to the D.C. Federal Pension Fund and the Judicial 

Retirement Fund as of September 30:

Office of D.C. Pensions’ Funds

(in Millions)

Fund Type of Deposit FY2022 FY 2021

District o f Columbia

Federal Pension Fund

Warrant $539.5 $576.5

Interest $73.6 $71.5

District Benefit Payments $275.3 $245.9

Post-1987 D.C. Health & Life 

Employer Payments

$26.3 $23.0

STAR Administrative Expense 

Reimbursements*

$2.6 $3.0

District o f Columbia

Judicial Retirement and

Survivors Annuity Fund

Warrant $19.4 $18.7

Interest $3.6 $3.6

Employee Contributions $0.7 $0.6

Totals

Warrant $558.9 $595.2

Interest $77.2 $75.1

Employee Contributions $0.7 $0.6

Reimbursements and Payments $304.2 $271.9

*FY 2022 includes four quarters of reimbursement payments collected, while FY 2021

includes five quarters.

20
Management’s Discussion & Analysis (Unaudited)

c. Collections

District Benefit Payments

Treasmy pays all benefit payments under the Police Officers and Fiiefighters, and Teachers, 

Retirement Plans from the D.C. Federal Pension Fund. DCRB makes an advance payment to 

the D.C. Federal Pension Fund prior to the last business day of the month for benefit 

payments made by Treasmy on behalf of the District. The STAR Split Reimbursement 

Summary Report supports DCRB reimbursements made to Treasmy each month.

The table below summarizes reiinbmsement activity for the most recent fiscal years as of 

September 30:

Office of D.C. Pensions’ Fund

Districit Benefit Payments

in Millions)

FY2022 FY2021 $ Change

District o f Columbia Federal Pension Fund $275.3 $245.9 $29.4

The District’s share of benefit payments continues to increase year over year as the number 

of annuitants with service after June 30, 1997, increases.

Post-1987 D.C. Health & Life Insurance

Treasmy pays the employer share of Post-1987 D.C. health and life insurance premiums on 

behalf of the District from the D.C. Federal Pension Fund. The District makes an advanced 

payment to the D.C. Federal Pension Fimd prior to the last business day of the month for the 

premiums that are paid by Treasmy.

The table below summarizes reiinbmsement activity for the most recent fiscal years as of 

September 30:

Office of D.C. Pensions’ Fund

D.C.

Insu

Health and Life

ranee Payments

in Millions)

FY2022 FY2021 $ Change

District o f Columbia Federal Pension Fund $26.3 $23.0 $3.3

The District’s employer share of Post-1987 D.C. health and life insurance premiums 

continues to increase year over year as the number of retiiees who were hiied after 

October 1 1987, increases.

21
Management’s Discussion & Analysis (Unaudited)

STAR Administrative Expense Reimbursements

The Office and DCRB have developed a methodology for allocating STAR administrative 

costs inciuTed by the Office when administering Federal and District benefit payments. The 

methodology takes into consideration the number of 100 percent Federal aimuitants,

100 percent District amiuitants, and split annuitants. Applying this methodology, the Office 

and DCRB entered into a cost sharing agreement for reimbursement of FY 2022 actual 

expenses.

The table below summarizes STAR administrative expense reiinbmsements for the most 

recent fiscal years as of September 30:

Office of D.C. Pensions’ Fund

Admii

Re

STAR

listrative Expense

imbursements

in Millions)

FY2022 FY2021 $ Change

District o f Columbia Federal Pension Fund $2.6 $2.5 $0.1

Amounts include a receivable for fomth quarter.

The year-to-year increase in the reimbursements for STAR administrative expenses are 

driven primarily by increases of DCRB’s share of the Office’s STAR administrative costs 

provided by contractors and service providers. The combined effect of DCRB’s increased 

share along with slightly increased STAR administrative expenses inciuTed by the Office 

accounts for the year-to-year increase.

Debt Management

The ARC Pension Payroll manages the debt collection and prevention activities for the 

Office. Dmiiig FY 2022, the Office collaborated with ARC Pension Payroll, OGC, and 

DCRB to pmsue debt prevention and collection efforts. The Office recovered approximately 

$1.5 million after notification of annuitant deaths. In addition, $134.6 thousand was 

collected tluough offsets, lump sum payments, or installment payments.

The Office has an agreement with the Fiscal Service Debt Management Services CrossServicing Program. The FY 2022 agreement allows collection processes for delinquent debt 

thiough several tools including issuing demand letters, conducting telephone follow-up calls, 

referring debts for administrative offset, performing administrative wage garnishment, and 

referring debts to private collection agencies.

d. Federal Investments

As requiied by the Act, amounts received in the D.C. Federal Pension Fund and the Judicial

22
Management’s Discussion & Analysis (Unaudited)

Rethement Fimd are invested in non-mai,ketable secmities issued to minor the chaiacteri^^ 

of marketable securities. The Fiscal Service invests the assets of the D.C. Federal Pension 

Fluid and the Judicial Retirement Fund based on investment guidance from the Office. The 

Office follows a “ladder” approach, scheduling maturities in amounts sufficient to meet the 

obligations to pay benefits and administrative expenses projected by annual actuarial 

valuations. Investment policy in the D.C. Federal Pension Fund and the Judicial Retirement 

Fimd strikes a balance between ensming the Office can meet short-tenn obligations and 

extending the ladder.

In FY 2022, the cash balances in the D.C. Federal Pension Fund and Judicial Retirement 

Fimd, available for contingencies, were targeted to remain above $94.0 million and 

$2.7 million, respectively, which represent approximately two months of federal obligations. 

Typically, the Office invests the cash balance ill one-day certificates, except for an iminvested balance of $500 thousand at month-end to cover unanticipated withdrawals on the 

last day of the calendar month.

By the end of FY 2022, the Office held securities with maturity dates in the D.C. Federal 

Pension Ruid which extended to August 2029, and held securities in the Judicial Retirement 

Fimd with matiuity dates which extended to August 2032. Similar to the prior year, the 

Office also invested a portion of the FY 2022 warrant for the Judicial Retirement Fund in a 

bond with a February 2036 maturity date. The Office normally invests in 10-year notes with 

inatiuities selected to immunize the fluids? projected fiitme benefit payments, but available 

fhnds from the FY 2022 warrant exceeded the securities available with this profile. The 

Office will return to investing in 10-year notes for the Judicial Retirement Fund as they 

become available.

Federal Investments are valued at cost, and, if applicable, adjusted for iinainoitized premiums 

and discoimts. The premiums and discounts are recognized as adjustments to interest 

income, utilizing the effective interest method.

The table below reflects the federal investments breakdown as of September 30 for the two 

most recent years:

Office of D.C. Pensions’ Funds

Federal Investments

(in Millions)

FY 2022 FY 2021 $ Change

District o f Columbia Federal Pension Fund $3,998.5 $3,957.4 $41.1

District of Columbia Judicial Retirement and

Survivors Annuity Fund $196.4 $189.7 $6.7

Totals $4,194.9 $4,147.1 $47.8

To ensme the Office achieves its strategic goal #1 (Effectively Managed Finances), om' Risk 

Management Progiam tracks risks diiectly related to the stated outcome, ^pension funds are

23
Management’s Discussion & Analysis (Unaudited)

effectively invested' for both the D.C. Federal Pension Fimd and the Judicial Retiieinent 

Fimd. These risks have been evaluated and categorized as low.

e. Payments

Federal Benefit Payments

Treasury pays all federal benefit payments under the Police Officers and Firefighters, 

Retirement Plan, Teachers, Retirement Plan, and Judges5 Retirement Plan.

The table below summarizes the Federal benefit payments as of September 30:

Office of D.C. Pensions5 Funds

Federa 1 Benefit Payments

in Millions)

FY2022 FY2021 $ Change

District of Columbia Federal Pension Fund $538.8 $533.2 $5.6

District of Columbia Judicial Retirement and

Survivors Annuity Fund $15.8 $15.0 $0.8

Totals $554.6 $548.2 $6.4

Refimds of Employee Contributions

DCRB processes refiinds of contributions for active police officers, fiiefighters, and teachers, 

and later, requests reimbursement from the Office for the Federal portion of those refhnd 

payments. The Office also processes refimds of contributions for active judges when 

requested.

The table below summarizes the refimds of employee contributions processed as of 

September 30:

Office of D.C. Pensions’ Fund

Refunds of Federal Portion

of Employee Contributions

(in Whole Dollars)

FY2022 FY2021 $ Change

District o f Columbia Federal Pension Fund $53,567 $26,523 $27,044

The year-to-year difference in the District of Columbia Federal Pension Fund refimds is 

driven by year-to-year differences in employee terminations.

24
Management’s Discussion & Analysis (Unaudited)

Benefit Adiniiiistration Expense Reimbursements

The Office reimbmses DCRB for administrative expenses incmTed in administering Federal 

benefit payments. The Office and DCRB have developed a methodology for allocating 

between the Office and DCRB the costs incmTed by DCRB while administering Federal and 

District benefit payments and entered into a cost sharing agreement for reimbursement of 

FY 2022 actual expenses. The methodology takes into consideration: (1) the number of 

active employees, 100 percent Federal annuitants, 100 percent District annuitants, and split 

annuitants; (2) the estimated DCRB resources needed to support these populations; (3) the 

number of employees throughout DCRB who are dedicated to supporting the benefits 

administration fimction; and (4) the level of effort associated with processing Federal benefit 

payments.

The table below is an estimate of the amounts the Office expects to reimburse DCRB as of 

September 30 for administrative expenses incurred while administering Federal benefit 

payments:

Office of D.C. Pensions’ Fund

Reimbur<

Admin

cements to DCRB for

istrative Expenses

in Millions)

FY 2022 FY 2021 $ Change

District o f Columbia Federal Pension Fund $3.2 $3.6 $(0.4)

Amounts include estimated fomth quarter expenses.

Administrative Expenses

The Office fluids administrative expenses from the D.C. Federal Pension Fimd and the 

Judicial Retirement Fund. Wlien administrative expenses related to activities that benefit all 

of the retkement programs occur, expenses are usually allocated 99 percent to the 

D.C. Federal Pension Fund and one percent to the Judicial Retiiement Fimd for majority of 

contracts and interagency agreements. The remaining administrative expenses such as Office 

staff salaries and benefits, are allocated at 95 percent to the D.C. Federal Pension Fund and 

five percent to the Judicial Retirement Fund. The allocation percentages are based on the 

number of annuitants covered by each fimd. When expenses benefit only annuitants ill the 

D.C. Federal Pension Fund or the Judicial Retirement Fund, or when a different allocation is 

clearly appropriate, expenses are charged accordingly.

The Office^ major administrative expenses consisted of DCRB benefit administration 

(discussed above), the Office’s staff salaries, and contractors engaged to provide IT system 

support.

25
Management’s Discussion & Analysis (Unaudited)

The table below reflects administrative expenses by firnd for two most recent fiscal years 

ending September 30:

Office of D.C. Pensions’ Funds

Administrative Expenses

in Millions)

FY2022 FY 2021 $ Change

District o f Columbia Federal Pension Fund $21.5 $19.9 $1.6

District of Columbia Judicial Retirement and

Survivors Annuity Fund $0.6 $0.5 $0.1

Totals $22.1 $20.4 $1.7

In FY 2022, the Office was again subject to the Sequestration imder the Bipartisan Budget 

Act of 2015 (Public Law 114-74) which modified the caps on defense and nondefense 

fimding for Fiscal Year 2018 that were established by the Budget Control Act of 2011. The 

Office of Management and Budget (OMB) issued a report to the Congress on the Joint 

Committee Reductions for Fiscal Year 2018. OMB prepared the report consistent with the 

requirements of the Balanced Budget and Emergency Deficit Control Act of 1985 

(BBEDCA), as amended. The report provided calculations of the amounts by which 

FY 2018 direct spending is required by section 251A of BBEDCA to be reduced and listed 

the required reductions for each non-exempt budget account with direct spending.

Based on this report, the Office identified the D.C. Federal Pension Fimd and the Judicial 

Retirement Fund as budget authority subject to sequestration. Although reductions due to 

sequestration had no impact on payments to annuitants, the Office absorbed these reductions 

in FY 2022 in the area of administrative expenses by managing the timing of approved hiiing 

actions, monitoring the fimding of contract actions, and planned projects.

26
Management’s Discussion & Analysis (Unaudited)

The table below summarizes these reductions for the two most recent fiscal years as of 

September 30:

Funds Payment Types

Sequestration Impact

(in Millions)

FY 2022 FY 2021 $ Change

District o f Columbia Federal

Pension Fund

Annuitant Benefit 

Payments $0.0 $0.0 $0.0

Administrative

Expenses $1.4 $1.4 $0.0

District o f Columbia Judicial

Retirement and Survivors

Annuity Fund

Annuitant Benefit 

Payments $0.0 $0.0 $0.0

Administrative

Expenses $0.1 $0.1 $0.0

Total Reduction due to Sequestration $1.5 $1.5 $0.0

Unless language within the Sequestration Transparency Act of 2012 is changed by Congiess, 

the Office will continue to be subject to sequestration reductions imtil 2031 per the 

Infrastructure Investment and Jobs Act 2022 (Public Law 117-58 Division I Sec. 90001), 

and will comply with implementation guidance issued by OMB and the Department of the 

Treasury.

Payment Integrity Information Act of 2019 (PIIA)

OMB Ciicular A-123 Appendix C, Requirements for Payment Integrity Improvement,

requires agencies to periodically review all programs and activities and identify those that 

may be susceptible to significant improper payments. An improper payment is defined as 

any payment that should not have been made or that was made in an inconect amount under 

statiitoiy, contractual, administrative, or other legally applicable requiiements. Incorrect

amounts are oveipayments, imdeipayinents, or duplicate payments that are made to eligible 

recipients. An improper payment also includes any payment that was made to an ineligible 

recipient or for an ineligible good or service, or payments for goods 01, services not received 

(except for such payments authorized by law). Agencies are required to annually report 

amounts and causes of improper payments to the President and Congress, and their plans for 

monitoring and reducing improper payments.

In FY 2022, the Office worked with ARC to analyze the various types of payments disbursed 

by the Office and reported these results using a standardized, risk-based model. The Office 

exceeded the 85% annual recapture payment target for Treasury at 98.2%. The Office will 

continue to work with Treasury’s Office of the Deputy Chief Financial Officer (ODCFO) to 

comply with OMB Circular A-123 Appendix C reporting requirements.

27
 

 

 

Management’s Discussion & Analysis (Unaudited)
	

Prompt Payment Act and Electronic Invoice Payments 

The Prompt Payment Act was enacted to ensure that suppliers doing business with the 

Federal Government are paid by the government in a timely manner. The Office paid 

100% of the 79 invoice payments by electronic funds transfer and incurred no Prompt Pay 

Act interest expense. 

f. Financial Operations 

Accounting Support 

Pursuant to an IAA with ARC, ARC Fiscal Accounting provides accounting support services 

that include processing accounting transactions such as commercial invoices, purchase cards, 

obligations, accruals, and revenue transactions. Transaction processing consists of a full 

range of accounting transactions necessary to maintain a complete general ledger, including 

budgetary transactions, accounts payable, accounts receivable, and fixed assets. ARC Fiscal 

Accounting uses Oracle Federal Financial (Oracle) as the core financial management system 

to record and process financial transactions. The Office’s transactions are entered into 

Oracle, both manually and via custom interfaces, from ancillary systems such as Procurement 

Request Information System Management (PRISM) and Concur Government Edition (CGE). 

Accounting entries that are recorded in the Oracle accounting system are supported by 

Treasury Financial Manual (TFM) to ensure compliance with standard general ledger 

reporting requirements. ARC Fiscal Accounting also prepares the Office’s financial 

statements and other useful data for managerial reporting. ARC Fiscal Accounting provides 

a report writer package called Oracle Business Intelligence (OBI), which allows the Office to 

generate various accounting reports to monitor obligations and expenditures. 

In FY 2021, ARC implemented a cloud-based solution named OneStream. OneStream is 

designed to streamline the financial reporting process and provide data analytics functionality 

while improving management’s visibility and controls. Earlier in FY 2022, the Office 

participated in a walk-through and testing of the OneStream solution. The Office noted that 

reconciliations and tie-points relied on by ARC were streamlined and automated. The Office 

is currently provided access to read-only Excel output from OneStream delivered to an OMB 

MAX collaboration site. In FY 2022, the Office worked with ARC to ensure that the August 

2021 updates to OMB Circular A-136, Financial Reporting Requirements, and the Treasury 

Financial Manual are incorporated in OneStream. During FY 2023, the Office will work 

with ARC to develop ad-hoc reporting such as the Monthly Financial Plans using OneStream 

in FY 2024. 

g. Actuarial Valuation 

In FY 2022, the Office’s actuarial contractor performed the annual actuarial valuation for the 

Office, as required by the Act. The annual actuarial valuation is used to determine the 

pension liability and FY 2023 funding requirement of the retirement plans administered by 

the Office. The actuarial valuation was based on assets and liabilities as of the end of 

28 
Management’s Discussion & Analysis (Unaudited)

FY 2022. The acUiarial accrued liability was determined using the demographic rates from 

the FY 2019 Actuarial Experience Study and economic assumptions in accordance with 

Statement of Federal Financial Accounting Standards (SFFAS) No. 33, Pensions, Other

Retirement Benefits, and Other Postemployment Benefits: Reporting the Gains and Losses

from Changes in Assumptions and Selecting Discount Rates and Valuation Dates.

The Federal Government’s total liability for Federal benefit payments for the Police Officers 

and Firefighters7 Retirement Plan, Teachers? Retiiement Plan, and Judges? Retiiement Plan is 

summarized in the table below for the two most recent years.

Office of D.C. Pensions’ Funds

Actuarial Accrued Liability

(in Millions)

FY2022 FY2021 $ Change

District o f Columbia Federal Pension Fund $8,212.2 $7,778.8 $433.4

District o f Columbia Judicial Retirement and

Survivors Annuity Fund $295.8 $276.4 $19.4

Total Actuarial Accrued Liability $8,508.0 $8,055.2 $452.8

The year-to-year differences in the acUiaiial accmed liability are driven primarily by ac

gains and losses associated with demographic experience and changes in demographic and 

economic assumptions.

Other key results from the Actuarial Valuation Report can be found on page 73 of this 

Annual Report.

C. Program is effectively managed and creates continuous improvement

1. Program Results

a. Leadership Team

In FY 2022, the Office Leadership Team composed of the Office Director, the Assistant 

Director for Benefits Administration, Assistant Director for Finance and Resource 

Administration, Assistant Director for IT Systems Administration, and the two Senior 

Progiam Managers focused on major deliverables in addition to execution and impact of 

cross-flmctional/organizational activities. Meetings between the Office Leadership Team 

and their DCRB counterparts will continue to take place to ensure alignment of major 

operational activities and timely creation of and adlierence to Memoranda of Understanding, 

Service Level Agreements, and Quality Plans.

29
 

 

 

 

 

 

Management’s Discussion & Analysis (Unaudited)
	

b. Multi-Year Planning 

In FY 2022, the Office Leadership Team continued to focus attention on major functional 

areas and activities assessed as having longer term and multi-entity impact. The Office 

Leadership Team tracked the performance indicators to ensure that the Office and its 

business partners made progress toward achieving the results contemplated in the Office’s 

FY 2021-2022 Multi-Year Plan. In addition, in FY 2022 the Office Leadership Team 

reviewed the Multi-Year Plan to determine if the contemplated results were achieved and 

developed a new FY 2023-2025 Multi-Year Plan to ensure the appropriate emphasis is 

reflected in order to achieve optimal results. 

c. Long-Term Business Planning 

The Long-Term Business Planning (LTBP) project began in FY 2018 to consider potential 

future program impacts and proactively assess those impacts. During FY 2022, the Office 

completed the assessment of potential future program impacts. The Office Leadership Team 

will use the assessment to make critical benefits administration decisions to guide with 

determining the appropriate timing and circumstances for future decision making. 

d. Program Management 

A key component of program management involves setting the Office’s annual project 

activities and major priorities. 

In FY 2022, the Office began developing a SharePoint tool to monitor both internal and 

external deliverables. This tool referred to as the Work Items List (WIL) provides various 

views allowing users to track high-level items through different lenses. These views help to 

ensure proper resources are assigned to upcoming deliverables while improving the 

timeliness for completion of deliverables. In FY 2023, the WIL will be fully implemented 

and shared for use across the Office. 

e. Service Level Agreements 

The Office has annual Service Level Agreements (SLAs) in place with Fiscal Service, ARC 

for the STAR administration and hosting, and annuitant payroll operations. In FY 2022, the 

SLAs were reviewed and revised to more accurately define responsibilities, required 

services, and reporting requirements for service providers and to ensure high quality service 

to annuitants. 

In FY 2021, the Office collaborated with DCRB to develop a robust SLA to ensure a 

comprehensive view of service requirements for benefit administration. During the 

collaboration, the Office and DCRB agreed to convert the SLA from an annual agreement to 

a biennial agreement. The current SLA covers FY 2022 and FY 2023. The SLA between the 

Office and DCRB will be reviewed and updated in FY 2023 for FY 2024 and FY 2025. 

30 
 

 

 

 

Management’s Discussion & Analysis (Unaudited)
	

f. Quality Program 

Benefits Administration 

As part of the Office’s Quality Program, a quality plan guided the review of benefit 

administration activities. The Office’s staff focus reviews on payment types and data points 

that impacted the actuarial liability, in addition to calculations that have had historically high 

error rates. The Office engaged DCRB in discussions to improve the quality of work 

performed by DCRB. 

In FY 2022, the Office modified existing quality review activities and introduced new quality 

review activities. The Office will continue exploring expansion and refinement of quality 

review activities in FY 2023 in alignment with the new quality management strategy. 

Annuitant Payroll Administration 

The Office’s Quality Program includes reviews of annuitant payroll processing functions. 

The Office reviews preliminary and final payroll statistics, off-cycle payment requests, and 

third-party payroll reporting. In addition to the aforementioned reports, each month the 

Office monitors death audit verification, that includes reviewing obituaries provided by the 

vendor, Do Not Pay (DNP) notifications, pending issues escalated for resolution, checks 

which have not been cashed for an extended period of time, payment reclamations, and 

returned mail. 

Information Technology Systems Administration 

During FY 2022, the Office continued to include system administration activities and the 

review of user accounts in its Quality Program. The quality plan tracks system availability, 

number and type of open production trouble tickets, and completion time of trouble tickets. 

As part of the quality review, user accounts were reviewed semi-annually to ensure that users 

have the least amount of access privileges necessary to perform their duties. The semiannual reviews were used by the Office to manage resources, maintain system security, and 

track the quality of STAR production support and hosting services. Additionally, in 

FY 2022, the Office continued the monthly active account verification reviews to ensure 

departing employee accounts were locked/terminated in a timely manner. 

g. Office of D.C. Pensions Program Performance Reporting 

In FY 2022, the Office tracked, collected, and reported performance data to continue to 

promote transparency, and improve decision making using the performance measurement 

reporting tool. The performance measures were reported and reviewed during the Office’s 

monthly status meeting. The performance data was utilized to make improvements in 

program management areas, such as operational planning and resource needs assessments. 

31 
 

 

 

Management’s Discussion & Analysis (Unaudited)
	

In FY 2023, the Office will commence a new project, the STAR Enhanced Electronic 

Reporting (SEER.) SEER will take advantage of the FY 2022 PeopleTools update, the 

STAR payment review tracking tool, and the STAR Debt and Due Process Tracking Tool 

enhancements to automate the collection and reporting of performance metrics available 

within STAR. SEER will automatically collect the data within STAR and present the 

performance metrics, eliminating the manual collection and quality review of the current 

collection process. 

h. Capstone Email 

Treasury’s Office of the Chief Information Officer (OCIO) integrated technologies, part of 

which includes an update of MS Office suite to MS Office 365. Capstone email retention 

was added to MS Outlook which includes automatic records retention/disposition dates. In 

FY 2023, the Office will continue discussions with OCIO and Treasury’s Office of Privacy, 

Transparency and Records (PTR) to find the best approach to continue managing email 

records. 

i. Records Management Project 

The Office initiated a Records Management Project. The scope of the work is to assess, 

design, initiate, and execute a records management strategy for the Office that achieves 

compliance with OMB, National Archives and Records Administration (NARA), and PTR 

guidance. This effort will assess paper and electronic files and electronic systems (network 

hard drives, email, SharePoint, etc.) across the Office to determine their inclusion in creating 

the Office’s records schedule. 

In FY 2022, the Office conducted various assessments and prepared a records management 

strategy with supporting technology requirements. This included a “roadmap” that defines 

major milestones for implementing a records management solution and maintaining future 

federal records. In FY 2023, both a physical and electronic records inventory is planned. 

j. SharePoint Project 

The Office continued to capitalize on the benefits of the FY 2019 SharePoint upgrade and redesign while working remotely during the COVID-19 global pandemic. The Office was able 

to operate with minimal disruption due to the conversion to a SharePoint-centric operational 

model. 

In FY 2023, the Office will continue to enhance and evaluate opportunities to expand the use 

of SharePoint. The Office plans to use SharePoint as the baseline for the office-wide records 

management project and platform for electronic document management. 

32 
 

 

Management’s Discussion & Analysis (Unaudited) 

k.	 Risk Management Program 

The Office emphasizes risk management through its Risk Management Program. The Office 

has taken a proactive approach of developing and nurturing a risk-aware culture by 

integrating program and fraud control activities into its daily operations. The Office 

developed the Fraud Risk Management Framework to expand upon the Summarized Fraud 

Management Overview; however, in anticipation of receiving the Treasury Enterprise Risk 

Management (ERM) Program Playbook, the Office held off on making changes to its 

program. The Office will incorporate guiding principles from the Treasury ERM Program 

Playbook into its Risk Management Program to align with Treasury’s management of risks. 

l.	 Emergency Preparedness 

The Office annually updates its Continuity of Operations Plan (COOP) to ensure the ability 

to continue to perform essential functions under a broad range of circumstances. The 

Memorandum of Understanding (MOU) with Fiscal Service establishes protocols for making 

annuitant payments during an emergency situation when STAR is not operational. The 

documentation supporting the MOU, such as Standard Operating Procedures and form 

templates, continue to be updated as needed. In FY 2023, the approach for making 

emergency payments will be re-evaluated to ensure the most effective processes are in place 

in the event annuitant payments are required outside of STAR. 

m. Internal Control Program 

In accordance with requirements as outlined in the OMB Circular A-123 Appendix A, 

Management of Reporting and Data Integrity Risk, the Office’s Senior Assessment Team 

(SAT) together with the help of a contractor, tested, documented, and reported on the 

Office’s internal control over financial reporting as required by the Federal Manager’s 

Financial Integrity Act of 1982 (FMFIA). The Office used the FY 2022 Treasury Guide for 

Assessing Internal Control in Accordance with OMB Circular A-123 Appendix A: 

Management of Reporting and Data Integrity Risk issued by Treasury’s Office of the Deputy 

Chief Financial Officer (ODCFO), Risk and Control Group to conduct the review. 

The scope for FY 2022 OMB Circular A-123, Appendix A testing covered July 1, 2021 

through June 30, 2022, and management reviewed test results for changes in controls or other 

subsequent events through October 21, 2022, to support the Office’s FY 2022 Annual 

Assurance Statement. The following activities were performed: 

 Quantitative and qualitative materiality assessments were conducted to determine the 

scope of testing; 

 Internal Control Framework Assessment was performed to document and evaluate the 

design of internal controls; 

 Eleven test plans were prepared and executed to confirm the design and evaluate the 

operating effectiveness of internal controls; and 

 Results of test plans were evaluated and no material weaknesses were identified. 

33 
Management’s Discussion & Analysis (Unaudited)

The results supported management’s assessment that Office’s internal controls activities are 

operating effectively and as intended. The Office submitted an unmodified statement of 

assuranceforFY2022.

The FY 2021 financial statement audit resulted in a repeat finding related to deficiencies in 

the Office^ general IT controls over the evidence of STAR audit log reviews. The finding 

remained open. The planned FY 2023 implementation of Fiscal Service’s Enterprise Log 

Initiative should provide sufficient evidence that the Office is reviewing audit logs.

n. Financial Statement Audit Opinion

KPMG LLP (KPMG), an independent public accoimting film, rendered an unmodified 

opinion on the Office^ FY 2022 Consolidated Financial Statements. KPMG noted no 

material weakness in the Office internal controls over financial reporting. Also, results of 

KPMG?s tests of compliance with laws and regulations disclosed no instances of 

noncoinpliance or other matters that requiie reporting under Government Auditing Standards

or OMB Bulletin No. 22-01, Audit Requirements for Federal Financial Statements.

IV. Limitation of the Financial Statements

The consolidated financial statements have been prepared to report the financial position and 

results of operations of the Office of D.C. Pensions (the Office), pursuant to the requirements 

of the 31 U.S.C. 3515 (b). The consolidated financial statements have been prepared from 

the books and records of the Office ill accordance with U.S. generally accepted accounting 

principles for federal entities and the foraiats prescribed by the Office of Management and 

Budget. Reports used to monitor and control budgetary resources are prepared from the 

same records. Users of the consolidated financial statements are advised that the statements 

are for a component of the U.S. Government.

Our key financial performance as of and for the fiscal year ended September 30, 2022, 

compared to September 30, 2021, is presented in the table below.

Summary Financial Information (in Millions)

FY 2022 FY 2021 $

Change

%

Change

Total Assets $4,219.2 $4,169.2 $50.0 1.20%

Total Liabilities $8,537.3 $8,081.6 $455.7 5.64%

Total Net Position $(4,318.1) $(3,912.4) $(405.7) 10.37%

Total Net Cost of Operations $964.8 $240.3 $724.5 301.50%

Total Budgetary Resources $1,462.0 $1,455.4 $6.6 0.45%

Agency Outlays, Net $500.3 $546.8 $(46.5) -8.50%

34
PART 2

Independent

Auditors 7

Report

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

KPMG LLP 

Suite 12000 

1801 K Street, NW 

Washington, DC 20006 

Independent Auditors’ Report 

Deputy Inspector General, U.S. Department of the Treasury, and 

Director, Office of D.C. Pensions: 

Report on the Audit of the Consolidated Financial Statements 

Opinion 

We have audited the consolidated financial statements of the Department of the Treasury’s Office of D.C. 

Pensions (ODCP), which comprise the consolidated balance sheets as of September 30, 2022 and 2021, and 

the related consolidated statements of net cost and changes in net position, and combined statements of 

budgetary resources for the years then ended, and the related notes to the consolidated financial statements. 

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the 

financial position of the Department of the Treasury’s Office of D.C. Pensions as of September 30, 2022 and 

2021, and its net costs, changes in net position, and budgetary resources for the years then ended in 

accordance with U.S. generally accepted accounting principles. 

Basis for Opinion 

We conducted our audits in accordance with auditing standards generally accepted in the United States of 

America (GAAS), the standards applicable to financial audits contained in Government Auditing Standards, 

issued by the Comptroller General of the United States, and Office of Management and Budget (OMB) Bulletin 

No. 22-01, Audit Requirements for Federal Financial Statements. Our responsibilities under those standards 

and OMB Bulletin No. 22-01 are further described in the Auditors’ Responsibilities for the Audit of the 

Consolidated Financial Statements section of our report. We are required to be independent of the ODCP and 

to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our 

audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for 

our audit opinion. 

Other Matter - Interactive Data 

Management has elected to reference to information on websites or other forms of interactive data outside the 

Annual Report to provide additional information for the users of its consolidated financial statements. Such 

information is not a required part of the consolidated financial statements or supplementary information 

required by the Federal Accounting Standards Advisory Board. The information on these websites or the other 

interactive data has not been subjected to any of our auditing procedures, and accordingly we do not express 

an opinion or provide any assurance on it. 

Responsibilities of Management for the Consolidated Financial Statements 

Management is responsible for the preparation and fair presentation of the consolidated financial statements in 

accordance with U.S. generally accepted accounting principles, and for the design, implementation, and 

maintenance of internal control relevant to the preparation and fair presentation of consolidated financial 

statements that are free from material misstatement, whether due to fraud or error. 

KPMG LLP, a Delaware limited liability partnership and a member firm of 

the KPMG global organization of independent member firms affiliated with 

KPMG International Limited, a private English company limited by guarantee. 

37
	
 

 

 

 

 

 

 

 

 

 

 

 

 

Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements 

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a 

whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that 

includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and 

therefore is not a guarantee that an audit conducted in accordance with GAAS, Government Auditing 

Standards, and OMB Bulletin No. 22-01 will always detect a material misstatement when it exists. The risk of 

not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud 

may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. 

Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, 

they would influence the judgment made by a reasonable user based on the consolidated financial statements. 

In performing an audit in accordance with GAAS, Government Auditing Standards, and OMB Bulletin No. 22-

01, we: 

•	 Exercise professional judgment and maintain professional skepticism throughout the audit.

•	 Identify and assess the risks of material misstatement of the consolidated financial statements, whether

due to fraud or error, and design and perform audit procedures responsive to those risks. Such

procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the

consolidated financial statements.

•	 Obtain an understanding of internal control relevant to the audit in order to design audit procedures that

are appropriate in the circumstances, but not for the purpose of expressing an opinion on the

effectiveness of the ODCP’s internal control. Accordingly, no such opinion is expressed.

•	 Evaluate the appropriateness of accounting policies used and the reasonableness of significant

accounting estimates made by management, as well as evaluate the overall presentation of the

consolidated financial statements.

We are required to communicate with those charged with governance regarding, among other matters, the 

planned scope and timing of the audit, significant audit findings, and certain internal control related matters that 

we identified during the audit. 

Required Supplementary Information 

U.S. generally accepted accounting principles require that the information in the Management’s Discussion and 

Analysis and Required Supplementary Information sections be presented to supplement the basic consolidated 

financial statements. Such information is the responsibility of management and, although not a part of the basic 

consolidated financial statements, is required by the Federal Accounting Standards Advisory Board who 

considers it to be an essential part of financial reporting for placing the basic consolidated financial statements 

in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the 

required supplementary information in accordance with GAAS, which consisted of inquiries of management 

about the methods of preparing the information and comparing the information for consistency with 

management’s responses to our inquiries, the basic consolidated financial statements, and other knowledge we 

obtained during our audits of the basic consolidated financial statements. We do not express an opinion or 

provide any assurance on the information because the limited procedures do not provide us with sufficient 

evidence to express an opinion or provide any assurance. 

Other Information 

Management is responsible for the other information included in the Annual Report. The other information 

comprises the Message from the Director and the Other Information section but does not include the 

consolidated financial statements and our auditors’ report thereon. Our opinion on the consolidated financial 

statements does not cover the other information, and we do not express an opinion or any form of assurance 

thereon. 

38
	
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

In connection with our audit of the consolidated financial statements, our responsibility is to read the other 

information and consider whether a material inconsistency exists between the other information and the 

consolidated financial statements, or the other information otherwise appears to be materially misstated. If, 

based on the work performed, we conclude that an uncorrected material misstatement of the other information 

exists, we are required to describe it in our report. 

Report on Internal Control Over Financial Reporting 

In planning and performing our audit of the consolidated financial statements as of and for the year ended 

September 30, 2022, we considered the ODCP’s internal control over financial reporting (internal control) as a 

basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing 

our opinion on the consolidated financial statements, but not for the purpose of expressing an opinion on the 

effectiveness of the ODCP’s internal control. Accordingly, we do not express an opinion on the effectiveness of 

the ODCP’s internal control. We did not test all internal controls relevant to operating objectives as broadly 

defined by the Federal Managers’ Financial Integrity Act of 1982. 

A deficiency in internal control exists when the design or operation of a control does not allow management or 

employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, 

misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in 

internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial 

statements will not be prevented, or detected and corrected, on a timely basis. A significant deficiency is a 

deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet 

important enough to merit attention by those charged with governance. 

Our consideration of internal control was for the limited purpose described in the first paragraph of this section 

and was not designed to identify all deficiencies in internal control that might be material weaknesses or 

significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not 

identified. Given these limitations, during our audit we did not identify any deficiencies in internal control that we 

consider to be material weaknesses. We identified a certain deficiency in internal control, described in the 

accompanying Schedule of Findings, that we consider to be a significant deficiency. 

Report on Compliance and Other Matters 

As part of obtaining reasonable assurance about whether the ODCP’s consolidated financial statements as of 

and for the year ended September 30, 2022 are free from material misstatement, we performed tests of its 

compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with 

which could have a direct and material effect on the financial statements. However, providing an opinion on 

compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an 

opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to 

be reported under Government Auditing Standards or OMB Bulletin No. 22-01. 

ODCP’s Response to Findings

Government Auditing Standards requires the auditor to perform limited procedures on the ODCP's response to 

the findings identified in our audit and described in the accompanying Schedule of Findings. The ODCP’s 

response was not subjected to the other auditing procedures applied in the audit of the consolidated financial 

statements and, accordingly, we express no opinion on the response. 

Purpose of the Reporting Required by Government Auditing Standards 

The purpose of the communication described in the Report on Internal Control Over Financial Reporting and 

the Report on Compliance and Other Matters sections is solely to describe the scope of our testing of internal 

39
	
control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the 

ODCP’s internal control or compliance. Accordingly, this communication is not suitable for any other purpose. 

Washington, DC 

December 13, 2022 

40
	
Schedule of Findings 

General Information Technology (IT) Controls over the System to Administer Retirement (STAR) 

During fiscal year 2022, a prior year deficiency continued to exist because ODCP had not fully implemented a 

corrective action plan. ODCP’s general IT controls over the review of STAR audit logs were not properly 

designed to maintain evidence that an independent individual reviewed and actioned, as necessary, activity on 

the audit logs for the database layer. In prior years, this resulted because management did not design the 

entity’s STAR to respond to the entity’s objectives and risks. The prior year deficiency continues to exist 

because ODCP and their service provider, the Department of Treasury’s Bureau of the Fiscal Service, have not 

fully implemented the corrective action plan, due to the timing of enterprise-wide audit logging remediation 

efforts and competing priorities. 

The audit logging deficiency poses a risk that inappropriate activity within STAR is not investigated and 

resolved. 

The relevant criteria are the Government Accountability Office’s Standards for Internal Control in the Federal 

Government, dated September 2014, and National Institute of Standards and Technology Special Publication 

800-53, Revision 4, Security and Privacy Controls for Federal Information Systems and Organizations. 

Recommendation: 

We recommend that ODCP management enhance existing policies and procedures to document a process for 

reviewing, investigating, and resolving unusual or suspicious activity identified during the audit log review, as 

well as maintaining evidence of such review, investigation and resolution. 

ODCP’s Response: 

The Office of D.C. Pensions’ service provider at the Bureau of the Fiscal Service (Fiscal Service) is currently

implementing an enterprise-wide logging solution, which is necessary for remediation of the database audit 

logging deficiency. Fiscal Service plans to complete their final phase of the logging solution in August of 2023. 

ODCP will continue to work with Fiscal Service on the policies and procedures surrounding database audit log 

monitoring once the full capabilities of the enterprise-wide logging solution have been realized. 

41
	
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42 
PART 3

Financial 

Statements

and Notes

 

 

 

 

 

Department of the Treasury 

Departmental Offices 

Office of D.C. Pensions 

Consolidated Balance Sheets 

As of September 30, 2022 and September 30, 2021 

(in thousands) 

2022 2021 

Assets: 

Intragovernmental 

Fund Balance with Treasury (Note 2) $ 527 $ 501 

Investments, Net 

Federal Investments (Note 3) 4,194,954 4,147,124 

Interest Receivable 21,688 20,308 

Total Intragovernmental 4,217,169 4,167,933

 Other than Intragovernmental 

Accounts Receivable, Net (Note 4) 2,028 1,294 

Total Other than Intragovernmental 2,028 1,294 

Total Assets $ 4,219,197 $ 4,169,227 

Liabilities: 

Intragovernmental 

Accounts Payable $ 115 $ 8 

Other Liabilities 57 40 

Total Intragovernmental 172 48 

 Other than Intragovernmental 

Accounts Payable 1,837 2,983 

Advances from Others 26,770 22,933 

Other Liabilities 

Accrued Pension Benefits Payable 46,978 45,099 

Actuarial Pension Liability (Note 6) 8,461,013 8,010,108 

Accrued Payroll and Benefits 561 488 

Total Other than Intragovernmental 8,537,159 8,081,611 

Total Liabilities $ 8,537,331 $ 8,081,659 

Net Position: 

Cumulative Results of Operations – Funds 

from Other than Dedicated Collections $ (4,318,134) $ (3,912,432) 

Total Net Position $ (4,318,134) $ (3,912,432) 

Total Liabilities and Net Position $ 4,219,197 $ 4,169,227 

The accompanying notes are an integral part of these financial statements. 

45 
Department of the Treasury 

Departmental Offices 

Office of D.C. Pensions 

Consolidated Statements of Net Cost 

For the Years Ended September 30, 2022 and September 30, 2021 

(in thousands) 

2022 2021 

Program Costs 

Administrative Expenses (Note 5) $ 22,138 $ 20,348 

District Benefit Payments and Employer Share of 

DC Health and Life Plans 297,820 267,375 

Pension Expense before Actuarial Assumption 

Changes (Note 6) 458,143 36,059 

Total Program Costs 778,101 323,782 

Less: Earned Revenues 

Reimbursable Income 300,401 270,387 

Interest Earned 60,152 59,395 

Employee Contributions 679 626 

Total Earned Revenues 361,232 330,408 

Net Program Costs Before Loss from Actuarial Assumption 

Changes 416,869 (6,626) 

Loss on Actuarial Assumption Changes, Net (Note 6) 547,978 246,929 

Net Cost of Operations $ 964,847 $ 240,303 

The accompanying notes are an integral part of these financial statements. 

46 
Department of the Treasury 

Departmental Offices 

Office of D.C. Pensions 

Consolidated Statements of Changes in Net Position 

For the Years Ended September 30, 2022 and September 30, 2021 

(in thousands) 

2022 2021 

Unexpended Appropriations: 

Beginning Balance $ - $ -

Appropriations Received 558,934 595,242 

Appropriations Used (558,934) (595,242) 

Net Change in Unexpended Appropriations - -

Total Unexpended Appropriations – Ending Balance - -

Cumulative Results of Operations: 

Beginning Balance $ (3,912,432) $ (4,267,559) 

Appropriations Used 558,934 595,242 

Imputed Financing 211 188 

Net Cost of Operations (964,847) (240,303) 

Net Change in Cumulative Results of Operations (405,702) 355,127 

Total Cumulative Results of Operations – 

Ending Balance $ (4,318,134) $ (3,912,432) 

Net Position $ (4,318,134) $ (3,912,432) 

The accompanying notes are an integral part of these financial statements. 

47 
Department of the Treasury 

Departmental Offices 

Office of D.C. Pensions 

Combined Statements of Budgetary Resources 

For the Years Ended September 30, 2022 and September 30, 2021 

(in thousands) 

Budgetary Resources: 

Unobligated Balance from Prior Year Budget Authority, Net 

(Discretionary and Mandatory) (Note 8) 

Appropriations (Discretionary and Mandatory) 

Spending Authority from Offsetting Collections 

Total Budgetary Resources 

2022 

$ 24,043 

1,133,757 

304,238 

$ 1,462,038 

$ 

$ 

2021 

25,980 

1,157,617 

271,842 

1,455,439 

Status of Budgetary Resources: 

New Obligations and Upward Adjustments 

Unobligated Balance Exempt from Apportionment, End of Year 

Total Status of Budgetary Resources 

$ 1,435,268 

26,770 

$ 1,462,038 

$ 

$ 

1,432,506 

22,933 

1,455,439 

Outlays, Net: 

Outlays, Net (Discretionary and Mandatory) 

Distributed Offsetting Receipts 

Agency Outlays, Net (Discretionary and Mandatory) 

$ 1,129,464 

(629,149) 

$ 500,315 

$ 

$ 

1,160,535 

(613,765) 

546,770 

The accompanying notes are an integral part of these financial statements. 

48 
 

 

 

 

 

Department of the Treasury 

Departmental Offices 

Office of D.C. Pensions 

Notes to Financial Statements 

September 30, 2022 and September 30, 2021 

1) Summary of Significant Accounting Policies 

a.	 Reporting Entity 

Under provisions in Title XI of the Balanced Budget Act of 1997, Public Law 105-33 

(111 Stat. 251, 712), as amended (the Act), the Secretary of the Treasury (the Secretary) 

assumed certain responsibilities for a specific population of annuitants under the following 

District of Columbia (District) retirement plans: the Police Officers and Firefighters’ 

Retirement Plan, the Teachers’ Retirement Plan and the Judges’ Retirement Plan. 

Specifically, the Secretary is responsible for administering the retirement benefits earned by 

District teachers, police officers and firefighters based upon service accrued prior to 

July 1, 1997, and retirement benefits earned by District judges, regardless of when service 

accrued. 

The Office of D.C. Pensions (the Office) is responsible for and maintains two pension funds, 

which are the District of Columbia Teachers, Police Officers and Firefighters Federal 

Pension Fund (the D.C. Federal Pension Fund – 20X5511) and the District of Columbia 

Judicial Retirement and Survivors Annuity Fund (the Judicial Retirement Fund – 20X8212). 

The Office has permanent and indefinite appropriations to cover the Accrued Pension 

Benefits Payable, the Actuarial Pension Liability, and costs to administer the retirement 

plans. 

District of Columbia Teachers, Police Officers and Firefighters Federal Pension Fund 

Pursuant to the District of Columbia Retirement Protection Improvement Act of 2004, Public 

Law 108-489, Treasury established the District of Columbia Teachers, Police Officers and 

Firefighters Federal Pension Fund (the D.C. Federal Pension Fund – 20X5511). Effective 

October 1, 2004, the assets and liabilities of the District of Columbia Federal Pension 

Liability Trust Fund (the Trust Fund - 20X8230) and the Federal Supplemental District of 

Columbia Pension Fund (the Supplemental Fund – 20X5500) were transferred to the 

D.C. Federal Pension Fund. The D.C. Federal Pension Fund is used for the accumulation of 

funds to finance obligations of the Federal Government for benefits and necessary 

administrative expenses for the Police Officers and Firefighters’ and Teachers’ Retirement 

Plans under the provisions of the Act. 

The D.C. Federal Pension Fund consists of the following: 

 Amounts deposited from the proceeds of assets transferred from the Trust Fund and the 

Supplemental Fund, which included the proceeds of assets transferred to the Department 

49 
 

 

 

of the Treasury (Treasury) from the District of Columbia Retirement Board (DCRB) 

pursuant to the Act; 

 Amounts deposited from the General Fund of the Treasury; 

 Income earned on the investments held in the D.C. Federal Pension Fund; 

 Reimbursement from DCRB for the District’s share of annuitant benefits paid from the 

D.C. Federal Pension Fund; 

 Reimbursement from the District for the District’s employer share of Post-1987 

D.C. health and life insurance premiums; and 

 Reimbursement from DCRB for the Office’s actual expenses incurred in support of 

administering District benefit payments. 

The portion of the D.C. Federal Pension Fund that is not needed to meet the level of current 

Federal benefit payments, refunds, and net administrative expenses is invested in nonmarketable Government Account Series (GAS) securities issued by the Bureau of the Fiscal 

Service (Fiscal Service). Investments are made in securities with maturities suitable to the 

needs of the D.C. Federal Pension Fund. 

By the end of each fiscal year, the Act requires the Secretary to pay into the D.C. Federal 

Pension Fund (from the General Fund of the Treasury) an annual amortization amount and, 

beginning in FY 2009, the covered administrative expenses for the year. The annual 

amortization amount, as determined by an enrolled actuary, is the amount necessary to 

amortize the original unfunded liabilities of the retirement programs assumed by the Federal 

Government over 30 years, the net experience gains or losses over 10 years, and any other 

changes in actuarial liability over 20 years. The amounts paid into the D.C. Federal Pension 

Fund during FY 2022 and FY 2021 were $539.5 million and $576.5 million, respectively, 

which are included in Appropriations Received on the Consolidated Statements of Changes 

in Net Position and Appropriations in the Combined Statements of Budgetary Resources. 

District of Columbia Judicial Retirement and Survivors Annuity Fund 

Pursuant to the Act, Treasury established the District of Columbia Judicial Retirement and 

Survivors Annuity Fund (the Judicial Retirement Fund – 20X8212). 

The Judicial Retirement Fund is used for the accumulation of funds to finance obligations of 

the Federal Government for benefits and necessary administrative expenses of the Judges’ 

Retirement Plan under the provisions of the Act. 

The Judicial Retirement Fund consists of the following: 

 Amounts deposited from the proceeds of assets transferred to Treasury from DCRB 

pursuant to the Act; 

 Amounts deposited from the General Fund of the Treasury; 

 Income earned on the investments held in the Judicial Retirement Fund; and 

 Employee contributions to the Judicial Retirement Fund. 

50 
 

 

 

The portion of the Fund that is not needed to meet the level of current benefit payments, 

refunds and administrative expenses is invested in GAS securities. Investments are made in 

securities with maturities suitable to the needs of the Judicial Retirement Fund. 

By the end of each fiscal year, the Act requires the Secretary to pay into the Judicial 

Retirement Fund (from the General Fund of the Treasury) an amount equal to the normal cost 

for the year, an annual amortization amount, and the covered administrative expenses for the 

year. The annual amortization amount, as determined by an enrolled actuary, is the amount 

necessary to amortize the original unfunded liability of the retirement program assumed by 

the Federal Government over 30 years, the net experience gains or losses over 10 years, and 

any other changes in actuarial liability over 20 years. The annual payment to the Judicial 

Retirement Fund also includes an amount necessary to fund the normal cost of the retirement 

program not covered by employee contributions. The amounts paid into the Judicial 

Retirement Fund during FY 2022 and FY 2021 were $19.4 million and $18.7 million, 

respectively, which are included in Appropriations Received on the Consolidated Statements 

of Changes in Net Position and Appropriations in the Combined Statements of Budgetary 

Resources. 

b. Basis of Accounting and Presentation 

The Office is presenting Financial Statements that consist of the Consolidated Balance Sheet, 

the Consolidated Statement of Net Cost, the Consolidated Statement of Changes in Net 

Position, the Combined Statement of Budgetary Resources, and the related notes. The 

Financial Statement Notes consist of a summary of significant accounting policies and other 

relevant explanatory information. The Consolidated Financial Statements have been 

prepared from the accounting records of the Office in accordance with United States 

generally accepted accounting principles for federal entities. Accounting principles generally 

accepted for federal entities are the standards prescribed by the Federal Accounting 

Standards Advisory Board (FASAB). FASAB is designated by the American Institute of 

Certified Public Accountants as the official accounting standards-setting body for the Federal 

Government. 

The Consolidated Financial Statements present balances and activities of the D.C. Federal 

Pension Fund and the Judicial Retirement Fund. There were no transactions between the 

Funds that require elimination during consolidation. 

c. Fund Balance with Treasury 

Fund Balance with Treasury represents appropriated funds from which the Office is 

authorized to make expenditures and pay liabilities resulting from operational activity. 

d. Federal Investments, Net 

Pursuant to the Act and Section 130 of Division A of Public Law 105-277 (1998), the 

Secretary invests the assets of the D.C. Federal Pension Fund and the Judicial Retirement 

Fund in GAS, market-based (“MK”) securities — special non-marketable Treasury securities 

51 
 

that mirror the prices of marketable securities with similar terms, issued and redeemed by 

Fiscal Service. The Office follows Treasury's investment policy guidelines and determines 

whether the investments should be made in MK bills, MK notes, or MK bonds. The 

maturities on investments typically range from less than one year to approximately 10 years, 

except for one investment in the Judicial Retirement Fund with a maturity of 

February 15, 2036. 

Amounts that are not necessary to meet current obligations are invested in MK securities. 

Amounts needed to meet current obligations are invested overnight in one-day MK 

securities, which are redeemed at face value plus accrued interest. If amounts held in cash, 

overnight securities and maturing securities are inadequate to meet required outlays, 

investments would be selected for redemption based on a review of the advantages of each of 

the alternatives and an assessment of the appropriateness of the securities in the portfolio 

under current investment policy. 

Investments are valued at cost, adjusted for unamortized premiums and discounts, if 

applicable. The premiums and discounts are recognized as adjustments to interest income, 

utilizing the effective interest method. Investments held in one-day securities are shown in 

the Note 3 as Non-Marketable Par Value Securities. 

e.	 Accounts Receivable, Net 

Accounts receivable consist primarily of: 

 The amount due from the DCRB for the District’s share of benefits paid by the Office to 

which the recipients became entitled during the reporting period, but which, by law, are 

paid on the first business day of the subsequent period; 

 Pending amounts due from annuitants as a result of benefit overpayments that have not 

completed collection due process; and 

 Amounts due from annuitants as the result of benefit overpayments. 

f.	 Advances from Others 

The Office is authorized to disburse funds for the District’s share of monthly benefits, and 

the employer share of Post-1987 health and life insurance premiums. Under a memorandum 

of understanding with the DCRB, the Office is to receive an advance of these monies prior to 

the actual disbursements. 

g.	 Accrued Pension Benefits Payable 

Accrued pension benefits payable relates primarily to retirement benefits to which the 

recipients became entitled during the reporting period, but which, by law, are paid on the first 

business day of the subsequent period. This accrual may also include amounts for refund 

claims for which processing was not completed during the reporting period but will be paid 

in the subsequent period. 

52 
 

h. Actuarial Pension Liability 

The actuarial cost method used to determine costs for the Police Officers and Firefighters’ 

Retirement Plan and Teachers’ Retirement Plan is the Projected Unit Credit Cost Method. 

Under this funding method, the accrued liability is determined based on service earned to the 

valuation date. Because the benefits under the Police Officers and Firefighters’ Retirement 

Plan and the Teachers’ Retirement Plan were fully accrued at June 30, 1997, the accrued 

liability is calculated as the present value of future benefits expected to be paid and there is 

no normal cost. 

The actuarial cost method used to determine costs for the Judges’ Retirement Plan is the 

Individual Entry Age Normal Cost Method. Under this funding method, the normal cost is a 

level percent of covered salary, which, along with the member contributions, will pay for 

projected benefits at retirement for the active plan participants. The level percent developed 

is called the normal cost rate and the product of that rate and payroll is the normal cost. The 

actuarial accrued liability is that portion of the present value of projected benefits that will 

not be paid by future normal costs or member contributions. The difference between this 

liability and the funds accumulated at the same date is referred to as the unfunded actuarial 

pension liability. 

The economic assumptions (rate of return, inflation, and salary increases) are based upon the 

requirements of Statement of Federal Financial Accounting Standards (SFFAS) No. 33, 

Pensions, Other Retirement Benefits, and Other Postemployment Benefits: Reporting the 

Gains and Losses from Changes in Assumptions and Selecting Discount Rates and Valuation 

Dates. 

To calculate the actuarial pension liabilities for FY 2022 and FY 2021, the Office used a 

100-year yield curve of spot rates developed by Treasury’s Office of Economic Policy. The 

yield curve is based on a 10-year average of quarterly rates, consistent with the requirements 

of SFFAS No. 33. The assumptions for inflation and salary increases were also the average 

of 10-year historical values. 

For FY 2022, the assumptions used to calculate the pension liabilities were spot rates 

gradually increasing from 0.87 percent to discount FY 2023 payments, to a maximum of 

3.21 percent to discount longer term payments; annual inflation and cost-of-living 

adjustments of 1.88 percent for judges, 2.14 percent for teachers, and 2.15 percent for police 

officers and firefighters; and salary increases at an annual rate of 1.26 percent for judges, 

2.30 percent for teachers, 2.15 percent for police officers, and 2.20 percent for firefighters. 

The assumptions used to calculate the pension liabilities for FY 2021 were spot rates 

gradually increasing from 0.80 percent to discount FY 2022 payments, to a maximum of 

3.33 percent to discount longer term payments; annual inflation and cost-of-living 

adjustments of 1.65 percent for judges, 1.68 percent for teachers, and 1.75 percent for police 

officers and firefighters; and salary increases at an annual rate of 1.04 percent for judges, 

2.30 percent for teachers, 2.15 percent for police officers, and 2.20 percent for firefighters. 

53 
 

 

The economic assumptions used by the Office for the Police Officers and Firefighters’, 

Teachers’, and Judges’ Retirement Plans differ from those used by Office of Personnel 

Management (OPM) for the following reasons: (1) the annual rate of salary increase 

assumptions are based on different plan member experience; (2) the annual rate of inflation 

and cost-of-living adjustment assumptions are based on different statutory requirements 

(applicable Consumer Price Index and period of calculation); and (3) for the discount rate 

assumption, OPM and the Office use Treasury spot rate yield curves, but the averaging 

periods differ and OPM converts the yield curve to a single equivalent rate while for 

teachers, police officers, and firefighters, the Office uses the individual yield curve rates. 

i. Appropriations Received and Used 

Treasury is required to make annual payments from the General Fund of the Treasury to the 

D.C. Federal Pension Fund and Judicial Retirement Fund and to amortize the original 

unfunded liabilities assumed by the Federal Government and any subsequent changes in 

liabilities over a period of time and to fund the normal cost and necessary administrative 

expenses of the D.C. Federal Pension Fund and the Judicial Retirement Fund. The 

appropriations are received into the Office’s appropriation funds and are transferred out to 

the D.C. Federal Pension Fund and the Judicial Retirement Fund to be invested in nonmarketable GAS securities. The Office has permanent and indefinite appropriations to cover 

the Accrued Pension Benefits Payable, the Actuarial Pension Liability, and costs to 

administer the retirement plans. Congress has appropriated funds or funding is otherwise 

available to pay amounts due. In accordance with SFFAS No. 7, Accounting for Revenue 

and Other Financing Sources, the payment from the Office’s appropriation funds results in 

an appropriation used, as reported in the accompanying Consolidated Statements of Changes 

in Net Position. 

j. Treasury Employee Retirement Plans 

The D.C. Federal Pension Fund and Judicial Retirement Fund pay the salaries and benefits of 

Treasury employees who support the Office as reasonable and necessary expenses incurred in 

carrying out the Secretary’s responsibilities under the Act. In FY 2022 and FY 2021, Office 

staff salaries and benefits were split 95 percent and five percent between the D.C. Federal 

Pension Fund and the Judicial Retirement Fund. This split represents the level of effort 

required to manage the administrative activities for each fund. 

The Office’s employees participate in the Civil Service Retirement System (CSRS) or the 

Federal Employees Retirement System (FERS). FERS was established by Public 

Law 99-335. Pursuant to this law, FERS and Social Security automatically cover most 

employees hired after December 31, 1983. Employees hired before January 1, 1984, elected 

to either transfer to FERS or remain in CSRS. 

All employees are eligible to contribute to the Thrift Savings Plan (TSP). For employees 

participating in FERS, TSP accounts are automatically established, and the D.C. Federal 

Pension Fund and the Judicial Retirement Fund make mandatory contributions of one percent 

of the Treasury employees’ base pay to the accounts. In addition, the D.C. Federal Pension 

Fund and the Judicial Retirement Fund make matching contributions, ranging from one 

54 
 

percent to four percent of base pay, for FERS eligible employees who contribute to their TSP 

accounts. Pursuant to law, mandatory and matching contributions are not made to the TSP 

accounts established for CSRS employees. 

FERS employees and certain CSRS reinstatement employees participate in the Social 

Security program. The D.C. Federal Pension Fund and Judicial Retirement Fund remit the 

employer’s share of the required contributions for eligible employees. 

The D.C. Federal Pension Fund and Judicial Retirement Fund do not report information 

pertaining to the CSRS and FERS retirement plans covering Treasury employees. OPM is 

responsible for reporting amounts such as plan assets, accumulated plan benefits, and related 

unfunded liabilities, if any. 

k. President’s Budget 

The President’s Budget for 2024, which includes actuals for FY 2022, has not yet been 

published as of the date of these financial statements. The President’s Budget is currently 

expected to be published and delivered to Congress in early February 2023. The FY 2021 

Combined Statement of Budgetary Resources (SBR) was reconciled to the Program and 

Financing (P&F) Schedules within the President’s Budget for 2023, published in March 

2022, and there were no differences for obligations incurred, budgetary resources, status of 

budgetary resources, or net outlays. 

The President's Budget for 2023, which includes the Office’s budget within the Other 

Independent Agencies’ budget appendix, is available at the OMB website. 

l. Revenue and Financing Sources 

All proceeds received and deposited by the Office are used for the purpose of providing 

annuity payments for retired District of Columbia teachers, police officers and firefighters for 

services earned prior to July 1, 1997, and for retirement benefits earned by District of 

Columbia judges, regardless of when services were earned. 

Funding for the Judicial Retirement Fund is authorized by 111 Stat. 757, Sec. 11251, Public 

Law 105-33 as amended by 112 Stat. 2681-534, Sec. 804(a)(4), Public Law 105-277. 

Funding for the D.C. Federal Pension Fund is authorized by 118 Stat. 3967, Sec. 11084, 

Public Law 108-489. Sources of revenue or other financing sources for the years ended 

September 30, 2022, and 2021, were annual federal payments into the funds, reimbursable 

income, employee contributions, and interest earnings from investments. 

m. Income Taxes 

The Office, a component of an agency of the Federal Government, is not subject to Federal, 

state, or local income taxes and accordingly, no provisions for income taxes have been 

recorded in the accompanying consolidated financial statements. 

55 
 

 

n. Classified Activities 

Accounting standards require all reporting entities to disclose that the accounting standards 

allow certain statements and disclosures to be modified if needed to prevent the disclosure of 

classified information. 

o. Intra-Governmental Costs 

The Office reports intra-governmental costs resulting from the receipt of services provided 

on a reimbursable basis from other federal entities. 

In certain instances, other federal entities incur costs that are directly identifiable to the 

Office’s operations. In accordance with SFFAS No. 4, Managerial Cost Accounting 

Standards and Concepts, as amended, the Office recognizes identified costs paid on behalf of 

the Office by other federal entities. The imputed intra-governmental financing sources the 

Office currently recognizes include the actual cost of future benefits for the CSRS and FERS 

retirement plans and the Federal Employees Health Benefits Program, and Federal 

Employees Group Life Insurance Program that other federal entities pay on the Office’s 

behalf. Such costs appear on the Consolidated Statements of Net Cost and related funding 

appears as imputed financing sources on the Consolidated Statements of Changes in Net 

Position. 

p. Overall Estimates Disclosures 

The use of estimates in the preparation of financial statements requires management to make 

certain estimates and assumptions that effect the recorded amounts of assets and liabilities 

and the reported amount of revenues and expenses during the reporting period. Actual 

results could differ from those estimates. 

q. Entity Assets 

Entity assets are assets which the Office has authority to use in its operations. The Office 

reports entity assets on the Consolidated Balance Sheets. The Office does not have nonentity assets. 

r. Custodial Collections 

Custodial collections were $18.5 thousand and $7.2 thousand for the years ended September 

30, 2022 and 2021, respectively, and is related to interest and penalties on certain debts owed 

to the Office. Custodial collection activities are considered immaterial and incidental to the 

mission of the Office. 

s. Intragovernmental Other Liabilities 

Intragovernmental Other Liabilities were $56.7 thousand and $40.0 thousand for the years 

ended September 30, 2022 and 2021, respectively, and is related to employer contributions 

56 
 

 

 

and payroll taxes payable. Intragovernmental Other Liabilities activities are considered 

immaterial to the mission of the Office. 

2) Fund Balance with Treasury 

The Status of Fund balance with Treasury as of September 30, 2022 and 2021, consisted of 

the following (in thousands): 

2022 2021 

Status of Fund Balance with Treasury: 

Unobligated Balance - Available $ 527 $ 501 

Total $ 527 $ 501 

3) Federal Investments 

Federal Investments as of September 30, 2022 and 2021, consisted of the following 

(in thousands): 

2022 

Cost / 

Acquisition 

Value 

Amortized 

(Premium) 

Federal 

Investments 

Market 

Value 

Intragovernmental Securities 

Non-Marketable Par Value 

Non-Marketable Market-based 

Total 

$ 

$ 

229,628 

3,992,219 

4,221,847 

-

(26,893) 

(26,893) 

229,628 

3,965,326 

4,194,954 

229,628 

3,695,883 

3,925,511 

2021 

Cost / 

Acquisition 

Value 

Amortized 

(Premium) 

Federal 

Investments 

Market 

Value 

Intragovernmental Securities 

Non-Marketable Par Value $ 220,142 - 220,142 220,142 

Non-Marketable Market-based 3,950,967 (23,985) 3,926,982 3,996,416 

Total $ 4,171,109 (23,985) 4,147,124 4,216,558 

The amortization method utilized by the Office is the effective interest method. The market 

value for notes and bonds is calculated using rates as of September 30, 2022 and 2021, as 

published in the Treasury Quote Sheets prepared by Treasury’s Office of Market Finance. 

Included in these figures are a net unrealized loss of $269.4 million and a net unrealized gain 

of $69.4 million for the years ended September 30, 2022 and 2021, respectively. 

57 
 

The amortized cost of Federal Investments (including par value securities invested 

overnight) as of September 30, 2022 and 2021, by maturity date is as follows (in thousands): 

2022 2021 

Less than or Equal to 1 Year $ 804,091 $ 800,558 

More than 1 Year and Less than 

or Equal to 5 Years 2,260,116 2,264,251 

More than 5 Years and Less than 

or Equal to 10 Years 1,120,821 1,073,382 

More than 10 Years 9,926 8,933 

Total $ 4,194,954 $ 4,147,124 

4) Accounts Receivable, Net 

The components of Accounts Receivable, Net as of September 30, 2022 and 2021, are as 

follows (in thousands): 

2022 2021 

Accounts Receivable, Gross $ 3,793 $ 4,100 

Allowance for Loss on Accounts Receivable (1,779) (2,815) 

Taxes Receivable 14 9 

Accounts Receivable, Net $ 2,028 $ 1,294 

The Allowance for Loss on Accounts Receivable are attributed to debts resulting from 

benefit overpayments. Accounts Receivable, Net also includes criminal restitution. For 

FY 2022 and FY 2021, the Office reported criminal debt in the gross amount of 

$654.7 thousand, and $655.8 thousand, respectively. The net realizable value of the criminal 

debt reported in FY 2022 and FY 2021 was $55.9 thousand and $57.8 thousand, respectively. 

58 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5) Administrative Expenses 

Administrative expenses for the years ended September 30, 2022 and 2021, are as follows 

(in thousands): 

2022 2021 

Intragovernmental Expenses 

Salaries and Related Benefits $ 1,064 $ 980 

Contractual Services 5,507 5,166 

Rent 655 647

 Other - 3 

Total Intragovernmental Expenses 7,226 6,796 

Public Expenses 

Salaries and Related Benefits 3,064 2,998 

Contractual Services 11,795 11,145 

Other 53 (591) 

Total Public Expenses 14,912 13,552 

Total Administrative Expenses $ 22,138 $ 20,348 

6) Pension Expense and Actuarial Pension Liability 

Pension Expense and Actuarial Pension Liability for the years ended September 30, 2022 and 

2021, includes the following components (in thousands): 

2022 2021 

Beginning Liability Balance $ 8,010,108 $ 8,272,445 

Pension Expense: 

Normal Cost 6,800 6,400 

Interest on Pension Liability During the Period 67,189 71,418 

Actuarial (Gains) Losses During the Period: 

From Experience 384,154 (41,759) 

From Discount Rate Assumption Change 193,721 337,019 

From Other Economic Assumption Changes 326,315 (7,079) 

From Non-Economic Assumption Changes 27,942 (83,011) 

Pension Expense before Other / Non-Actuarial 

Adjustments 1,006,121 282,988 

Less Amounts Paid and Accrued: (555,216) (545,325) 

Ending Liability Balance $ 8,461,013 $ 8,010,108 

59 
Reconciliation to amounts reported in the Consolidated Statements of Net Cost 

(in thousands): 

2022 2021 

Pension Expense before Actuarial Assumption Changes: 

Normal Cost $ 6,800 $ 6,400 

Interest on Pension Liability During the Period 67,189 71,418 

Actuarial (Gain) Loss During the Period from Experience 384,154 (41,759) 

Total Pension Expense before Actuarial Assumption Changes 458,143 36,059 

Loss on Actuarial Assumption Changes, Net 

Actuarial (Gains) Losses During the Period: 

From Discount Rate Assumption Change 193,721 337,019 

From Other Economic Assumption Changes 326,315 (7,079) 

From Non-Economic Assumption Changes 27,942 (83,011) 

Total Loss on Actuarial Assumption Changes, Net 547,978 246,929 

Total Pension Expense $ 1,006,121 $ 282,988 

Federal Benefit Payments 

Federal pension benefits paid and accrued were $538.8 million and $16.4 million from the 

D.C. Federal Pension Fund and Judicial Retirement Fund, respectively, for 2022, and 

$530.5 million and $14.8 million, respectively, for 2021. In FY 2022, the Judicial 

Retirement Fund included a payment of $676.9 thousand for missed federal life insurance 

premiums. For FY 2022 and FY 2021, approximately $53.6 thousand and $26.5 thousand, 

respectively, represent contribution refunds to plan participants of the D.C. Federal Pension 

Fund and the Judicial Retirement Fund. 

Actuarial Gains and Losses 

In FY 2022, the Office reported a net liability actuarial loss in the D.C. Federal Pension Fund 

and the Judicial Retirement Fund. The liability actuarial losses were $193.7 million due to 

the new discount rate assumptions, $384.2 million from experience, $326.3 million due to 

changes in pay and cost-of-living assumptions, and $27.9 million due to other assumption 

changes which include the change in the mortality projection scale from MP-2020 to MP2021. The net result was a total liability actuarial loss of $932.1 million for the D.C. Federal 

Pension Fund and Judicial Retirement Fund. 

In FY 2021, the Office reported a net liability actuarial loss in the D.C. Federal Pension Fund 

and Judicial Retirement Fund. The liability actuarial losses were $337.0 million due to the 

new discount rate assumptions, which were offset by liability actuarial gains of $41.8 million 

resulting from experience, $7.1 million due to changes in pay and cost-of-living assumptions, 

and $83.0 million due to other assumption changes which include the change in the mortality 

projection scale from MP-2019 to MP-2020. The net result was a total liability actuarial loss 

of $205.1 million for the D.C. Federal Pension Fund and Judicial Retirement Fund. 

60 
 

 

 

 

 

 

7) Reconciliation of Net Cost of Operations to Agency Outlays, Net 

The Reconciliation of Net Cost of Operations to Agency Outlays, Net depicts the differences 

between proprietary financial accounting information and budgetary accounting information. 

Proprietary financial accounting information is intended to provide a picture of the 

government’s financial operations and financial position and is presented on an accrual basis. 

The accrual basis includes information about costs arising from the consumption of assets 

and the incurrence of liabilities. Budgetary accounting information is used for planning and 

control purposes and relates to both the receipt and use of cash. The reconciliation of net 

cost, presented on an accrual basis, and the net outlays, presented on a budgetary basis, 

provides an explanation of the relationship between financial accounting and budgetary 

information. The reconciliation serves to identify costs paid for in the past, those that will be 

paid in the future, and to assure integrity between financial and budgetary information. 

For the fiscal years ended September 30, 2022 and 2021, the Reconciliation of Net Cost of 

Operations to Agency Outlays, Net consisted of the following (in thousands):

 2022 2021 

Net Cost of Operations $ 964,847 $ 240,303 

Components of Net Cost of Operations Not Part of Outlays: 

Increase/(Decrease) in Assets Not Affecting Outlays: 

Accounts Receivable 734 (774) 

Total Increase/(Decrease) in Assets Not Affecting Outlays: 734 (774) 

(Increase)/Decrease in Liabilities Not Affecting Outlays: 

Accounts Payable and Advances from Others (3,033) 2,027

 Other Liabilities 144 686

 Other Liabilities - Actuarial Pension Liability (450,905) 262,337

 Other Liabilities - Accrued Pension Benefits Payable (1,879) 880 

Total (Increase)/Decrease in Liabilities Not Affecting Outlays: (455,673) 265,930 

Other Financing Sources:

 Imputed Financing Sources (211) (188)

 Other 679 626 

Total Other Financing Sources: 468 438 

Other 3,491 3,387 

Total Components of Net Cost of Operations Not Part of Outlays (450,980) 268,981 

Components of the Outlays That Are Not Part of Net Cost of

Operations: 

Changes in Premiums and Amortization of Premiums/Discounts (14,900) 37,427 

Changes in Interest Receivable 1,348 59 

Total Components of Outlays That Are Not Part of Net Cost of 

Operations (13,552) 37,486 

Agency Outlays, Net $ 500,315 $ 546,770 

61 
8) Additional Information Related to the Combined Statements of Budgetary Resources 

Net Adjustments to Unobligated Balance Brought Forward October 1 

During the years ended September 30, 2022 and 2021, adjustments were made to the balance 

of unobligated budgetary resources available as of October 1, 2021 and 2020. These 

adjustments primarily include Recoveries of Prior Year Unpaid Obligations that were 

obligated in prior years. Also, included in Other Changes in Unobligated Balances in FY 2022 is a 

prior year reimbursement paid to a non-federal entity. 

The adjustments during the years ended September 30, 2022 and 2021, are as follows 

(in thousands): 

2022 2021 

Unobligated Balance Brought Forward, October 1 $ 22,933 $ 21,479 

Recoveries of Prior Year Unpaid Obligations 330 4,441 

Other Changes in Unobligated Balances 780 60 

Unobligated Balance from Prior Year Budget Authority, Net 

(Discretionary and Mandatory) $ 24,043 $ 25,980 

Undelivered Orders 

Undelivered orders for the Office represent goods and services ordered and obligated which 

have not been received or paid. Undelivered orders as of September 30, 2022 and 2021, 

consisted of the following (in thousands): 

2022 

Federal Non-Federal Total 

Unpaid undelivered orders 

at the end of the year $ 210 $ 5,435 $ 5,645

Federal 

2021 

Non-Federal Total 

Unpaid undelivered orders 

at the end of the year $ 283 $ 5,836 $ 6,119 

62 
PART 4

Required

Supplementary

Information

(Unaudited)

Department o f the Treasury Departmental Offices Office o f D.C. Pensions

Combining Statements o f Budgetary Resources By Fund (Unaudited) For the Years Ended September 30, 2022 and September 30, 2021 (In Thousands)

See accompanying independent auditors' report.

2022 20

D.C. Judicial

Retirement and

Survivors Annuity Fund

D C. Federal

Pension Fund

Combined D C.

Pension Funds

Total

D.C. Judicial

Retirement and

Survivors Annuity Fund

D C F

Pensio

Budgetary Resources: Unobligated Balance from Prior Year Budget Authority, Net Appropriations (Discretionary and Mandatory) Spending Authority from Offsetting Collections S 14 36.374 s 24.029 1.097,383 304,238 S 24.043 1,133.757 304.238 s 1 34.059 s 

Total Budgetary Resources: S 36.388 $ 1.425.650 S 1,462.038 s 34,060 s 

Status of Budgetary Resources: New Obligations and Upward Adjustments S 36.388 s 1.398.880 26.770 $ 1,435.268 26.770 s 34,060 5 

Unobligated Balance Exempt from Apportionment, end of year 

Total Status of Budgetary Resources: S 36.388 s 1.425.650 S 1.462.038 s 34.060 S 

S 36.249

(19.422)

s 1.093.215

(609.727)

S 1,129.464 

(629.149)

s 34.022

(18.738)

5 

Outlays, Net: Outlays, Net (Discretionary and Mandatory) Distributed Offsetting Receipts Agency Outlays, Net (Discretionary and Mandatory) S 16.827 s 483.488 S 500.315 s 15.284 S 

65 
(This page intentionally left blank.) 

66 
PART 5

Other

I formation

(Unaudited)

Department of the Treasury

Departmental Offices

Office of D.C. Pensions

Consolidating Balance Sheets

By Fund (Unaudited)

As of September 30, 2022 and September 30, 2021

(In Thousands)

2022 2021

D C. Judicial D.C. Judicial

Retirement and D C Federal Consolidated D C. Retirement and D C Federal Consolidated D C.

Survivors Annuity Pension Fund Pension Funds Total Survivors Annuity Pension Fund Pension Funds Total

Fund Fund

Assets:

Intragovemmental

Fund Balance with Treasury

Investments, Net

S 128 S 399 S 527 S 104 S 397 S 501

Federal Investments 196.413 3.998.541 4.194.954 189.704 3.957.420 4.147.124

Interest Receivable 488 21.200 21.688 456 19.852 20.308

Total Intragovemmental 197.029 4.020.140 4.217.169 190.264 3.977.669 4.167.933

Other than Intragovemmental

Accounts Receivable, Net 3 2.025 2.028 3 1.291 1.294

Total Other than Intragovemmental 3 2.025 2.028 3 1.291 1.294

Total Assets S 197.032 S 4.022.165 S 4.219.197 S 190.267 S 3.978.960 S 4.169.227

Liabilities:

Intragovermental

Accounts Payable S 39 s 76 $ 115 5 S 8 s 8

Other Liabilities 3 54 57 2 38 40

Total Intragovemmental 42 130 172 2 46 48

Other than Intragovemmental

Accounts Payable 6 1.831 1.837 8 2.975 2.983

Advances from Others

Other Labilities

26.770 26.770 22.933 22.933

Accrued Pension Benefits Payable 1.327 45.651 46.978 1.213 43.886 45.099

Actuarial Pension Liability 294.513 8.166.500 8.461.013 275.210 7.734.898 8.010.108

Accrued Payroll and Benefits 28 533 561 24 464 488

Total Other than Intragovemmental 295.874 8.241.285 8.537.159 276.455 7.805.156 8.081.611

Total Liabilities S 295.916 s 8.241.415 $ 8.537.331 S 276.457 S 7.805.202 s 8.081.659

Net Position:

Cumulative Results of Operations -

Funds from Other than Dedicated Collections S (98.884) s (4.219.250) s (4.318.134) $ (86.190) S (3.826.242) s (3.912.432)

Total Net Position s (98.884) s (4.219.250) s (4.318.134) S (86.190) S (3.826.242) s (3.912,432)

Total Liabilities and Net Petition s 197.032 s 4 022 165 s 4 .2 1 9 .1 9 7 s 190.267 S 3.978.960 s 4 169 227

See accompanying independent auditors' report.

69
Department of the Treasury

Departmental Offices

Office of D.C. Pensions

Consolidating Statements of Net Cost

By Fund (Unaudited)

For the Years Ended September 30, 2022 and September 30, 2021

(In Thousands)

2022 2021

D.C. Judicial

Retirement and

Survivors Annuity

Fund

_ ^ . . Consolidated D. C. D.C. Federal _ . _ .

_ . _ . Pension Funds

Pension Fund _ . .

Toa

D.C. Judicial

Retirement and

Survivors Annuity

Fund

D.C. Federal

Pension Fund

Consolidated D.C.

Pension Funds

Total

Program Costs

Administrative Expenses $ 573 $ 21.565 $ 22.138 $ 459 $ 19.889 S 20.348

District Benefit Payments and Employer Share of

DC Health and Life Plans - 297.820 297.820 - 267.375 267.375

Pension Expense Before Actuarial Assumption Changes 25.997 432.146 458.143 15.477 20.582 36.059

Total Program Costs 26.570 751.531 778.101 15.936 307.846 323.782

Less: Earned Revenues

Reimbursable income - 300.401 300.401 - 270.387 270,387

Interest Earned 3,491 56.661 60.152 3,387 56.008 59.395

Employee Contributions 679 - 679 626 - 626

Total Earned Revenues 4.170 357,062 361.232 4,013 326.395 330.408

Net Program Costs Before Loss from Actuarial Assumption Changes 22.400 394.469 416.869 11.923 (18.549) (6.626)

Loss on Actuarial Assumption Changes, Net 9.727 538.251 547.978 7.890 239.039 246.929

Net Cost of Operations $ 32.127 $ 932.720 $ 964.847 $ 19.813 $ 220.490 $ 240.303

See accompanying independent auditors' report.

70
Department of the Treasury

Departmental Offices

Office of D.C. Pensions

Consolidating Statements of Changes in Net Position

By Fund (Unaudited)

For the Years Ended September 30, 2022 and September 30, 2021

(In Thousands)

Unexpended Appropriations

Beginning Balance

Appropriations Received

Appropriations Used

Net Change in Unexpended Appropriations

Total Unexpended Appropriations - Ending Balance

Cumulat ve Results of Operations

Beginning Balance

Appropriations Used

Imputed Financing

Net Cost of Operations

Net Change in Cumulative Results of Operations

Total Cumulative Results of Operations - Ending Balance

Net Position

See accompanying independent auditors' report

2022______________________________________________________ 2021

D C. Judicial

Retirement and

Survivors Annuity

Fund

D C Federal

Pension Fund

Consolidated D C.

Pension Funds Total

D C Judicial

Retirement and

Survivors Annuity

Fund

D C Federal

Pension Fund

Consolidated D C.

Pension Funds Total

S - $ - S - $ - $ - S

19,422 539,512 558,934 18,738 576,504 595,242

(19422) (539.512) (558.934) (18.738) (576,504) (595,242)

•

$ (86,189) $ (3,826,243) $ (3,912,432) $ (85,124) $ (4,182,435) S (4,267,559)

19,422 539,512 558.934 18,738 576,504 595,242

10 201 211 10 178 188

(32.127) (932.720) (964.847) (19.813) (220.490) (240.303)

(12,695) (393,007) (405,702) (1.065) 356,192 355,127

S (98.884) $ (4.219.250) S (4.318,134) $ (86.189) S (3.826.243) S (3.912.432)

$ (98.884) $ (4.219.250) S (4.318.134) S (86.189) $ (3.826.243) S (3.912.432)

7 1
Department of the Treasury

Departmental Offices

Office of D.C. Pensions

Schedule of Pension Expense - by Fund (Unaudited)

For the Years Ended September 30, 2022 and September 30, 2021

(■n Thousands)

2022 2021

Beginning Liability Balance

Pension Expense

Normal Cost

Interest on Pension Liability Dunng the Penod

Actuarial (Gains) Losses During the Period

From Experience

From Discount Rate Assumption Change

From Other Economic Assumption Changes

From Non-Economic Assumption Changes

Pension Expense before Other/Non-Actuanal Adjustments

Less Amounts Paid and Accrued

Ending Liability Balance

See accompanying independent auditors' report

D C. Judicial

Retirement and

Survivors Annuity

Fund

D C. Federal

Pension Fund

Consolidated D C.

Pension Funds Total

D C Judicial

Retirement and

Survivors Annuity

Fund

D C Federal

Pension Fund

Consolidated D C.

Pension Funds Total

$ 275,210 $ 7,734,898 $ 8,010,108 $ 266,677 $ 8,005,768 S 8,272,445

6,800 . 6,800 6,400 6.400

7,115 60,074 67,189 7,586 63,832 71,418

12,082 372,072 384,154 1,491 (43,250) (41,759)

1,278 192,443 193,721 7,560 329,459 337,019

7,413 318,902 326,315 3,741 (10,820) (7,079)

1.036 26.906 27942 (3,412) (79.599) (83.011)

35.724 970.397 1.006.121 23.366 259.622 282.988

(16,421) (538,795) (555,216) (14,833) (530,492) (545.325)

$ 294.513 S 8.166.500 $ 8.461.013 S 275.210 $ 7.734.898 S 8.010.108

72
 

 

Actuarial Valuation Report FY 2022 (unaudited) 

Executive Summary 

Highlights of the Actuarial Valuation 

The actuarial valuation report has been completed for the following program for the most recent plan year: 

United States Department of the Treasury District of Columbia Pensions Program (Program) 

The Program refers to the federal responsibility for benefit payments under the following District of Columbia 

(D.C.) retirement plans: District of Columbia Police Officers and Firefighters' Retirement Plan, District of 

Columbia Teachers' Retirement Plan, and District of Columbia Judges' Retirement Plan. The designated assets 

for the federal administration of these plans are held in two separate funds. The District of Columbia 

Teachers, Police Officers and Firefighters Federal Pension Fund (“D.C. Federal Pension Fund”) covers federal 

payments under the District of Columbia Police Officers and Firefighters' Retirement Plan and District of 

Columbia Teachers' Retirement Plan. The Judicial Retirement and Survivors Annuity Fund (“Judicial 

Retirement Fund”) covers payments under the District of Columbia Judges' Retirement Plan. 

The purpose of this report is to present the results of the actuarial valuation including: 

ł	 To illustrate the current assets and liabilities of each Plan as of the end of Fiscal Year (FY) 2022 

(October 1, 2021 through September 30, 2022);
 

ł	 To review the experience of the Program over the past year and to discuss reasons for changes in 

Program costs; 

ł	 To determine the appropriate contribution to be paid by the Department of the Treasury to the Funds in 

FY 2023 (October 1, 2022 through September 30, 2023); and 

ł	 To identify and discuss any emerging trends in Program costs. 

This report also includes certain statement line items and footnote disclosures necessary to compute the 

annual pension expense in accordance with Statement of Federal Financial Accounting Standards No. 5, 

Accounting for Liabilities of the Federal Government, and No. 33, Pensions, Other Retirement Benefits, and 

Other Postemployment Benefits: Reporting the Gains and Losses from Changes in Assumptions and Selecting 

Discount Rates and Valuation Dates (SFFAS 5 and SFFAS 33). Use of the valuation results for other purposes 

may not be appropriate. 

Summary of Results 

As of October 1, 2022 

Police Officers and 

Firefighters', and 

Teachers' Plans 

Judges' Plan

Unfunded Actuarial Accrued Liability 

Actuarial Accrued Liability 

Plan Assets 

$ 

$ 

4,220,547,568 

8,212,151,289 

(3,991,603,721) 

$ 

$ 

99,028,419 

295,839,904 

(196,811,485) 

Normal Cost with Interest (including expected 

employee contributions) N/A $ 7,400,000 

73
	
Executive Summary 

Highlights of the Actuarial Valuation 

Summary of Gains and Losses 

As part of the review of the valuation, an actuarial gain/loss analysis was performed. Expected liabilities and 

plan assets were developed presuming all demographic and economic assumptions from the prior valuation 

were realized during the plan year. These expected values were then compared to the actual results. The 

factors causing the liabilities or assets to be greater than expected (a loss for liabilities and a gain for assets), 

or smaller than expected (a gain for liabilities and a loss for assets) were isolated. Differences in liability not 

directly attributable to experience different than assumed, such as changes in assumptions and methods, 

were separately measured from this process. 

The different sources of gains and losses, as well as their individual impacts, are outlined below. 

Source of Liability (Gain)/Loss due to Actuarial Experience 

Police Officers and 

Source of Demographic (Gain)/Loss Firefighters', and Judges' Plan 

Teachers' Plans 

(Gains)/Losses due to Plan Experience: 

Active Decrements $ (2,749,548) $ 1,800,456 

Inactive Mortality (28,365,549) 580,655 

Salary Increase (2,008,987) 839,866 

New Entrants N/A 

Cost-of-Living Adjustment (COLA) 

Different than Expected 378,335,821 8,166,957 

(Gains)/Losses due to Census Changes: 28,863,753 846,268 

(Gains)/Losses due to New Terminated Vested 

Plan Members: N/A 

(Gains) / Losses due to New Actives Due to 

Ongoing Data Management: 

Total $ 374,075,490 $ 12,234,202 

We have provided clarification on these items below: 

• (Gains)/Losses due to Plan Experience: The liability for each plan is expected to change based on 

certain demographic and economic assumptions; however, actual plan experience will differ to some 

degree. This creates (gains) or losses due to plan experience being different than expected with 

these assumptions. This includes the following primary factors: 

• Active Decrements: The actuarial valuation assumes that each active plan member has 

a particular probability of terminating, retiring, becoming disabled, or becoming deceased in each 

year. An individual (gain) or loss is generated based on the plan member's actual status in the 

current valuation year based on the difference from what was expected. The gain for the Police 

Officers and Firefighters' and Teachers' Plans is primarily due to favorable retirement experience with 

more Police Officers and Firefighters retiring than expected. For the Judges' Plan, there was one new 

disability retirement granted and one judge retiring earlier than anticipated, resulting in a loss. 

74
	
Executive Summary 

Highlights of the Actuarial Valuation 

• Inactive Mortality: The actuarial valuation assumes that each inactive plan member has 

a particular probability of becoming deceased in each year. An individual (gain) or loss is generated 

based on whether the plan member actually dies during the year. The gain shown for the 

Police Officers and Firefighters' and Teachers' Plans is driven by plan members in pay status dying at an 

earlier age and in greater number than expected in the past year. For the Judges' Plan there was a 

mortality loss despite the number of deaths being as expected. The total liability of those that died was 

less than expected resulting in a loss. Smaller populations are expected to experience larger deviations 

from expected year-over-year than a larger population, as individual deaths or survivorship have a 

more significant relative impact on the liability than in a larger population. Long-term gains and losses 

are expected to offset each other with experience aligning to the assumed mortality probabilities. 

• Salary Increase: The actuarial valuation assumes that salaries for active plan members 

will increase by a certain amount. An individual (gain) or loss is generated for each plan member 

based on their actual salary amount reported in the current valuation. A gain is reported when 

a plan member's actual salary is lower than the expected amount, and a loss is reported when a 

plan member's actual salary is higher than the expected amount. The gain for the Police Officers 

and Firefighters' and Teachers' Plans is due in part to the fact that there was no collectively bargained 

pay increase. The loss for Judges' Plan is due to the actual salary increases exceeding the assumed 

rate. 

• New Entrants: The actuarial valuation incurs a loss whenever new members enter the plan with 

past service. The Police Officers and Firefighters' and Teachers' Plans are closed and will never incur 

a gain or loss due to this reason. The Judges' Plan did have seven new entrants but the individuals 

did not join with past service, therefore there is no (gain) or loss. 

• COLA Different Than Expected: The actuarial valuation assumes that retirement benefits for 

inactive plan members that are receiving benefits will increase by a certain amount. An individual 

(gain) or loss is generated for each plan member based on their actual benefit amount reported in the 

current valuation. Inflation for 2021 was significantly above recent history creating higher actual COLA 

percentages than expected and driving losses in both the Police Officers and Firefighters' and Teachers' 

Plans and the Judges’ Plan. The actual COLA for Police Officers and Firefighters was 7.00% compared to 

the 1.75% assumption. The actual COLA for Teachers was 7.80% compared to the 1.68% assumption. 

The actual COLA for Judges was 5.90% compared to the 1.65% assumption. 

• (Gains)/Losses due to Census Changes: Each year, ODCP prepares the census data that will be used as 

the basis for the annual valuation. Inevitably, there will be updates to the census data beyond those that we 

would expect due to the passage of time. This category of (gain)/loss is described in more detail below. 

For the Police Officers and Firefighters' and Teachers' Plans, the net loss amount was $28.9 million and 

includes the following: 

• A $24.9 million loss resulting from new beneficiaries following the death of plan members for
 

whom the chosen form of payment was unknown.
 

• A $1.6 million gain resulting from active plan members who retired or terminated within the past 

year, primarily due to benefits calculated at retirement different than previously estimated or those 

who were not eligible to begin benefits in the prior valuation. 

• A $5.6 million net loss resulting from ongoing data management, including unexpected changes
 

to data fields such as hire date, salary, service, etc.
 

75
	
Executive Summary 

Highlights of the Actuarial Valuation 

For the Judges' Plan, the total loss amount of $846,000 includes the following: 

• A $250,000 net loss resulting from active plan members who retired or terminated 

within the past year, primarily due to benefits calculated at retirement different than previously 

estimated. 

• A $338,000 net loss resulting from ongoing data management, including unexpected changes 

to data fields such as hire date, salary, service, etc. 

• A $240,000 loss resulting from data updates for continuing inactive plan members, primarily due 

to additional spouse information provided with these spouses being younger than assumed. 

• A $18,000 loss resulting from new beneficiaries following the death of plan members. 

76
	
Executive Summary 

Highlights of the Actuarial Valuation 

Source of Asset (Gain)/Loss due to Actuarial Experience 

Asset ( . Garn )/Loss D.C. Federal Pension 

Fund d. • Ju 1c1a 1 Retirement • Fun d

Beginning of Year Assets $ 3,952,499,961 $ 190,105,319 

Expected Return on Assets 29,388,331 4,821,393 

Actual Return on Assets 57 529 332 3 621 848 

Asset (Gain)/Loss $ (28,141,001) $ 1,199,545 

The plan assets experienced the following rates of return during the prior plan year: 

D.C. Federal Pension Jud.. 1c1a I R e t· 1remen t F und Fund 

Assets 1.46% 1.89% 

As noted on page 55 of this report in the Interest Rates for (Gain)/Loss section, the expected return on assets 

for the Judicial Retirement Fund is based on the prior year effective interest rate of 2.65% while the D.C. 

Federal Pension Fund's expected return on assets is based on the first rate on the prior year's yield curve, 

0.80%. The Judicial Retirement Fund experienced a lower-than-anticipated return of 1.89% on fund assets 

and the D.C. Federal Pension Fund experienced a higher-than-anticipated return of 1.46% on fund assets, 

thus resulting in an asset loss and an asset gain, respectively. 

Changes in Plan Provisions from the Previous Valuation 

The valuation for the current plan year was based on the same plan provisions as the valuation for the prior 

plan year. We are not aware of any other changes to the plans since the last valuation. 

A full summary of the plan provisions and plan changes for each plan (if any) can be found later in this report 

in Appendix C: Plan Provisions Summary. 

77
	
Executive Summary 

Highlights of the Actuarial Valuation 

Source of Liability (Gain)/Loss due to Changes in Actuarial Assumptions from the 

Previous Valuation 

Assumption Change 

Police Officers and 

Firefighters', and 

Teachers' Plans 

Judges' Plan 

Discount Rate Assumption 

Other Economic Assumptions 

Non-Economic Assumptions 

Total 

$ 

$ 

192,442,985 

318,901,321 

26,906,626 

538,250,932 

$ 

$ 

1,277,578 

7,413,303 

1 035 828 

9,726,709 

The discount rate assumption was updated according to prescribed guidance. 

(EIR) for all plans decreased, causing a loss. 

The Effective Interest Rate 

For the Police Officers and Firefighters' and Teachers' Plans and Judges' Plan, the cost-of-living adjustment 

(COLA) for annuitants increased causing a loss. For the Police Officers and Firefighters' and Teachers' Plans, 

the review of the wage inflation assumption resulted in no change to the assumption for these plans. For the 

Judges' Plan, the other economic assumption change was an increase to the salary increase assumption for 

active plan members which caused a loss. A detailed description of the changes since prior year is available in 

Appendix A: Actuarial Assumptions and Methods. 

For the Police Officers and Firefighters', and Teachers' Plans, and the Judges' Plan, the updated mortality 

projection scale to MP-2021 was the only impact for non-economic assumptions. A complete description of the 

actuarial assumptions and rationale can be found in Appendix A: Actuarial Assumptions and Methods and 

Appendix B: Rationale. 

78
	
Executive Summary 

Highlights of the Actuarial Valuation 

Government Contributions 

This report includes a calculation of the Government Contribution required to be made before the end of 

FY 2023 (excluding the reimbursement for expenses). The table below contains Government Contribution 

(excluding expenses) for FY 2022 and FY 2023. 

Government Contribution 

(excluding expenses) 

Contribution Year 

D.C. Federal Pension Fund Judiciary Retirement Fund 

September 30, 2022 $ 520,900,000 $ 18,900,000 

September 30, 2023 $ 589,600,000 $ 22,000,000 

The increase/(decrease) in the Government Contribution amounts from FY2022 to FY2023 is explained in the 

table below. 

Police Officers and 

Firefighters', and Judges' Plan 

Teachers' Plans 

Full amortization of the 10/1/2012 Experience 

gain/loss $ (500,000) $ 400,000 

New amortization base for the 10/1/2022 

Experience gain/loss 38,000,000 1,500,000 

New amortization base for the 10/1/2022 

Assumption change gain/loss 31,200,000 600,000 

Normal Cost change 600,000 

Employee Contribution change 

Total $ 68,700,000 $ 3,100,000 

79
	
 

Executive Summary 

Actuarial Valuation Opinion 

This report presents the results of the actuarial valuation of the Program as of October 1, 2022. In our 

opinion, this report is complete and accurate and represents fairly the actuarial position of the Program for 

the purposes stated herein. 

This actuarial valuation has been prepared based upon plan member data and plan provisions provided by 

the Department of the Treasury as of May 1, 2022 (plan data was projected to September 30, 2022 by 

adjusting for expected mortality for inactive plan members) and the estimated asset information projected 

by the Department of the Treasury to September 30, 2022 (provided on September 7, 2022). 

We have reviewed the data and other information provided for reasonableness, but have not independently 

audited the data or other information provided. We have no reason to believe the data and other information 

provided are not complete and accurate, and know of no further information that is essential to the 

preparation of the actuarial valuation. 

In our opinion, all costs, liabilities, rates of interest, and other factors underlying these actuarial 

computations have been determined on the basis of actuarial assumptions and methods. Each are 

reasonable (or consistent with authoritative guidance) for the purposes described herein taking into account 

the experience of the plans and future expectations. Rates of interest used in this valuation are provided by 

ODCP and are consistent with authoritative guidance. All other assumptions are reasonable for the purposes 

described herein. 

Future actuarial measurements may differ significantly from the current measurements presented in this 

report due to such factors as the following: 

ł	 Plan experience differing from that anticipated by the economic or demographic assumptions; 

ł	 Changes in economic or demographic assumptions; 

ł	 Increases or decreases expected as part of the natural operations of the methodology used for these 

measurements (such as the end of an amortization period or additional cost or contribution 

requirements based on each plan's funded status); and 

ł	 Changes in plan provisions or applicable law. 

Our scope did not include analyzing the potential range of such future measurements; therefore, this 

analysis was not performed. 

The undersigned with actuarial credentials collectively meet the Qualification Standards of the American 

Academy of Actuaries to render the actuarial opinions contained herein. 

This report was prepared solely for the benefit and internal use of the Department of the Treasury. This 

report is not intended for the benefit of any other party and may not be relied upon by any third party for 

any purpose, and Deloitte Consulting LLP accepts no responsibility or liability with respect to any party other 

than the Department of the Treasury. 

To the best of our knowledge, no employee of the Deloitte U.S. Firms is an officer or director of the 

employer. In addition, we are not aware of any relationship between the Deloitte U.S. Firms and the 

employer that may impair or appear to impair the objectivity of the work detailed in this report. 

DELOITTE CONSULTING LLP 

Jeffrey Rees, FSA, MAAA, FCA Michael de Leon, ASA, MAAA, FCA 

Enrolled Actuary No. 20-05941 Enrolled Actuary No. 20-06450 

1RYHPEHU , 2022 1RYHPEHU , 2022 

80
	
Executive Summary 

Summary of Results 

Police Officers and Firefighters', and Teachers' Plans 

Plan Member Counts 

Actives 

Terminated Vested 

Annuitants 

Total 

Contributions 

Federal Required Contribution 

Present Value of Benefits (PVB) 

Active Plan Members 

Retirement Decrement 

Termination Decrement 

Disability Decrement 

Death Decrement 

Total 

Inactive Plan Members 

Normal Retirees1 

Terminated Vested 

Disabled Retirees1 

Beneficiaries 

Total 

Total PVB (inactive and active) 

Valuation Date 

October 1, 2022 October 1, 2021 

567 803 

260 269 

13 042 13 187 

13,869 14,259 

589,600,000 $ 520,900,000 

188,015,325 $ 261,499,178 

608,695 838,561 

226 941 341 683 

$ 

$ 

$ 

$ 

$ 

$ 

Unfunded Actuarial Accrued Liability (AAL) 

Active AAL $ 

Inactive AAL 

Total AAL $ 

Asset Value as of Valuation Date $ 

Unfunded AAL $ 

188,850,961 $ 262,679,422 

6,478,696,504 

39,511,106 

649,529,509 

855,563,209 

8,023,300,328 

$ 

$ 

6,053,132,279 

37,234,971 

646,661,754 

779 076 374 

7,516,105,378 

8,212,151,289 $ 7,778,784,800 

188,850,961 

8,023,300,328 

8,212,151,289 

$ 

$ 

262,679,422 

7,516,105,378 

7,778,784,800 

(3,991,603,721) $ (3,952,499,961) 

4,220,547,568 $ 3,826,284,839 

Throughout this report, former spouses receiving benefits under a qualified domestic relations order are not included in 

counts. Their benefit amounts are included with their associated retired plan member. 

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57 

Executive Summary 

Summary of Results 

Judges' Plan 

Valuation Date 

October 1, 2022 October 1, 2021 

Plan Member Counts 

Actives 57 

Terminated Vested 

Annuitants 106 103 

Total 163 160 

Contributions 

Government Contribution ( excluding expenses) $ 22,000,000 $ 18,900,000 

Present Value of Benefits (PVB) 

Active Plan Members 

Retirement Decrement $ 150,387,774 $ 137,957,809 

Termination Decrement 

Disability Decrement 

Death Decrement 863 254 727 995 

Total $ 151,251,028 $ 138,685,804 

Inactive Plan Members 

Normal Retirees1 $ 201,038,833 $ 181,812,743 

Terminated Vested 

Disabled Retirees1 4,252,423 2,099,448 

Beneficiaries 10 168 034 9 866 579 

Total $ 215,459,290 $ 193,778,770 

Total PVB (inactive and active) $ 366,710,318 $ 332,464,574 

Unfunded Actuarial Accrued Liability (AAL) 

Active AAL $ 80,380,614 $ 82,643,594 

Inactive AAL 215,459,290 193 778 770 

Total AAL $ 295,839,904 $ 276,422,364 

Asset Value as of Valuation Date $ (196,811,485) $ (190,105,319) 

Unfunded AAL $ 99,028,419 $ 86,317,045 

Total Normal Cost $ 7,400,000 $ 6,800,000 2 

Employee Contributions (600,000) (600,000) 

Net Employer Normal Cost $ 6,800,000 $ 6,200,000 

Throughout this report, former spouses receiving benefits under a qualified domestic relations order are not included in 

counts. Their benefit amounts are included with their associated retired plan member. 

2This was inadvertently net of employee contributions in the October 1, 2021 valuation report. 

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