Report Suggests Changes to Stop Pension Abuses in NY

According to Newsday, the report also recommends legislative changes that expand on the pension reforms pushed through last year by New York State Attorney General Andrew Cuomo.

Rice’s office opened a criminal investigation into pension abuses in February 2008 after it was revealed that five school districts reported the same private attorney as a full-time employee, enabling him to secure a nearly $62,000-a-year pension as well as health benefits. Rice told Newsday it was clear that the taxpayer was being ripped off, but it “was equally clear that it was not criminal.”

Because there are no criminal statutes requiring that all public employees certify the time they worked, no laws were broken, said her spokesman, Eric Phillips, according to the news report. The grand jury recommendations are designed to redress that and provide more accountability. In addition to proposing new laws, the report recommends instituting regulations that would, among other things, create sanctions for public employers who fail to report anyone who has been incorrectly classified as an employee.

The investigation found that the professionals provided little, if any, backup material to document their work, that the number of workdays used for pension salary calculations was sometimes wildly inflated, and that employers did not require conventional time sheets. Such abuses, at a time when fewer and fewer people in the private sector are provided pension benefits, “are simply intolerable,” the report said, according to Newsday.

Investigators subpoenaed records of special districts – the small units of government that handle specific services such as garbage and water for certain areas – with revenues of more than $3 million, and probed roughly 20 individuals. Two of the unidentified individuals cited in the report have collected more than $950,000 in pension payments, while the others have not yet started collecting pensions.

Following a probe of pension abuses by Comptroller Thomas DiNapoli, some attorneys’ pensions were cut off. Two attorneys filed suit alleging DiNapoli violated their due process rights in deciding to end the payments (see Lawyers Sue over NY Benefits Cutoff ).