Department of the Treasury 
 

Office of D.C. Pensions
 

FISCALYEAR 

2020 

ANNUAL REPORT 

District of Columbia Pensions Program

 

 

MESSAGE FROM THE DIRECTOR 

December 2020 

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

Year (FY) 2020 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, 2020, the District of Columbia Judicial Retirement and Survivors Annuity Fund, and 

the District of Columbia Federal Pension Fund held assets totaling $4.1 billion. During FY 2020, 

$777.5 million in benefit payments were processed for annuitants and beneficiaries, and refunds of 

employee contributions were made 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 2020 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 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. Two significant 

enhancements will be implemented in FY 2021, which includes the automation of off-cycle 

payments in November 2020 and the introduction of annuitant self service in June 2021. In addition, 

significant program initiatives were executed this year: the Multi-Year Plan updated for FY 2021 – 

FY 2022; the Long-Term Business Planning project continued; and SharePoint, the Office document 

repository, upgraded to the 2016 version. 

The entire staff from the D.C. Pensions Program demonstrated great resilience during the COVID-19 

global pandemic where the interruption changed the work environment. With little notice, staff 

shifted to a fully remote work environment requiring tremendous 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 well-being of staff while exploring 

opportunities to enhance efficiency and effectiveness in a remote working environment. 

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. 

Nancy A. Ostrowski, Director 

Office of D.C. Pensions 

Department of the Treasury 
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 .................4 

IV. Limitation of the Financial Statements ...........................................................................33 

PART 2 INDEPENDENT AUDITORS’ REPORT 

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

PART 3 FINANCIAL STATEMENTS AND NOTES
 

Consolidated Balance Sheets ..........................................................................................43 

Consolidated Statements of Net Cost .............................................................................44 

Consolidated Statements of Changes in Net Position.....................................................45 

Combined Statements of Budgetary Resources ..............................................................46 

Notes to Financial Statements.........................................................................................47 

PART 4 REQUIRED SUPPLEMENTARY INFORMATION (Unaudited) 

Combining Statements of Budgetary Resources.............................................................63 

PART 5 OTHER INFORMATION (Unaudited) 

Consolidating Balance Sheets – By Fund .......................................................................67 

Consolidating Statements of Net Cost – By Fund ..........................................................68 

Consolidating Statements of Changes in Net Position – By Fund..................................69 

Schedule of Pension Expense – By Fund .......................................................................70 

Actuarial Valuation Report FY 2020 (Executive Summary) ..........................................71 
(This page intentionally left blank.) 
 

 

PART 1 

Management’s 

Discussion and 

Analysis 

(Unaudited) 

MANAGEMENT'S DISCUSSION AND ANALYSIS
 

FISCAL YEAR 2020 (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 

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

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

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 
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, and program management. The Office 

coordinates with many District entities and stakeholders 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, Information Technology Systems Administration, Finance and Resource 

Administration, and Program Management. 

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

functions for certain District of Columbia retirement plans. Approximately 

$777.5 million in Federal and District benefit payments were made to annuitants and 

beneficiaries for the year ended September 30, 2020. 

 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 $4.1 billion as of September 30, 2020. 

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

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) 

2 
 

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. 

As of September 30, 2020, the D.C. Federal Pension Fund and the Judicial Retirement 

Fund paid for 19 Treasury positions. In addition, the Office funds two 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) 2020, 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) entities to execute responsibilities under the 

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

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

the last seven months of FY 2020. With little notice, the Office shifted to a fully remote 

operating environment. This is the first time the Office has executed its missions for an 

extended period where staff, our service providers, and business partners have worked 

together in a 100% telework environment. This unanticipated change required 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 

3 
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 supports long-term strategic planning with a focus on 

program oversight, quality management, risk management, and performance 

management. The Office’s Multi-Year Plan was updated for FY 2021 — FY 2022. The 

Multi-Year Plan allows the Office to look at the program holistically and collaborate on 

planning and decision-making. A team comprised of the Director, Senior Program 

Manager, Risk Manager, Assistant Director for Benefits Administration, Assistant 

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

Information Technology Systems Administration, continued with a Long-Term Business 

Planning (LTBP) project focusing on the review of the Act. 

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 following sections of the 

Management’s Discussion and Analysis provide more details about the FY 2020 program 

results and plans for future years. 

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) 2018 — FY 2022 Strategic Goals and Objectives. The Treasury Strategic 

Goal that the Office contributes to is Achieve Operational Excellence, as shown below. 

Treasury Strategic Goal: Achieve Operational Excellence 

Strategic Objectives: 

 Workforce Management 

 Customer Value and Experience 

4 
Office Strategic Goals that contribute to the Treasury Strategic Goal: 

1. Office Strategic Goal: Effectively Managed Finances 

Office Outcomes: 

 Benefit payments are accurate and timely 

 Pension funds are effectively invested 

 Pension funds are effectively managed 

 Pension funds meet future needs 

2. Office Strategic Goal: Management and Organizational Excellence 

Office Outcomes: 

 Program is effectively managed 

3. Office Strategic Goal: Effective Quality Assurance Program 

Office Outcomes: 

 Program creates continuous improvement 

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

Outcomes linked to Treasury’s FY 2018 — FY 2022 Strategic Goal. It also identifies the 

Office’s Performance Measures and Results. 

5 
Office of D.C. Pensions Strategic Goals, Objectives, Outcomes, Performance Measures and Results

Fiscal Years 2018 - 2022 Fiscal Year 2020

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

Achieve

Operational

Excellence

Workforce 

Management

Effectively

Managed

Finances

Skilled staff and

technology are available to

administer benefits

Benefit payments are

accurate and timely

FY 2020 projected monetary

error rate for benefit

calculations

Target: 5% or less

Actual: 11.2% (See footnote 1)

STAR is available to users

Target: 99% or more

Actual: 99.96%

Skilled staff and funds are

available to manage

financial activities

Pension fluids are

effectively invested

FY 2020 investment strategy

executed timely

Target: 100%

Actual: 100%

FY 2021 investment strategy

developed timely

Target: September 25, 2020

Actual: September 23, 2020

Pension fluids are

effectively managed

FY 2020 minimum daily cash

balance exceeds the minimum

balance as defined in the

FY 2020 investment strategy

Target: 100%

Actual: 100%

FY 2020 annual contribution 

from General Fund received

timely into pension fluids

Target: September 28. 2020

Actual: September 28. 2020

6
Fiscal Years 2018 - 2022 Fiscal Year 2020

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

Achieve

Operational

Excellence

(continued)

Workforce 

Management

(continued)

Effectively

Managed

Finances

(continued)

Skilled staff and funds are

available to manage

financial activities

(continued)

Pension fluids are

effectively managed

(continued)

Monthly benefit payments

made to annuitants by the first

business day ofthe month 

Target: 100%

Actual: 100%

Electronic benefit payments

made to annuitants

Target: 98.7%

Actual: 98.8%

Pension fluids meet

future needs

FY 2020 request for annual

contribution from General Fluid

prepared timely

Target: September 24, 2020

Actual: September 23, 2020

Customer Value and

Experience

Management

and

Organizational

Excellence

Skilled staff and

management tools are

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 2020 financial statement

audit opinion received from an

independent external auditor

Target: Unmodified opinion

Actual: Unmodified opinion

7
Fiscal Years 2018 - 2022 Fiscal Year 2020

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

Achieve

Operational

Excellence

(continued)

Customer Value and

Experience

(continued)

Management

and

Organizational

Excellence

(continued)

Skilled staff and

management tools are

available (continued)

Program is

effectively managed

(continued)

FY 2020 Annual Report and

Financial Statements printed 

Target: December 18. 2020

Actual: December 18, 2020 (eta)

FY 2019 open material

weakness on

September 30. 2020

Target: 0

Actual: 0

FY 2020 Actuarial Valuation

Report delivered timely

Target: September 21, 2020

Actual: September 21, 2020

Effective

Quality 

Assurance

Program

Quality plans are

operational in each area

Program creates

continuous

improvement

FY 2020 Quality Assurance

Plans approved by

September 30. 2020

Target: 100%

Actual: 100%

Footnotes:

1) The monetary error rate for FY 2020 showed a slight increase over the 8.2% monetary errorrate in FY 2019. The increase in the error rate may be

attributed to process changes made to adapt to a virtual work environment due to COVID-19.

8
A. Benefitpayments are accurate and timely

1. Program Results

a. Benefits Administration

General Operations

Benefits administration services were provided to annuitants and beneficiaries in three

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

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

beneficiary population as of September 30, 2020, is as follows: teachers 5,776; police

officers and firefighters 8,489; and judges 104.

The average monthly Federal and District benefit payments in FY 2020 was $64.8 million.

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

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

District ofColumbia 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 ofnew 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 oftransaction 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 ofthe

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

retirement plans was 98.8 percent.

9
The table below illustrates the EFT participation rates for annuitants by retirement plan as of

September 30:

District of Columbia Retirement Plans

Electronic Funds Transfer (EFT)

Participation Rate

FY 2020 FY 2019

Police Officers & Firefighters 98.6% 98.5%

Teachers 99.0% 99.0%

Judges 100.0% 100.0%

In FY 2020, a variety of outreach efforts continued to ensure that accurate and timely

information was provided to annuitants, including:

Letters notifying annuitants when their benefits changed;

DCRB newsletters which provides retirement plan information for active and retired

police officers, firefighters, and teachers;

Earning statement messages alerting annuitants to changes in benefits such as a cost-ofliving adjustments (COLA), informing annuitants ofthe opportunity to make changes to

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

updating mailing addresses), and providing information regarding customer service

improvements;

Letters to retiredjudges providing information regarding the COLA effective

December 2019; and

Letters to retiredjudges announcing Federal Employees Dental and Vision Insurance

Programs (FEDVIP) and Federal Employees Health Benefits (FEHB) Program open

seasons.

Annuitant Payroll Operations

Pursuant to an Interagency Agreement (IAA) with the Treasury’s Bureau ofthe 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 monthly benefit

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

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

ensure the annuitant payroll is processed correctly.

In FY 2020, ARC Pension Payroll staffmade 173,063 Federal and District benefit payments

totaling approximately $777.5 million for a monthly average of $64.8 million. These

monthly benefits represent payments for annuitants, beneficiaries, and Qualified Domestic

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

$944.9 thousand were paid to annuitants when benefits were not processed in time for the

regular on-cycle schedule.

10
 

During FY 2020, 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. ARC Pension Payroll also provided 

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

communications are distributed in an efficient and timely manner. 

In FY 2020, 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 2020, the Office continued to collaborate with DCRB to focus on key benefit 

activities and data integrity. In support of these efforts, the Office contracted with a 

consulting firm with experience in benefits administration to assist with benefit 

administration support activities. This allows the Office to have maximum flexibility to 

simultaneously execute various benefit activities and projects. 

In an effort to make benefits administration process improvements, the Office continued to 

make incremental improvements, which included completing enhancements to the Payment 

Review Tracking Tool, improving STAR functionality for STAR users, incorporating DCRB 

staff input for topics to cover during the monthly Quality Assurance Forums, and assessing 

the training needs to address quality review findings and to fill in knowledge gaps. 

During FY 2020, the Office discovered that Judges who elected the optional survivor benefit 

after they were appointed to the bench may not have made survivor contributions back to the 

date of appointment. In FY 2021, the Office will coordinate with the D.C. Courts Human 

Resources Office to communicate with the affected Judges about their options. 

In FY 2021, the Office will develop a quality management approach for monitoring benefit 

administration activities. The Office will continue assessing training requirements to ensure 

skills and knowledge exists to effectively manage and execute benefits administration 

activities. In addition, the Office will review business processes, procedures, and reporting 

to ensure benefit payments are processed accurately and timely. 

Treasury Offset Program 

In FY 2020, the Office continued discussions with the Fiscal Service, Debt Management 

Services’ (DMS) Treasury Offset Program (TOP) regarding an exemption for 100% of all 

11 
 

payments under the Police Officers and Firefighters’, Teachers’, and Judges’ Retirement 

Plans. In February 2020, the collaborative efforts of DCRB, Fiscal Service, and the Office 

resulted in the exemption being granted. The exemption shall remain in place as long as the 

Office is disbursing benefit payments on behalf of the District of Columbia. 

Off-Cycle Payments 

In FY 2020, the Office collaborated with DCRB and ARC Pension Payroll to develop 

requirements for automating Off-Cycle payments using STAR. Currently, Off-Cycle 

payments are manually processed by DCRB and ARC Pension Payroll outside of STAR. 

After the payments are manually processed, they are recorded by ARC Pension Payroll in 

STAR at the end of the processing month. The automated processing of Off-Cycle payments 

in STAR will allow DCRB, ARC Pension Payroll, and the Office access to “real-time” 

payment information. Additionally, processing Off-Cycle payments in STAR will minimize 

the creation of overpayments that are caused by the manual process. The expected 

implementation date for processing Off-Cycle payments in STAR is November 2020. 

Summary Plan Description (SPD) 

The SPDs are designed to provide 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 2022. The 

District of Columbia Judges’ Retirement Plan SPD is scheduled to be updated in 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. The Office is working with 

DCRB to analyze the data to identify the former District employees who may be entitled to a 

deferred benefit or refund of retirement contributions. Once the population has been 

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

STAR Annuitant Self-Service 

Currently, annuitants are 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 STAR Change Request was submitted to 

allow annuitants of the Plans to have access to the certain retirement information maintained 

in STAR. The self-service functionality will allow annuitants an opportunity to view and 

edit certain STAR information. Allowing annuitants to view and, in some cases, make 

changes to their information will make it easier and more convenient and reduce the level of 

effort required for DCRB and the Office. 

12 
As part of the Annuitant Self-Service implementation, the Office will utilize 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 that will allow individuals access to STAR after completing the 

registration process on the ID.me website. This process allows annuitants to safely and 

securely enter STAR. 

In FY 2021, the Office will collaborate with DCRB to identify the requirements and to 

develop the appropriate communication for annuitants. Implementation of the self-service 

functionality is scheduled for FY 2021 with a limited population of approximately 600 

annuitants. After at least 90 days, DCRB and the Office will evaluate the impact to 

determine how and when to allow access to a larger population. 

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 share of Federal and District benefit payments. 

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 

13 
 

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 Update Model 

The Office adopted Oracle/PeopleSoft update methodology introduced with the 

implementation of PeopleSoft 9.2. The Office now implements smaller Oracle/PeopleSoft 

updates annually, rather than the previous model where typically one large update was 

implemented every three or four years. 

In May 2020, the Office implemented its third annual update using the new strategy. This 

update keeps the STAR system up to date with Oracle’s latest version, but did not introduce 

any new features. In FY 2021, the Office will continue to execute this update strategy. 

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 2020, STAR was available 99.96 percent of the time. 

STAR System Security 

In FY 2020, 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 and major applications are well-documented, 

authorized, and adhered to formal and established security requirements. The annual 

assessment is a part of ODCP’s continuous monitoring effort to test STAR’s securityrelevant changes that occur out 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 Authorization to Operate. There were fifteen vulnerabilities identified in the 

assessment and documented as Plan of Action and Milestone (POA&M) items. Of the 

fifteen vulnerabilities, nine have been mitigated to date and two are being researched for a 

solution. The remaining four vulnerabilities are being addressed as part of current STAR 

Annuitant Self-Service enhancement. The next full assessment is scheduled for FY 2021. 

14 
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, a contingency test, and 

the first of two backup data tests. 

 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. 

 The Contingency test consisted of testing remote access through the Treasury, 

Departmental Offices Remote Access (DORA) connection to the STAR Contingency 

site. This test successfully validated remote connectivity to the STAR Contingency site 

via DORA. 

 The first information system backup exercise for FY 2020 consisted of testing the 

reliability and integrity of backup data from one of STAR’s schedule system backups. 

This test successfully validated the integrity of STAR backup files. 

 The second information system backup exercise is scheduled to be conducted in 

March 2021. 

In FY 2020, the Office also conducted its annual incident response exercise that consisted of 

investigating an unauthorized release of Personally Identifiable Information (PII) data. The 

exercise identified gaps in investigation process. Updates were made to the PII incident 

Response Plan to better describe steps needed to ensure the right people are notified to 

properly investigate potential data breaches. 

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

STAR security management adheres to the Federal Information Security Management Act 

(FISMA) calendar year which starts July 1 and ends June 30. 

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. In FY 2020, the Office reviewed STAR security documents to record the major 

change in the STAR system posture from non-public facing to public facing as required to 

implement Annuitant Self-Service. The Office also reviewed the Treasury/DO .214 

D.C. Pensions Retirement Records system of records which will be updated along with the 

STAR Privacy and Civil Liberties Impact Assessment in FY 2021. 

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, the 

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. 

15 
 

 

In FY 2020, the Office has undertaken an update to 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 will incorporate the STAR Change 

Control Charter into one consolidated document. Updates to the STAR Change Control Plan 

are being coordinated with DCRB and are scheduled to be presented to the CCB for vote by 

the end of calendar year 2020. 

In FY 2020, the Office implemented a major refinement to STAR’s Payment Review 

Tracking Tool (PRTT) which is used for tracking and reporting of monetary, procedural, and 

documentation quality reviews. The updates to the PRTT improved functionality and 

increased reporting capabilities. 

In FY 2021, the Office plans to undertake the development of a tool in STAR to track and 

report debt and benefit due process cases. The tool will improve the coordination and 

communication between the Office, DCRB, and ARC Pension Payroll. 

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

1. Program Results 

a.	 Pension Funds 

Pursuant to 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, 2020 are $3.9 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: 

16 
• 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, 2020 are $182.8 million.

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

Management Program tracks several risks related to the stated objective, “pensionfunds 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.

b. Fund Deposits

Warrants

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

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

for the year and amortize the unfunded liabilities ofthe 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 necessary to fund the normal cost ofthe

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 enrolled actuary. These funds 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 amounts ofthe pension liabilities.

The table below reflects FY 2020 and FY 2019 annual payments from the Treasury General

Fluid as of September 30:

Office of D.C. Pensions’ Funds

Annual Payments from the

Treasury General Fund

(in Millions)

FY 2020 FY 2019 $ Change

District ofColumbia FederalPension Fund $540.0 $498.3 $41.7

District ofColumbia JudicialRetirement and

Survivors Annuity Fund $16.0 $16.6 $(0.6)

Totals $556.0 $514.9 $41.1

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

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

17
Federal Government. There are seven years remaining ofthese 30-year payments of

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

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

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

driven 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 ofthen applicable amortization period.

Interest

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

interest: interest earned on GAS long-term securities, interest earned on overnight securities,

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 ofReturn is calculated by

dividing interest earned from GAS securities by the average par value ofinvestments in GAS

securities. The FY 2020 and FY 2019 annual interest as of September 30 from the pension

funds are summarized in the following tables:

Office of D.C. Pensions’ Funds

FY 2020 Annual Interest

(in Millions)

Interest

Payments

(deposits)

Interest

Earned

(recognized)

Rate of

Return

District ofColumbia Federal Pension Fund $81.8 $65.1 1.84%

District ofColumbia JudicialRetirement and

Survivors Annuity Fund $3.8 $3.6 2.14%

Totals $85.6 $68.7

Office of D.C. Pensions’ Funds

FY 2019 Annual Interest

(in Millions)

Interest

Payments

(deposits)

Interest

Earned

(recognized)

Rate of

Return

District ofColumbia Federal Pension Fund $91.8 $68.2 1.95%

District ofColumbia Judicial Retirement and

Survivors Annuity Fund $4.0 $3.8 2.33%

Totals $95.8 $72.0

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

primarily by the interest rates for available GAS non-marketable Treasury securities available

at the time investments are placed.

18
Judges’ Employee Contributions

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

to pay for part ofthe cost oftheir retirement benefits. Active judges who elect a survivor

annuity contribute an additional 3.5 percent ofsalary. The table below summarizes the

contributions of active judges’ contributions for the most recent fiscal years as of

September 30:

Summary ofFund Deposits

Office of D.C. Pensions’ Fund

Employee Contributions

from Active Judges

(in Thousands)

FY 2020 FY 2019 $ Change

District ofColumbia JudicialRetirement and

Survivors Annuity Fund $664.8 $620.7 $44.1

The following table reflects the fund 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 ofDeposit FY 2020 FY 2019

District ofColumbia

FederalPension Fund

Warrant $540.0 $498.3

Interest $81.8 $91.8

District Benefit Payments $225.7 $202.8

Post-1987 D.C. Health & Life

Employer Payments

$21.2 $17.6

STAR Administrative Expense

Reimbursements

$1.7 $1.9

District ofColumbia

Judicial Retirement and

Survivors Annuity Fund

Warrant $16.0 $16.6

Interest $3.8 $4.0

Employee Contributions $0.7 $0.6

Totals

Warrant $556.0 $514.9

Interest $85.6 $95.8

Employee Contributions $0.7 $0.6

Reimbursements and Payments $248.6 $222.3

19
c. Collections

District Benefit Payments

Treasury pays all benefit payments under the Police Officers and Firefighters’ 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 ofthe month for benefit

payments made by Treasury on behalf ofthe District. The STAR Split Reimbursement

Summary Report supports DCRB reimbursements made to Treasury each month.

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

September 30:

Office of D.C. Pensions’ Fund

District Benefit Payments

in Millions)

FY 2020 FY 2019 $ Change

District ofColumbia Federal Pension Fund $225.7 $202.8 $22.9

Post-1987 D.C. Health & Life Insurance

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

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

payment to the D.C. Federal Pension Fund prior to the last business day ofthe month for the

premiums that are paid by Treasury.

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

September 30:

Office of D.C. Pensions’ Fund

D.C. Health and Life

Insurance Payments

in Millions)

FY 2020 FY 2019 $ Change

District ofColumbia Federal Pension Fund $21.2 $17.6 $3.6

The District’s advances ofthe employer share ofPost-1987 D.C. health and life insurance

premiums continues to increase year over year as the number ofretirees who were hired after

October 1, 1987 increases.

STAR Administrative Expense Reimbursements

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

20
costs incurred by the Office when administering Federal and District benefit payments. The

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

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

and DCRB entered into a cost sharing agreement for reimbursement ofFY 2020 actual

expenses. The following table summarizes STAR administrative expense reimbursements

for the most recent fiscal years as of September 30:

*Amount includes a receivable of $610 thousand for the fourth quarter ofFY 2020.

Office of D.C. Pensions’ Fund

STAR

Administrative Expense

Reimbursements

in Millions)

FY 2020* FY 2019 $ Change

District ofColumbia Federal Pension Fund $2.3 $2.1 $0.2

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

driven primarily by cost ofliving increases and STAR enhancement during FY 2020.

Debt Management

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

Office. Dining FY 2020, the Office collaborated with ARC Pension Payroll, OGC, and

DCRB to pursue debt prevention and collection efforts. Approximately, $1.1 million was

recovered after the notification of an annuitant’s death. In addition, $167.0 thousand was

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

The Office has an agreement with the Fiscal Service DMS Cross-Servicing Program. The

FY 2020 agreement allows collection processes for delinquent debt through a number of

tools including: issuing demand letters, conducting telephone follow-up calls, initiating skip

tracing, referring debts for administrative offset, performing administrative wage

garnishment, and referring debts to private collection agencies.

Dining FY 2021, the Office, ARC Pension Payroll, and DCRB plan to begin work on the

development ofthe Debt and Due Process Tracking Tool (DDPTT). This 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 manipulation of all reports, tracking, and

communication between offices. The ability for each organization to instantly access the

current status of a debt or due process case will benefit all organizations.

d. Investments

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

21
Retirement Fund are invested in non-marketable securities issued to minor the characteristics

ofmarketable securities. The Fiscal Service invests the assets ofthe D.C. Federal Pension

Fund 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

Fund strikes a balance between ensuring the Office can meet short-term obligations and

extending the ladder.

In FY 2020, the cash balances in the D.C. Federal Pension Fund and Judicial Retirement

Fund, available for contingencies, were targeted to remain above $95.0 million and

$2.6 million, respectively, which represent approximately two months offederal obligations.

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

last day ofthe calendar month.

By the end ofFY 2020, the Office held securities with maturity dates in the D.C. Federal

Pension Fund which extended to May 2027, and held securities in the Judicial Retirement

Fund with maturity dates which extended to August 2030. Similar to the prior year, the

Office also invested a portion ofthe FY 2020 warrant for the Judicial Retirement Fund in a

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

maturities selected to immunize the funds’ projected future benefit payments, but available

funds from the FY 2020 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.

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

discounts. The premiums and discounts are recognized as adjustments to interest income,

utilizing the effective interest method.

The following table reflects the net investments breakdown as of September 30 for the two

most recent years:

Office of D.C. Pensions’ Funds

Net Investments

(in Millions)

FY 2020 FY 2019 $ Change

District ofColumbia Federal Pension Fund $3,875.0 $3,822.0 $53.0

District ofColumbia JudicialRetirement and

Survivors Annuity Fund $182.2 $176.6 $5.6

Totals $4,057.2 $3,998.6 $58.6

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

Management Program tracks risks directly related to the stated objective, “pensionfunds are

effectively invested" for both the D.C. Federal Pension Fund and the Judicial Retirement

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

22
e. Payments

Federal Benefit Payments

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

Teachers’, and Judges’ Retirement Plans.

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

Office of D.C. Pensions’ Funds

Federal Benefit Payments

(in Millions)

FY 2020 FY 2019 $ Change

District ofColumbia FederalPension Fund $539.3 $543.3 $(4.0)

District ofColumbia JudicialRetirement and

Survivors Annuity Fund $14.4 $13.5 $0.9

Totals $553.7 $556.8 $(3.1)

Refunds ofEmployee Contributions

DCRB processes refunds of contributions for active police officers, firefighters, and teachers,

and later, requests reimbursement from the Office for the Federal portion ofthose refund

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

requested. The table below summarizes the refunds of employee contributions processed as

of September 30:

Office of D.C. Pensions’ Funds

Refunds of Federal Portion

ofEmployee Contributions

(in Whole Dollars)

FY 2020 FY 2019 $ Change

District ofColumbia Federal Pension Fund $53,813 $75,532 $(21,719)

The year-to-year difference in the District ofColumbia Federal Pension Fund refunds is 

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

Benefit Administration Expense Reimbursements

The Office reimburses DCRB for administrative expenses incurred in administering Federal

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

incurred by DCRB while administering Federal and District benefit payments and entered

into a cost sharing agreement for reimbursement ofFY 2020 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

23
DCRB resources needed to support these populations; (3) the number of employees

throughout DCRB who are dedicated to supporting the benefits administration function; and

(4) the level of effort associated with processing Federal benefit payments.

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

September 30 for FY 2020 administrative expenses incurred while administering Federal

benefit payments; and the actual reimbursement for FY 2019:

*Estimates based on discussions with DCRB.

Office of D.C. Pensions’ Fund

Reimbursements to DCRB for

Administrative Expenses

in Millions)

FY 2020* FY 2019 $ Change

District ofColumbia Federal Pension Fund $3.1 $3.4 $(0.3)

Administrative Expenses

The Office funds administrative expenses from the D.C. Federal Pension Fund and the

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

ofthe retirement programs occur, expenses are usually allocated 99 percent to the

D.C. Federal Pension Fluid and one percent to the Judicial Retirement Fund for majority of

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

staffsalaries and benefits, are allocated at ninety-five 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 Fund. When expenses benefit only one group,

or when a different allocation is clearly appropriate, expenses are charged accordingly.

The Office’s major administrative expenses consisted ofDCRB benefit administration

(discussed above), the Office’s staffsalaries, and contractors engaged to provide benefit

administration and IT system support.

The following table reflects administrative expenses by fund for two most recent fiscal years

ending September 30:

Office of D.C. Pensions’ Funds

Administrative Expenses

in Millions)

FY 2020 FY 2019 $ Change

District ofColumbia Federal Pension Fund $22.9 $22.0 $0.9

District ofColumbia Judicial Retirement and $0.5 $0.5 $0.0 Survivors Annuity Fund

Totals $23.4 $22.5 $0.9

24
In FY 2020, the Office was again subject to the Sequestration under the Bipartisan Budget

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

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

Office ofManagement 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 ofthe Balanced Budget and Emergency Deficit Control Act of 1985

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

FY 2018 direct spending is required by section 251A ofBBEDCA 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 District ofColumbia Federal Pension Fund and

the District ofColumbia Judicial Retirement and Survivors Annuity 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 2020 in the area of

administrative expenses by delaying approved hiring actions and delaying the award of

several contract actions (postponing planned projects).

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

September 30:

Fund Payment Type

Sequestration Impact

(in Millions)

FY 2020 FY 2019 $ Change

District ofColumbia Federal

Pension Fund

Annuitant Benefit

Payments $0.0 $0.0 $0.0

Administrative

Expenses $1.4 $1.4 $0.0

District ofColumbia 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 Congress,

the Office will continue to be subject to sequestration reductions until 2029 per the Bipartisan

Budget Act of 2019 (Public Law 115-123 Division C, Title I, Sec. 30101), and will comply

with implementation guidance issued by OMB and the Department ofthe Treasury.

Payment Integrity Improvement

OMB Circular A-123 Appendix C, Requirementsfor PaymentIntegrity Improvement,

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

25
 

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 incorrect amount under 

statutory, contractual, administrative, or other legally applicable requirements. Incorrect 

amounts are overpayments, underpayments, 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 or 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 2020, 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. 

Additionally, the Office reported and reviewed results from ongoing internal benefit payment 

quality reviews. 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. 

The Office was selected by Treasury’s Office of the Inspector General (OIG) as part of its 

FY 2020 IPERIA Compliance Audit for the Office’s submission of the FY 2019 Payment 

Recapture Audit reporting requirement. The OIG auditor reviewed supporting 

documentation provided by the Office and did not note any matters involving FY 2019 

IPERIA activities considered to be significant, or any instances of noncompliance with laws 

and regulations. 

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 72 payments by electronic funds transfer and received no Prompt Pay Act 

violations. 

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 

26 
reporting requirements. ARC Fiscal Accounting also prepares the Office’s financial

statements and other usefill 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 2020, ARC continued to work towards implementing 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.

The COVID-19 global pandemic stalled progress dining FY 2020 for the testing phases of

this implementation, but the Office anticipates being involved in testing and training for the

implementation ofthe OneStream solution in FY 2021.

g. Actuarial Valuation

In FY 2020, 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 2021 funding requirement ofthe retirement plans administered by

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

FY 2020. The actuarial accrued liability was determined using the demographic rates from

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

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

Retirement Benefits, and OtherPostemployment 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

Firefighters’ Retirement Plan, Teachers’ Retirement Plan, and Judges’ Retirement Plan is 

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

Office of D.C. Pensions’ Funds

Actuarial Accrued Liability

(in Millions)

FY 2020 FY 2019 $ Change

District ofColumbia FederalPension Fund $8,050.5 $8,188.7 $(138.2)

District ofColumbia Judicial Retirement and

Survivors Annuity Fund $267.9 $255.4 $12.5

Total Actuarial Accrued Liability $8,318.4 $8,444.1 $(125.7)

The year-to-year differences in the actuarial accrued liability are driven primarily by actuarial

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 71 ofthis

Annual Report.

27
 

C. Program is effectively managed and creates continuous improvement 

1. Program Results 

a. Leadership Team 

In FY 2020, 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 Senior Program 

Manager focused on major external deliverables in addition to execution and impact of crossfunctional/organizational activities. Regular meetings between the Office Leadership Team 

and their DCRB counterparts take place quarterly to ensure alignment of major operational 

activities and timely creation of and adherence to Memoranda of Understanding, Service 

Level Agreements, and Quality Plans. 

b. Multi-Year Planning 

In FY 2020, the Office Leadership Team continued to focus attention on major functional 

areas and activities assessed as having longer term and multi-entity impact. The 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 Multi-Year Plan. The 

Leadership Team updated the Multi-Year Plan for FY 2021 — FY 2022. In FY 2021, the 

Leadership Team will review the Multi-Year Plan to determine if the contemplated results 

were achieved and to update the 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 2020, the team 

continued to address areas outlined on the “roadmap” which was developed in FY 2018 and 

updated in FY 2020. The “roadmap” will guide leadership with determining the appropriate 

timing and circumstances for future decision making and for the creation of actionable 

activities. In FY 2021, the Office will continue to determine an approach to address items 

outlined in the “roadmap.” 

d. Program Management 

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

activities and major priorities. In FY 2020, the Office’s major priorities included the annual 

financial statements audit, the actuarial valuation, and enterprise content management 

projects. In addition, the Office reviewed various processes to ensure benefit payments were 

made accurately and timely. 

In FY 2020, the Office reviewed and updated the Treasury/DO .214 DC Pensions Retirement 

Records system of records which is referred to as the System of Records Notice (SORN). In 

28 
 

FY 2021, the Office will submit the updated SORN to Treasury’s Office of Privacy, 

Transparency, and Records (PTR) for review. PTR will coordinate with internal Treasury 

offices and provide the SORN to the OMB, for review and clearance. After incorporating 

comments, Treasury will publish the Treasury/DO .214 DC Pensions Retirement Records 

system of records in the Federal Register and solicit comments from the public. If no 

changes are necessary, it will become effective. 

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 2020, the 

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

services, and reporting requirements for service providers and to ensure the Office is 

providing high quality service to annuitants. 

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

comprehensive view of service requirements for benefit administration. 

f. Quality Program 

Benefits Administration 

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

administration activities. In FY 2020, the Office’s staff and benefits administration 

contractor focused 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 

provided feedback to DCRB and assessed staff training needs. The Office has worked with 

the benefits administration contractor to develop and implement a plan to transition quality 

review activities from the benefits administration contractor to the Office’s staff during 

FY 2021. 

In FY 2021, the Office will develop a quality management approach to enhance the Quality 

Program for benefits administration activities. In addition, an assessment of training 

materials being performed by the benefits administration contractor will result in a training 

roadmap for quality review and recommendations for training materials. The Office will 

review the recommendations and develop a plan to address and implement the training 

roadmap. The Quality Assurance Forums at DCRB will continue to provide feedback on 

discrepancies as well as deliver training targeted to address quality review findings. The 

quality review activities from the benefits administration contractor to the Office’s staff are 

expected to be fully transitioned by December 2020. 

Annuitant Payroll Administration 

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

The Office reviews preliminary and final payroll statistics, large annuitant payments, and 

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

29 
 

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. 

In FY 2020, the Office strengthened its process to track and report returned payments with 

new STAR functionality that minimizes the use of spreadsheets outside of the system. The 

functionality sends a system generated email with details regarding each individual returned 

payment and has the capability to report a listing of all returned payments that are pending 

reissue. Updates can be made to returned payment records to indicate research completed, 

suggested actions, and resolution/closing of records when payments have been reissued. 

Information Technology Systems Administration 

During FY 2020, 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 are reviewed semi-annually to ensure that users 

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

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

FY 2020, 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 2020, 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 are reported and reviewed during the Office’s 

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

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

h. Capstone Project 

During FY 2020, the Office reviewed its email records management practices. Consistent 

with the rules set out by PTR and the National Archives and Records Administration 

(NARA). Microsoft Outlook email inboxes with email records were inventoried. The 

Office’s staff and contractors treated email messages created or received during official 

business with due regard for records management policies. The C2 approach 

(Clean x Categorize) was developed to guide the Office’s email management practices. 

In FY 2021, Treasury’s Office of the Chief Information Officer (OCIO) is integrating 

technologies, part of which includes an update of MS Office suite to MS Office 365. In the 

future, Capstone email retentions will be added to MS Outlook which will include automatic 

records retention/disposition dates. The Office is in ongoing discussion with OCIO and PTR 

30 
to find the best approach to continue managing email records. The Office is committed to 

ensuring safe preservation of all emails determined to be Federal records. 

i. SharePoint Project 

In FY 2020, the Office was able to fully capitalize on the benefits of the FY 2019 SharePoint 

upgrade and re-design by effortlessly transitioning to a remote working environment 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. 

During FY 2020, OCIO upgraded to SharePoint 2016. In FY 2021, the Office plans to 

capitalize on these efforts and the features offered by this platform to facilitate records 

digitization and other electronic document management requirements. The Office will 

continue to enhance and evaluate opportunities to expand the use of SharePoint. 

j. Risk Management Program 

In FY 2020, the Office Leadership Team worked with the Risk Manager to review and make 

recommendations to revise the Risk Management Program. In addition, the Office compared 

its Risk Management Program to Treasury’s goal of promoting and facilitating a risk-aware 

culture across the federal government by developing a Federal Enterprise Risk Management 

(ERM) framework and strategies. 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. 

In FY 2020, the Office developed the Fraud Risk Management Framework to expand upon 

the Summarized Fraud Management Overview. The framework will be included in the Risk 

Management Plan in FY 2021. 

k. Emergency Preparedness 

In FY 2020, the Office updated 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 with Fiscal Service establishes protocols for making 

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

was enhanced and signed in FY 2020. All documentation supporting the MOU, such as 

Standard Operating Procedures and form templates, will be updated in FY 2021. In 

FY 2021, an emergency payroll exercise will be conducted. This exercise will provide a 

training opportunity for the individuals involved with executing the MOU. This exercise will 

also help identify gaps in the procedures that will be used to process emergency payments. 

Lastly, this exercise will help identify missing or outdated information so that it can be 

addressed before an emergency event. 

l. Budget Formulation 

In FY 2020, the Office revised its internal budget formulation processes in developing the 

31 
FY 2021 budget request and FY 2022 — FY 2025 budget estimates to continually improve 

the accuracy and transparency of the budget formulation life cycle. The Office shifted to a 

SharePoint based model to facilitate the collaboration and consolidation of staff input, and to 

develop a more robust repository of the decisions underlying annual budget requests for 

reference in future year budget formulation. 

m. Internal Control Program 

In accordance with requirements as outlined in the OMB Circular A-123 Appendix A, 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 2020 Treasury Implementation Guide for OMB Circular A-123 Appendix A: Management 

of Reporting and Data Integrity Risk issued by Treasury’s ODCFO, Risk and Control Group 

to conduct the review. The scope for FY 2020 OMB Circular A-123, Appendix A testing 

covered July 1, 2019 through June 30, 2020, and management reviewed test results for 

changes in controls or other subsequent events through September 30, 2020, to support the 

Office’s Final FY 2020 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; 

 Seven 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. 

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 

assurance for FY 2020. 

In FY 2021, the Office will continue to rotate test plans allowing other processes within the 

organization to be evaluated as part of the OMB Circular A-123, Appendix A assessment. 

In FY 2020, the Office received two Notice of Findings and Recommendations (NFRs) 

during the annual financial statement audit related to STAR system-level access approval 

procedures and the evidence of STAR audit log reviews. The Office will work with the 

Fiscal Service ISS team, to more fully develop processes for documenting reviews of audit 

logs and streamline existing controls encompassing system access. 

n.	 Financial Statement Audit Opinion 

KPMG LLP (KPMG), an independent public accounting firm, rendered an unmodified 

opinion on the Office’s FY 2020 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 

32 
 

noncompliance or other matters that require reporting under Government Auditing Standards 

or OMB Bulletin No. 19-03, 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 in accordance with U.S. generally accepted accounting principles for federal entities 

and the formats prescribed by the Office of Management and Budget Circular A-136, 

Financial Reporting Requirements. The financial reports used to monitor and control 

budgetary resources are prepared from the same books and records. 

The consolidated financial statements should be read with the realization that it is for a 

component of the U.S. Government, a sovereign entity. 

33 
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34 
PART 2

Independent
 

Auditors’
 

Report 

 

 

 

 

 

 

 

 

 

 

 

 

KPMG LLP

Suite 12000

1801 K Street, NW

Washington, DC 20006

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. 

Independent Auditors’ Report 

Deputy Inspector General, Department of the Treasury, and 

Director, Office of D.C. Pensions: 

Report on the Financial Statements 

We have audited the accompanying 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, 2020 

and 2019, 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. 

Management’s Responsibility for the Financial Statements 

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

in accordance with U.S. generally accepted accounting principles; this includes 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. 

Auditors’ Responsibility 

Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We 

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

in accordance with the standards applicable to financial audits contained in Government Auditing Standards 

issued by the Comptroller General of the United States, and in accordance with Office of Management and 

Budget (OMB) Bulletin No. 19-03, Audit Requirements for Federal Financial Statements. Those standards and 

OMB Bulletin No. 19-03 require that we plan and perform the audit to obtain reasonable assurance about 

whether the consolidated financial statements are free from material misstatement. 

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the 

consolidated financial statements. The procedures selected depend on the auditors’ judgment, including the 

assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud 

or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s 

preparation and fair presentation of the consolidated financial statements 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 entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the 

appropriateness of accounting policies used and the reasonableness of significant accounting estimates made 

by management, as well as evaluating the overall presentation of the consolidated financial statements. 

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

audit opinion. 

Opinion 

In our opinion, the consolidated financial statements referred to above 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, 2020 

and 2019, 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. 

37
 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Matters 

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 financial statements. Such information is not 

a required part of the basic 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. 

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, 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 auditing standards generally accepted in the United States of America, 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 

Our audits were conducted for the purpose of forming an opinion on the basic consolidated financial statements 

as a whole. The information in the Message from the Director and the Other Information section is presented 

for purposes of additional analysis and is not a required part of the basic consolidated financial statements. 

Such information has not been subjected to the auditing procedures applied in the audits of the basic 

consolidated financial statements, and accordingly, we do not express an opinion or provide any assurance on 

it. 

Other Reporting Required by Government Auditing Standards 

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, 2020, 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. 

38
 
 

 

 

 

 

 

 

 

 

 

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 have not 

been identified. Given these limitations, during our audit we did not identify any deficiencies in internal control 

that we consider to be material weaknesses. We did identify certain deficiencies in internal control, described in 

Exhibit A, that we consider to be a significant deficiency. 

Compliance and Other Matters 

As part of obtaining reasonable assurance about whether ODCP’s consolidated financial statements as of and 

for the year ended September 30, 2020 are free from material misstatement, we performed tests of its 

compliance with certain provisions of laws, regulations, and contracts, 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. 19-03. 

ODCP’s Response to Findings 

The ODCP’s response to the findings identified in our audit is described in Exhibit A. The ODCP’s response 

was not subjected to the auditing procedures applied in the audit of the consolidated financial statements and, 

accordingly, we express no opinion on the response. 

Purpose of the Other Reporting Required by Government Auditing Standards 

The purpose of the communication described in the Other Reporting Required by Government Auditing 

Standards section is solely to describe the scope of our testing of internal control and compliance and the 

results of that testing, and not to provide an opinion on the effectiveness of ODCP’s internal control or 

compliance. Accordingly, this communication is not suitable for any other purpose. 

Washington, DC 

December 9, 2020 

39
 
 

 

 

 

 

 

 

 

 

 

 

 

 

Exhibit A 

General Information Technology (IT) Controls over the System to Administer Retirement (STAR) 

During fiscal year 2020, certain deficiencies existed surrounding general IT controls associated with ODCP’s 

financial systems, as follows: 

—		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 application, database and operating system layers. This resulted because Fiscal Service, ODCP’s 

service provider, did not sufficiently define the criteria for documentation of the review of the automated 

audit log report to address the risk that inappropriate activity is investigated and resolved, and ODCP did 

not sufficiently monitor the control activities of Fiscal Service. 

—		In addition, general IT controls over the approval of new user access to the operating system on which 

STAR resides did not operate effectively because Fiscal Service did not communicate internally nor adhere 

to STAR Operating System Account Management Policy and Procedures. As a result of these deficiencies, 

an individual was inappropriately granted access to STAR but such access was retroactively approved, and 

there is increased risk that inappropriate activity within STAR is not investigated and resolved. 

Recommendations: 

We recommend that ODCP management: 

—		Fully develop 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; and 

—		Reinforce policies and procedures, through internal communication or training for control operators, 

regarding their assigned responsibilities, or that management realign responsibilities. 

ODCP’s Response: 

The Office of D.C. Pensions (ODCP) concurs with the two deficiencies identified above and the two 

recommendations offered to ODCP management. 

However, ODCP believes that the two deficiencies should be addressed in a Management Letter. In the first 

finding above, the issue was a lack of documenting the reviews of audit logs and ODCP’s insufficient 

monitoring of that activity performed by our Shared Service Provider. In the second finding, a new system 

administrator was granted access to the STAR system prior to approval by an authorized official. ODCP 

believes the categorization of a significant deficiency is disproportionate to the documented deficiencies 

because it does not reflect the extent of existing compensating controls. Database NetIQ alerts are in place to 

notify ODCP of select system activities and administrator account reviews are routinely conducted. 

While ODCP has these compensating controls in place, discussions with our Shared Service Provider are 

underway to address the findings and to continue to strengthen our internal control environment. 

KPMG’s Response to ODCP’s Response: 

We evaluated the aggregation of the findings noted above, in accordance with auditing standards generally 

accepted in the United States of America, to conclude that a significant deficiency does exist, taking into 

consideration the increased risk that inappropriate activity within STAR is not investigated and resolved. 

Although management stated that they do not concur with our classification of the findings as a significant 

deficiency, they plan on taking corrective actions to address them. 

40
 
PART 3 

Financial
 

Statements
 

and Notes
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Department of the Treasury 

Departmental Offices 

Office of D.C. Pensions 

Consolidated Balance Sheets 

As of September 30, 2020 and September 30, 2019 

(in thousands) 

Assets: 

Entity Assets 

Intragovernmental 

Fund Balance with Treasury 

(Note 2) 

Investments, Net (Note 3) 

Interest Receivable 

Total Intragovernmental 

Accounts Receivable, Net (Note 4) 

Taxes Receivable 

2020 

$ 497 

4,057,209 

20,257 

4,077,963 

2,062 

6 

$ 

2019 

491 

3,998,634 

22,577 

4,021,702 

3,069 

6 

Total Assets $ 4,080,031 $ 4,024,777 

Liabilities: 

Intragovernmental 

Accounts Payable 

Accrued Payroll and Benefits 

Total Intragovernmental 

Accounts Payable 

Advances from Others 

Accrued Pension Benefits Payable 

Actuarial Pension Liability (Note 6) 

Accrued Payroll and Benefits 

Total Liabilities 

$ 53 

42 

95 

7,137 

21,479 

45,979 

8,272,445 

455 

$ 8,347,590 

$ 

$ 

116 

33 

149 

5,136 

19,359 

46,084 

8,397,990 

354 

8,469,072 

Net Position: 

Cumulative Results of Operations 

Total Net Position $ 

(4,267,559) 

(4,267,559) $ 

(4,444,295) 

(4,444,295) 

Total Liabilities and Net Position $ 4,080,031 $ 4,024,777 

The accompanying notes are an integral part of these financial statements. 

43 
Department of the Treasury 

Departmental Offices 

Office of D.C. Pensions 

Consolidated Statements of Net Cost 

For the Years Ended September 30, 2020 and September 30, 2019 

(in thousands) 

Program Costs 

Administrative Expenses (Note 5) 

District Benefit Payments and Employer Share of 

DC Health and Life Plans 

Pension Expense before Actuarial Assumption 

Changes (Note 6) 

Total Program Costs 

Less: Earned Revenues 

Reimbursable Income 

Interest Earned 

Employee Contributions 

Total Earned Revenues 

2020 

$ 23,374 

244,803 

124,478 

392,655 

246,531 

68,702 

665 

315,898 

$

2019 

22,482 

218,350 

94,450 

335,282 

220,232 

71,924 

621 

292,777 

Net Expense Before Loss from Actuarial Assumption 

Changes 

Loss on Actuarial Assumption Changes, Net (Note 6) 

Net Cost of Operations 

76,757 

302,695 

$ 379,452 $ 

42,505 

487,272 

529,777 

The accompanying notes are an integral part of these financial statements. 

44 
 

 

 

Department of the Treasury 

Departmental Offices 

Office of D.C. Pensions 

Consolidated Statements of Changes in Net Position 

For the Years Ended September 30, 2020 and September 30, 2019 

(in thousands) 

2020 2019 

Unexpended Appropriations: 

Beginning Balance $ - $ -

Budgetary Financing Sources: 

Appropriations Received 556,005 514,898 

Appropriations Used (556,005) (514,898) 

Total Budgetary Financing Sources - -

Total Unexpended Appropriations - -

Cumulative Results of Operations: 

Net Position - Beginning of Year $ (4,444,295) $ (4,429,645) 

Budgetary Financing Sources: 

Appropriations Used 556,005 514,898 

Other Financing Sources (Nonexchange): 

Imputed Financing 183 

Total Financing Sources 556,188 515,127 

Net Cost of Operations (379,452) (529,777) 

Net Change 176,736 (14,650) 

Cumulative Results of Operations $ (4,267,559) $ (4,444,295) 

Net Position $ (4,267,559) $ (4,444,295) 

The accompanying notes are an integral part of these financial statements. 

45 

229 
Department of the Treasury 

Departmental Offices 

Office of D.C. Pensions 

Combined Statements of Budgetary Resources 

For the Years Ended September 30, 2020 and September 30, 2019 

(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 

2020 

$ 19,652 

1,128,880 

248,651 

$ 1,397,183 

$ 

$ 

2019 

18,391 

1,092,452 

222,252 

1,333,095 

Status of Budgetary Resources: 

New Obligations and Upward Adjustments 

Unobligated Balance Exempt from Apportionment, End of Year 

Total Status of Budgetary Resources 

$ 1,375,704 

21,479 

$ 1,397,183 

$ 

$ 

1,313,736 

19,359 

1,333,095 

Outlays, Net (Discretionary and Mandatory) 

Distributed Offsetting Receipts 

Agency Outlays, Net (Discretionary and Mandatory) 

$ 1,125,115 

(587,895) 

$ 537,220 

$ 

$ 

1,088,915 

(593,347) 

495,568 

The accompanying notes are an integral part of these financial statements. 

46 
Department of the Treasury 

Departmental Offices 

Office of D.C. Pensions (the Office) 

Notes to Financial Statements 

September 30, 2020 and September 30, 2019 

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. 

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 

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; 

47 
	 Reimbursement from the District for the District’s employer contribution for Post-1987 

D.C. Health and Life benefits; 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 2020 and FY 2019 were $540.0 million and $498.3 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. 

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 

48 
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 2020 and FY 2019 were $16.0 million and $16.6 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 accounting principles 

generally accepted in the United States of America 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. 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 

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, 

49 
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 contribution for Post-1987 Health and Life benefits. 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. 

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 

50 
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 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 2020, 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. The assumptions used to calculate the pension liabilities were spot rates 

gradually increasing from 0.82 percent to discount FY 2021 payments, to a maximum of 3.60 

percent to discount longer term payments; annual inflation and cost-of-living adjustments of 

1.52 percent for judges, 1.71 percent for teachers, and 1.76 percent for police officers and 

firefighters; and salary increases at an annual rate of 0.94 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 2019 were spot rates 

gradually increasing from 0.74 percent to discount FY 2020 payments, to a maximum of 3.84 

percent to discount longer term payments; annual inflation and cost-of-living adjustments of 

1.36 percent for judges, 1.82 percent for teachers, and 1.80 percent for police officers and 

firefighters; and salary increases at an annual rate of 0.83 percent for judges, 2.30 percent for 

teachers, 1.95 percent for police officers, and 2.00 percent for firefighters. 

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 

51 
 

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 2020 and FY 2019, Office 

staff salaries and benefits are split 95 percent and 5 percent between the D.C. Federal 

Pension Fund and the Judicial Retirement 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 

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 2022, which includes actuals for FY 2020, 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 2021. The 

FY 2019 Combined Statement of Budgetary Resources (SBR) was reconciled to the Program 

52 
 

and Financing (P&F) Schedules within the President’s Budget for 2021, published in 

February 2020, and there were no differences for budgetary resources, status of budgetary 

resources, or net outlays. 

The President's Budget for 2021, 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, 2020, and 2019, respectively, were annual federal payments into the funds, 

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. 

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, as amended, the Office recognizes 

identified costs paid on behalf of the Office by other federal entities. The imputed intragovernmental 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 that other federal entities pay on the Office’s behalf. The funding for these 

costs appears on the Consolidated Statements of Net Cost, and as imputed financing sources 

on the Consolidated Statements of Changes in Net Position. 

53 
2020 2019 

Status of Fund Balance with Treasury: 

Unobligated Balance - Available 

Total 

$ 

$ 

497 $ 

$ 

491 

497 491 

p. Reclassification 

Certain amounts in the prior period Notes to Financial Statements have been reclassified for 

consistency with the presentation of the current period Notes to Financial Statements. 

Specifically, prior year line items on Note 7 were reclassified and corrected to align with 

current year presentation. These reclassifications and immaterial changes have no effect on 

the Office’s financial statement balances or reported results. 

q. 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. 

2) Fund Balance with Treasury 

The Status of Fund balance with Treasury as of September 30, 2020 and 2019 consisted of 

the following (in thousands): 

3) Investment, Net 

Investments, Net as of September 30, 2020 and 2019 consisted of the following (in 

thousands): 

2020 

Investments, 

Gross 

Unamortized 

Premium, 

Net 

Investments, 

Net 

Market 

Value 

Intragovernmental Securities 

Non-Marketable Par Value 

Non-Marketable Market-based 

$ 219,552 

3,776,138 

-

61,519 

219,552 

3,837,657 

219,552 

4,000,220 

Total $ 3,995,690 61,519 4,057,209 4,219,772 

54 
2019 

Unamortized 

 Investments, Premium, Investments, Market 

Gross Net Net Value 

Intragovernmental Securities 

Non-Marketable Par Value $ 217,515 - 217,515 217,515 

Non-Marketable Market-based 

Total $ 

3,755,810 

3,973,325 

25,309 

25,309 

3,781,119 

3,998,634 

3,828,776 

4,046,291 

2020 2019 

Less than or Equal to 1 Year $ 822,010 $ 830,786 

More than 1 Year and Less than 

or Equal to 5 Years 2,269,999 2,323,699 

More than 5 Years and Less than 

or Equal to 10 Years 960,150 840,613 

More than 10 Years 5,050 3,536 

Total $ 4,057,209 $ 3,998,634 

2020 2019 

Accounts Receivable, Gross 

Allowance for Loss on Accounts Receivable 

Accounts Receivable, Net 

$ 

$ 

4,930 

(2,868) 

$ 

$ 

3,701
 

(632)
 

2,062 3,069 

The amortization method utilized by the Office is the effective interest method. The market 

value for notes and bonds is calculated using rates for September 30, 2020 and 2019, as 

published in the Treasury Quote Sheets prepared by Treasury’s Office of Market Finance. 

Included in these figures are net unrealized gains of $162.6 million and $47.7 million as of 

September 30, 2020 and 2019, respectively. 

The amortized cost of Investments, Net (including par value securities invested overnight) as 

of September 30, 2020 and 2019, by maturity date is as follows (in thousands): 

4) Accounts Receivable, Net 

The components of Accounts Receivable, Net as of September 30, 2020 and 2019, are as 

follows (in thousands): 

During FY 2020 and FY 2019, a quarterly review and analysis of historical collection rates 

were used to determine that appropriate Allowance for Loss on Accounts Receivables. The 

Allowance for Loss on Accounts Receivable are attributed to debts resulting from benefit 

overpayments. 

55 
2020 2019 

Intragovernmental Expenses 

Salaries and Related Benefits $ 981 $ 957 

Contractual Services 5,544 5,909 

Rent 679 690 

Total Intragovernmental Expenses 

Public Expenses 

7,204 7,556 

Salaries and Related Benefits 3,158 3,045 

Contractual Services 10,443 11,612 

Other 2,569 269 

Total Public Expenses 

Total Administrative Expenses 

16,170 14,926 

$ 23,374 $ 22,482 

2020 2019 

Beginning Liability Balance $ 8,397,990 $ 8,372,470 

Pension Expense: 

Normal Cost 5,300 5,600 

Interest on Pension Liability During the 

Period 66,357 54,607 

Actuarial (Gains) Losses During the Period: 

From Experience 52,821 34,243 

From Discount Rate Assumption Change 382,631 290,082 

From Other Assumption Changes (35,887) 133,487 

From Non-Economic Changes 

Pension Expense before Other / NonActuarial Adjustments 

Less Amounts Paid and Accrued: 

Ending Liability Balance 

(44,049) 

427,173 

(552,718) 

$ 8,272,445 

63,703 

581,722 

(556,202) 

$ 8,397,990 

Accounts Receivable, Net also includes criminal restitution. For FY 2020 and FY 2019, the 

Office continued to report three instances of criminal debt in the gross amount of 

$796.7 thousand and $789.3 thousand, respectively. The net realizable value of the criminal 

debt reported in FY 2020 and FY 2019 was $74.2 thousand and $286.4 thousand, 

respectively. 

5) Administrative Expenses 

Administrative expenses for the years ended September 30, 2020 and 2019 are as follows (in 

thousands): 

6) Pension Expense 

Pension expense for the plan years ended September 30, 2020, and 2019, includes the 

following components (in thousands): 

56 
Reconciliation to amounts reported in the Consolidated Statements of Net Cost 

(in thousands): 

2020 2019 

Pension Expense before Actuarial Assumption Changes: 

Normal Cost $ 5,300 $ 5,600 

Interest on Pension Liability During the Period 66,357 54,607 

Actuarial (Gain) Loss During the Period from Experience 52,821 34,243 

Total Pension Expense before Actuarial Assumption Changes 124,478 94,450 

Loss on Actuarial Assumption Changes, Net 

Actuarial (Gains) Losses During the Period: 

From Discount Rate Assumption Change 382,631 290,082 

From Other Assumption Changes (35,887) 133,487 

From Non-Economic Changes (44,049) 63,703 

Total Loss on Actuarial Assumption Changes, Net 302,695 487,272 

Total Pension Expense $ 427,173 $ 581,722 

Federal Benefit Payments 

Federal pension benefits paid and accrued during the plan years were $538.4 million and 

$14.3 million from the D.C. Federal Pension Fund and Judicial Retirement Fund, 

respectively, for 2020, and $542.9 million and $13.3 million, respectively, for 2019. For 

FY 2020 and FY 2019, approximately $53.0 thousand and $76.0 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 2020, 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 $382.6 million due to 

the new discount rate assumptions and $52.8 million resulting from experience, which were 

offset by liability actuarial gains of $35.9 million due to new pay and cost-of-living 

assumptions and $44.0 million due to other assumption changes. The net result was a total 

liability actuarial loss of $355.5 million for the D.C. Federal Pension Fund and Judicial 

Retirement Fund. 

In FY 2019, the Office reported a net liability actuarial loss in the D.C. Federal Pension Fund 

and Judicial Retirement Fund. The liability actuarial losses were $290.1 million due to the 

new discount rate assumptions, $34.2 million resulting from experience, $133.5 million due 

to new pay and cost-of-living assumptions, and $63.7 million due to other assumption 

changes. The net result was a total liability actuarial loss of $521.5 million for the 

D.C. Federal Pension Fund and Judicial Retirement Fund. 

57 
 2020 2019 

Net Cost of Operations $ 379,452 $ 529,777

Components of Net Cost of Operations Not Part of Outlays: 

Increase/(Decrease) in Assets Not Affecting Outlays: 

Accounts Receivable (1,007) 164

 Interest Receivable (2,292) (1,907) 

Total Increase/(Decrease) in Assets Not Affecting Outlays: (3,299) (1,743) 

(Increase)/Decrease in Liabilities Not Affecting Outlays: 

Accounts Payable and Advances from Others (4,057) (2,755)

 Salaries and Benefits (111) (23) 

Actuarial Pension Liability 125,545 (25,520)

 Other Liabilities 104 59 

Total (Increase)/Decrease in Liabilities Not Affecting Outlays: 121,481 (28,239) 

Other Financing Sources:

 Imputed Financing Sources (183) (230)

 Other 665 616 

386 

3,770 

(25,826) 

Total Other Financing Sources: 

Other 

Total Components of Net Cost of Operations Not Part of Outlays 

Components of the Outlays That Are Not Part of Net Cost of

Operations: 

482 

3,632 

122,296 

Premiums and Amortization of Premiums/Discounts 

Total Components of Outlays That Are Not Part of Net Cost of 

Operations 

Agency Outlays, Net 

35,472 

35,472 

$ 537,220 

(8,383)
 

(8,383)
 

$ 495,568
 

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 not only to identify costs paid for in the past and 

those that will be paid in the future, but also to assure integrity between financial and 

budgetary financial accounting. 

For the fiscal years ended September 30, 2020 and 2019, the Reconciliation of Net Cost of 

Operations to Agency Outlays, Net consisted of the following (in thousands):

58 
 

 

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, 2020 and 2019, adjustments were made to the balance 

of unobligated budgetary resources available as of October 1, 2019 and 2018. These 

adjustments primarily include Recoveries of Prior Year Unpaid Obligations that were 

obligated in prior years. 

The adjustments during the years ended September 30, 2020 and 2019 are as follows (in 

thousands): 

Unobligated Balance Brought Forward, October 1 

Recoveries of Prior Year Unpaid Obligations 

Other Changes in Unobligated Balances 

Unobligated Balance from Prior Year Budget Authority, Net 

(Discretionary and Mandatory) 

2020 

$ 19,359 

250 

43 

$ 19,652 

$ 

$ 

2019 

17,339 

18,391 

977 

75 

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, 2020 and 2019 

consisted of the following (in thousands): 

2020 

Federal Non-Federal Total 

Upaid undelivered orders 

at the end of the year $ 240 $ 5,202 $ 5,442 

Federal 

2019 

Non-Federal Total 

Unpaid undelivered orders 

at the end of the year $ 487 $ 5,254 $ 5,741 

59 
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60 
PART 4 

Required 

Supplementary
 

Information
 

(Unaudited)
 

Department of the Treasury

Departmental Offices

Office of D.C. Pensions

Combining Statements of Budgetary Resources

By Fund (Unaudited)

For the Years Ended September 30, 2020 and September 30, 2019

(in thousands)

See accompanying independent auditors' report.

2020 2019

DC Judicial

Retirement

and Survivors

Annuity Fund

DC Federal

Pension

Fund

Combined

D.C. Pension

Funds Total

DC Judicial

Retirement

and Survivors

Annuity Fund

DC Federal

Pension Fund

Combined

D.C. Pension

Funds Total

Budgetary Resources

Unobligated Balance from Prior YearBudget Authority. Net

(Discretionary and Mandatory) $ 32 19,620 19,652 $ 74 18,317 18,391

Appropriations (Discretionary and Mandatory) 30,716 1,098,164 1,128,880 30,408 1,062,044 1,092,452

Spending Authority from Offsetting Collections - 248,651 248,651 - 222,252 222,252

Total Budgetary Resources $ 30,748 1.366,435 1,397,183 $30,482 1,302,613 1,333,095

Status ofBudgetary Resources

New Obligations and Upward Adjustments $ 30,748 1,344,956 1,375,704 $ 30,482 1,283,254 1,313,736

Unobligated Balance Exempt from Apportionment, end ofyear - 21,479 21,479 - 19,359 19,359

Total Budgetary Resources $ 30,748 1,366,435 1,397,183 $ 30,482 1,302,613 1,333,095

Outlays. Net (Discretionary and Mandatory) $ 30,688 1,094,427 1,125,115 $ 30,416 1,058,499 1,088,915

Distributed Offsetting Receipts (15,979) (571,916) (587,895) (16,617) (576,730) (593,347)

Agency Outlays. Net (Discretionary and Mandatory) $ 14,709 522,511 537,220 $ 13,799 481,769 495,568

63
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64 
PART 5 

Other 

Information 

(Unaudited) 

Department of the Treasury

Departmental Offices

Office of D.C. Pensions

Consolidating Balance Sheets

By Fund (Unaudited)

As of September 30, 2020 and September 30, 2019

(in thousands)

See accompanying independent auditors' report.

2020 2019

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

Assets:

Entity Assets

Intragovernmental

Fund Balance With Treasury $ 101 396 497 $ 102 389 491

Investments, Net 182,232 3,674,977 4,057,209 176,636 3,821,998 3,998,634

Interest Receivable 464 19,793 20,257 491 22,086 22,577

TotalIntragovernmental 162,797 3,695,166 4,077,963 177,229 3,844,473 4,021,702

Accounts Receivable - 2,062 2,062 - 3,069 3,069

Taxes Receivable 4 2 6 3 3 6

Total Assets $ 162,801 3,697,230 4,080,031 $ 177,232 3,847,545 4,024,777

Liabilities:

Intragovernmental

Accounts Payable $ 19 34 53 $ 36 80 116

AccruedPayrollandBenefits 3 39 42 2 31 33

TotalIntragovernmental 22 73 95 38 111 149

Accounts Payable 5 7,132 7,137 4 5,132 5,136

Advances from Others - 21,479 21,479 - 19,359 19,359

AccruedPension Benefits Payable 1,200 44,779 45,979 1,132 44,952 46,084

ActuarialPension Liability 266,677 8,005,768 8,272,445 254,283 8,143,707 8,397,990

Accrued Payroll and Benefits 22 433 455 18 336 354

Total Liabilities $ 267,926 8,079,664 8,347,590 $ 255,475 8,213,597 3,469,072

Net Position:

Cumulative Results ofOperations (85,125) (4,182,434) (4,267,559) (78,243) (4,366,052) (4,444,295)

Total Net Position $ (85,125) (4,162,434) (4,267,559) $ (78,243) (4,366,052) (4,444,295)

Total Liabilities and Net Position $ 162,801 3,897,230 4,080,031 $ 177,232 3,847,545 4,024,777

67
- 

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, 2020 and September 30, 2019

(in thousands)

See accompanying independent auditors' report

2020 2019

DC 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

Program Costs

Administrative Expenses $ 508 22,866 23,374 $ 525 21,957 22,482

District ofBenefit Payments and EmployerShare of

DC Health and Life Plans - 244,803 244,803

-

218,350 218,350

Pension Expense before Actuarial Assumption Changes 17,636 106,842 124,478 17,906 76,544 94,450

Total Program Costs 18,144 374,511 392,655 18,431 316,851 335,282

Less Earned Revenues

Reimbursable Income - 246,531 246,531 220,232 220,232

Interest Earned 3,632 65,070 68,702 3,771 68,153 71,924

Employee Contributions 665 - 665 621 - 621

Total Earned Revenues 4,297 311,601 315,898 4,392 288,385 292,777

Net Expense Before Loss from Actuarial Assumption

Changes 13,847 62,910 76,757 14,039 28,466 42,505

Loss on Actuarial Assumption Changes, Net 9,022 293,673 302,695 (4,759) 492,031 487,272

Net Cost ofOperations $ 22,869 356,583 379,452 $ 9,280 520,497 529,777

68
Department ofthe Treasury

Departmental Offices

Office ofD.C. Pensions

Consolidating Statements of Changes in Net Position

By Fund (Unaudited)

For the Years Ended September 30, 2020 and September 30, 2019

(in thousands)

See accompanying independent auditors' report

2020 2019

D.C. Judicial

Retirement and

Survivors Annuity

Fund

D C Federal

Pension Fund

Consolidated D C

Pension Funds Total

DC Judicial

Retirement and

Survivors Annuity

Fund

D C Federal

Pension Fund

Consolidated D C

Pension Funds Total

Unexpended Appropriations

Beginning Balance $ - - - $ -

-

-

Budgetary Financing Sources

Appropriations Received 15,979 540,026 556,005 16.617 498281 514,898

Appropriations Used (15,979) (540,026) (556,005) (16.617) (498 281) (514898)

Total Budgetary Financing Sources -

-

-

-

-

-

Total Unexpended Appropriations

- - -

- -

-

Cumulative Results ofOperations

Net Position - Beginning of Year $ (78,243) (4,366,052) (4,444,295) $ (85,591) (4,344,054) (4,429,645)

Budgetary Financing Sources

Appropriations Used 15,979 540,026 556,005 16,617 498,281 514,898

Other Financing Sources (Nonexchange)

Imputed Financing 9 174 183 11 218 229

Total Financing Sources 15,988 540,200 556,188 16,628 498,499 515,127

Net Cost ofOperations (22,869) (356,583) (379,452) (9,280) (520,497) (529,777)

Net Change (6,881) 183,617 176,736 7,348 (21,998) (14,650)

Cumulative Results ofOperations $ (85,124) (4,182,435) (4,267,559) $ (78,243) (4,366,052) (4,444,295)

NetPosition $(85,124) (4,182,435) (4,267,559) $(78,243) (4,366,052) (4,444,295)

69 69
Department ofthe Treasury

Departmental Offices

Office of D.C. Pensions

Schedule ofPension Expense - by Fund(Unaudited)

For the Years Ended September 30. 2020 and September 30. 2019

(in thousands)

See accompanying independent auditors' report

2020 2019

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

Beginning Liability Balance $ 254,283 8,143,707 8,397,990 $ 254,485 8,117,985 8,372,470

Pension Expense:

Normal Cost 5,300 5,300 5,600 5,600

Interest on Pension Liability During the Period 7,755 58,602 66,357 8,048 45,559 54,607

Actuarial (Gains) Losses During the Period

From Experience 4,581 48,240 52,821 4,258 29,985 34,243

From Discount Rate Assumption Change 5,978 375,553 382,531 2,982 287,100 290,082

From Other Assumption Changes 4,505 (40,392) (35,887) (8,319) 141,806 133,487

From Non-Economic Changes (1,461) (42,588) (44,049) 577 63,126 63,703

Pension Expense before Other/ Non-ActuarialAdjustments 26,658 400,515 427,173 13,145 568,575 581,722

Less Amounts Paid andAccrued (14,264) (538,454) (552,718) (13,348) (542,854) (556,202)

Ending Liability Balance $266,677 8,005,768 8,272,445 $254,283 8,143,707 8,397,990

70
Actuarial Valuation Report FY 2020 (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 Columba 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 valuator including:

• To illustrate the current assets and liabilities of each Plan as of the end of fiscal Year (FY) 2020

(October 1, 2019 through September 30, 2020);

• To review the experience of the Program over the past year and to discuss reasons for changes in

Program costs;

• To determine the appropriate contribution to be paid by the Department of the Treasury to the Funds in

FY 2021 (October 1, 2020 through September 30, 2021); and

• 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, 2020

Police Officers and

Firefighters', and Judges' Plan

Teachers' Plans

Actuarial Accrued Liability $ 8,050,546,961 $ 267,876,951

Plan Assets (3,870,858,529) (182,824,303)

Unfunded Actuarial Accrued Liability $ 4,179,688,432 $ 85,052,643

Normal Cost with Interest (including expected

employee contributions)

N/A $ 6,400,000

71
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

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 (gan) 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 a group of new retirees who turned 50

since the prior valuation. The assumption in effect for the measurement of (gam)/loss assumed

that an individual who leaves the population prior to attaining age 50 is a termination, causing

a gain to be incurred in the active decrements category. The individuals' retirement loss is

categorized as "other census changes' resulting in the correct calculation of the liability overall,

despite the categorization of the individual pieces. For the Judges' Plan, fewer active members retired

than were expected, resulting in a gain.

72

Source of Demographic (Gain)/Loss

Police Officers and

Firefighters', and

Teachers' Plans

Judges' Plan

(Gains)/Losses due to Plan Experience:

Active Decrements $ (12,427,477) $ (1,504,082)

Inactive Mortality (26,634,555) 3,057,653

Salary Increase (1,842,830) 1,183,894

New Entrants N/A 437,739

Cost-of-Living Adjustment (COLA)

Different than Expected 33,714,083 249,451

(Gains)/Losses due to Census Changes: 52,317,451 1,166,822

(Gains)/Losses due to New Terminated Vested

Man Members: 3,390,631 N/A

Total $ 48,517,303 $ 4,591,477
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 gam shown for the

Police Officers and Freighters' and Teachers' Plans is driven by plan members in pay status dying at an

earlier age or in greater number than expected in the past year. For the Judges' Plan there was

only one death since the prior year, in contrast with the remaining population of older retirees

and survivors who survived despite higher probabilities of death. 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 ate 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.

• 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 wil never incur

a gain or loss due to this reason. The Judges' Plan reports a small loss due to the new plan members

with past service.

73

• 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. The Police Officers and Firefighters' and Teachers' Plans had

a loss primarily due to higher actual COLA percentages than expected. Note that the

Police Officers and Firefighters' Plan members who rebred prior to February 15, 1930 received

retroactive pay increases, however, only the difference between the expected COLA and the actual

COLA for 2020 have been included here. The remaining loss due to the retroactive increase for

those who rebred poor to February 15, 1980 is included in the $4.3 million loss for

continuing plan members as discussed in the (Gains)Losses due to Census Changes

section below. The Judges' Plan had a loss due to higher COLA than expected.
Executive Summary

Highlights of the Actuarial Valuation

• (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 $52.3 million and

includes the following:

• A $19.1 million loss resulting from new beneficiaries following the death of plan members for

whom the chosen form of payment was unknown.

• An $11.8 million net loss resulting from ongoing data management, including unexpected changes

to data fields such as hire date, salary, service, etc.

• An $11.2 million toss 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 $4.3 million loss resulting from data updates for continuing inactive plan members, primarily due

to collection of benefit amounts and retirement dates in the census data. In addition, the loss due to the

retroactive portion of the COLA increase for plan members in the Police Officers and Firefighters' Plan

who retired before February 15, 1980 is included in this toss.

• A $5.7 million loss resulting from beneficiaries found when previously repotted as "no

future benefits due" in the prior valuation year and from finding new plan members due to data

clean-up.

• A $0.2 million loss resulting from rehires.

For the Judges * Plan, the total toss amount includes the following:

• (Gains)/Losses due to New Terminated Vested Plan Members: There were 45 new terminated vested

plan members discovered as a result of a data clean-up initiative performed by the program. This caused a

$3.4 million loss to the Police Officers and Firefighters' and Teachers' Plans.

• A $1.2 million 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.

74
Executive Summary

Highlights of the Actuarial Valuation

Source of Asset (Gain)/Loss due to Actuarial Experience

Asset (Gain)/Loss D.C. Federal Pension

Fund Judicial Retirement Fund

Beginning of Year Assets $ 3,822,592,727 $ 177,213,402

Expected Return on Assets 26,209,824 5,310,395

Actual Return on Assets 66,868,543 3,654,359

Asset(Gain)/Loss $ (40,658,719) $ 1,656,036

The plan assets experienced the following rates of return during the prior plan year:

D.C Federal Pension

Fund Judicial Retirement Fund

Assets 1.75% 2.05%

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 3.12% 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.

0.74%. The Judicial Retirement Fund experienced a lower-than-anticipated return of 2.05% on fund assets and

the D.C Federal Pension Fund experienced a higher-than-anticipated return of 1.75% on fund assets, thus

resulting in an asset loss and an asset gain, respectively.

Changes in Plan Provisions front 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.

75
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 $ 376,652,534 $ 5,978,103

Other Economic Assumptions (40,391,530) 4,505,228

Non-Economic Assumptions (42,537,750) (1,460,995)

Total $ 293,673,204 $ 9,022,336

The discount rate assumption was updated according to prescribed guidance. The Effective Interest Rate (EIR)

for all plans decreased, causing a loss.

The other economic assumptions changed for this valuation were the cost-of-living adjustment (COLA) for

annuitants and the salary increase assumption for active plan members. Due to the plans' composition of

primarily inactive plan members, the COLA assumption is the primary driver in the calculation of liabilities due

to other economic assumptions. 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 MP2019 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.

76
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 2021 (excluding the reimbursement for expenses). The table below contains Government Contribution

(excluding expenses) for FY 2020 and FY 2021.

77

Police Officers and

Firefighters', and

Teachers' Plans

Judges' Plan

Full amortization of the 10/1/2000 Assumption

change (gain)/loss $ 22,200,000 $ 600,000

Full amortization of the 10/1/2010 Experience

(gain)/loss $ 3,300,000 $ (100,000)

New amortization base for the 10/1/2020

Experience (gain)/loss 900,000 700,000

New amortization base for the 10/1/2020

Assumption change (gain)/loss 12,000,000 600,000

Normal Cost change - 1,100,000

Employee Contribution change - (100,000)

Total $ 38,400,000 $ 2,800,000

Government Contribution

(excluding expenses)

Contribution Year

D.C. Federal Pension Fund Judiciary Retirement Fund

September 30, 2020 $ 520,300,000 $ 15,500,000

September 30, 2021 $ 558,700,000 $ 18,300,000

The increase in the Government Contribution amounts from FY2020 to FY2021 is explained in the table below.
Executive Summary

Actuarial Valuation Opinion

This report presents the results of the actuarial valuation of the Program as of October 1, 2020. 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, 2020 (plan data was projected to September 30, 2020 by adjusting

for expected mortality for inactive plan members) and the estimated asset information projected by the

Department of the Treasury to September 30, 2020 (provided on July 29, 2019).

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 ocher 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:

• Plan experience differing from that anticipated by the economic or demographic assumptions;

• Changes in economic or demographic assumptions;

• 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

• 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 internaI 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

Enrolled Actuary No. 20-05941

October 27, 2020

Michael de Leon. ASA, MAAA, FCA

Enrolled Actuary No. 20-06450

October 27, 2020

78
Executive Summary

Summary of Results

Police Officers and Firefighters', and Teachers' Plans

Valuation Date

October 1, 2020 October 1, 2019

Plan Member Counts

Actives 1,024 1,307

Terminated Vested 244 204

Annuitants 13,345 13,440

Total 14,613 14,951

Contributions

Federal Required Contribution $ 558,700,000 $ 520,300,000

Present Value of Benefits (PVB)

Active Plan Members

Retirement Decrement $ 358,866,503 $ 467,942,026

Termination Decrement - -

Disability Decrement 1,168,243 1,666,607

Death Decrement 494,825 678,418

Total $ 360,529,571 $ 470,287,051

Inactive Plan Members

Normal Retirees1 $ 6,195,482,251 $ 6,224,919,047

Terminated Vested 37,732,770 34,993,537

Disabled Retirees1 690,435,989 717,875,525

Beneficiaries 766,366,380 740,581,913

Total $ 7,690,017,390 $ 7,718,370,022

Total PVB (inactive and active) $ 8,050,546,961 $ 8,188,657,073

Unfunded Actuarial Accrued Liability (AAL)

Active AAL $ 360,529,571 $ 470,287,051

Inactive AAL 7,690,017,390 7,718,370,022

Total AAL $ 8,050,546,961 $ 8,188,657,073

Asset Value as of Valuation Date $ (3,870,858,529) $ (3,822,592,727)

Unfunded AAL $ 4,179,688,432 $ 4,366,064,346

1Throughout 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.

79
October 1, 2020 October 1, 2019 

Valuation Date 

Executive Summary

Summary of Results

Judges' Plan

*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

Plan Member Counts

Actives 61 59

Terminated Vested - -

Annuitants 101 96

Total 162 155

Contributions

Government Contribution (excluding expenses) $ 18,300,000 $ 15,500,000

Present Value of Benefits (PVB)

Active Plan Members

Retirement Decrement $ 136,533,697 $ 122,282,090

Termination Decrement - -

Disability Decrement - -

Death Decrement 733,431 561,503

Total $ 137,267,128 $ 122,843,593

Inactive Plan Members

Normal Retirees1 $ 173,986,119 $ 162,493,045

Terminated Vested - -

Disabled Retirees2 2,052,526 2,119,211

Beneficiaries 9,566,351 8,959,664

Total $ 185,604,996 $ 173,571,920

Total PVB (inactive and active) $ 322,872,124 $ 296,415,513

Unfunded Actuarial Accrued Liability (AAL)

Active AAL $ 82.271,955 $ 81,844,013

Inactive AAL 185,604,996 173,571,920

Total AAL $ 267,876,951 $ 255,415,933

Asset Value as of Valuation Date $ (182,824,303) $ (177,213,402)

Unfunded AAL $ 85,052,648 $ 78,202,531

Total Normal Cost $ 6,400,000 $ 5,300,000

Employee Contributions (600,000) (500,000)

Net Employer Normal Cost $ 5,800,000 $ 4,800,000

80