TRENTON, N.J. (AP) — Municipalities and school districts in New Jersey are wrongly letting hundreds of private attorneys and contract employees remain on state pension rolls at a potential cost of millions of dollars, in some cases bending rules “to get the results they sought,” the state comptroller said Tuesday.
Gov. Chris Christie’s office assailed the practices as a “taxpayer rip-off” and warned that local aid payments would be in jeopardy if municipalities don’t purge all private employees and independent contractors from the state pension system.
“We didn’t go through the exercise of achieving hard-fought, critical reforms of the pension system to ensure its long-term health and solvency only to have it abused and disregarded by those who want to do favors for their political or business connections and cronies,” said Michael Drewniak, a spokesman for the governor.
A 2007 state law cut off from further pension gains anyone retained through public contracts or otherwise considered an independent contractor, directing they be removed from the pension system once their agreements expired. Old pension practices, including bulking up pensions by working for multiple government agencies, were viewed as “gaming” the system.
But in a report Tuesday, Comptroller Matthew Boxer said a review of 58 municipalities and school districts found widespread lack of compliance.
The comptroller said he referred 202 pension enrollees from 134 municipalities and 25 school districts to the state Division of Pensions and Benefits for review and removal of improper pension credits. They include 176 lawyers and 21 engineers.
If paid, he said, the accrued credits would cost the state about $1.9 million a year in benefits. Six individuals have already been voluntarily removed by local governments based on the state inquiry.
The comptroller estimated that his office could uncover hundreds of additional abuses and millions more in wasted pension dollars if it reviewed the remaining 515 municipalities and 597 school districts not included in the survey.
In some cases, government officials wrongly thought some private employees were grandfathered in, Boxer said. But in many instances, skewed analyses by local governments resulted in private employees getting to stay on pension rolls, with some decisions based on the advice of the same attorneys getting the benefits.
“Government officials should not be relying on pension eligibility advice from the very attorney whose eligibility is at issue,” Boxer said in a statement announcing the findings. “That just flies in the face of common sense.”
Though some government officials appeared to have been genuinely confused, Boxer told The Associated Press that “in other cases you had local officials who were bending the rules to get the results they sought.”
The comptroller’s office cited a number of examples where local officials appeared to find ways to take care of vendors facing the loss of the generous perk.
Even governments that eventually removed enrollees from the pension system often failed to do so retroactive to the proper cutoff date, the comptroller said.
The office cited the case of two employees who were kept in the system just long enough after the cutoff to be able to reach the 10 years of credits required to vest in the system and be eligible for payments upon retirement.
State health care expenses are also affected by the pension decisions. The report said 16 private vendors found to still be in the pension system have either accrued the 25 years of pension credits needed to get lifetime state-funded health benefits, or are within five years of qualifying. The potential health care cost for those 16 alone would surpass $300,000 annually.
The comptroller’s investigation also found that there are potentially hundreds of state employees working part time who should no longer be earning pension credits. A 2010 law required all individuals hired after May 21, 2010, to work a minimum of 32 hours a week to qualify for pension credits.
The comptroller’s office recommended the state pension board provide local governments with a checklist to certify pension eligibility.
In addition to removing private contractors from the pension rolls, the comptroller asked the pension board to go a step further and review earlier pension credits to assure they were properly earned.
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Online:
For a copy of the comptroller’s report, go to: http://1.usa.gov/MhSivr
