In The News › N.O. Sewerage and Water Board director Marcia St. Martin says she will retire this year

N.O. Sewerage and Water Board director Marcia St. Martin says she will retire this year

By Andrew Vanacore
Nola.com / The Times-Picayune
April 17, 2013

New Orleans Sewerage & Water Board Executive Director Marcia St. Martin, who led the agency through Hurricane Katrina and the storm’s aftermath, said Wednesday that she plans to retire at the end of the year.

St. Martin announced her retirement at a meeting of the agency’s board Wednesday morning. The decision apparently surprised some board members, who had expected St. Martin to stay on until at least 2014, and who gave her a standing ovation for her service to the city.

St. Martin — who became executive director in 2004 after several years as interim director — is the first woman and the first African-American to have held the top job at the water board.

Her retirement comes as Mayor Mitch Landrieu pushes for an overhaul of how the Sewerage & Water Board is structured, following warnings from the city’s independent inspector general that the agency is vulnerable to fraud and abuse. The issue came to a head last year as the board and the City Council contemplated and then passed one of the biggest water rate hikes in recent memory, a step aimed at raising money for badly needed post-Katrina repairs and upgrades.

St. Martin, 66, said Wednesday that the decision to retire was her own, and mentioned that leaving the job will finally give her the opportunity for the knee surgery she has been waiting to get done after taking a fall during Katrina.

“That’s going to be one of the first things I do,” she said. “Definitely put my feet up.”

St. Martin’s retirement comes as the Sewerage & Water Board’s generous pension plan — and St. Martin’s retirement package in particular — have been coming under increasing attack.

WVUE-TV reported last year that St. Martin will receive $175,000 a year after she retires. The station also reported that, as a result of her participation in the state’s Deferred Retirement Option Program, or DROP, she could receive a lump-sum payment of as much as $877,000 when she retires. That program affords employees an opportunity to work for an additional five years and also collect pension payments, which are placed in a tax-free, interest-bearing account.

However, St. Martin entered the program in Feb. 2010, and the station said she would have to work until 2015 to get the maximum benefit. The lump sum accrues at $15,000 per month, meaning if she works through the end of the year, she’ll receive about $700,000.

St. Martin has noted that she participates in the same benefits program as all S&WB employees, and said there was nothing inappropriate about her retirement package. Officials in the Landrieu administration, while arguing for broader changes to the pension system, have supported that view.

The S&WB’s pension plan has come under fire from the Bureau of Governmental Research as well as from City Councilwoman Stacy Head for being one of the most generous in the region.

Unlike the 401(k) and other “defined contribution” plans now widespread in private industry, the water board’s plan guarantees “defined benefits” to employees.

In urging changes to the program, Head last month cited a hypothetical S&WB employee who paid the long-standard 4 percent of her salary each year to the retirement plan. A comparable employee in private industry would have had to put 49 percent of her earnings into a savings plan each year to match the benefits the S&WB worker will be entitled to when she retires, Head said.

Retiring employees must have worked a little over 34 years to receive the maximum payout: 100 percent of their average pay over their three highest-paid years, which usually are the last three years they worked.

Employees’ contribution level was raised this year to 5 percent of their pay, which is still 1 percentage point below the current level for city employees. Head suggested the water board should raise the level to 6 percent next year and consider raising it to the state-mandated maximum of 8 percent in the near future.

Head said last month that the pension plan is a major reason why 42 percent of the revenue from recently approved water and sewer rate increases will go to the board’s regular operations and maintenance expenses, not to badly needed infrastructure upgrades.

The higher rates, approved by the council in December over Head’s objections, will cause customers’ monthly water and sewer rates to more than double by 2020. Rates will rise by 10 percent every year for the next eight years.

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