Administration December 3, 2003

Sunshine State Pension Overcharged Uncle Sam $517 Million

March 12, 2003 (PLANSPONSOR.com) - The much delayed audit of Florida's state pension fund has revealed that the Sunshine State overcharged the US government $517 million for pension contributions made on behalf of state employees.

Reported by

Eric Hazard

Government auditors made the disclosure in a draft of a report that was delayed by a federal inspector general at the behest of Governor Jeb Bush’s office. Calling the contributions “excessive,” the report said Florida either should repay Washington or accept reduced federal contributions to the fund in the future, according to an Associated Press report.

Last spring, US Health and Human Services (HHS) Inspector General Janet Rehnquist delayed work on the audit following a request from Governor Bush’s chief of staff. Former employees of the daughter of Supreme Court Chief Justice William Rehnquist have said the request and the delay were designed to protect Governor Bush from release of the potentially negative news as he was running for re-election.

Last week, Rehnquist informed the White House that she would resign in June to spend more time with her family. Her decision to delay the audit was among a number of actions that had led to an investigation of her by the Senate Finance Committee, the General Accounting Office and a self-policing group of inspectors general since late last year regarding charges by former employees that she mismanaged the office. (See Janet Rehnquist Ends Controversial Tenure with Resignation ).

Delayed Action

The federal government contributes to the pension funds for state agency employees who help administer joint state-federal programs such as Medicaid. Because HHS reviews and approves the federal contributions every year, the department’s Inspector General oversees the system.

Florida’s fund was running a surplus after “exceptional” returns on investments, the draft said. The state used part of the surplus to establish a reserve fund for its pension program without reimbursing the federal government.

Officials at the Inspector General’s office decided to audit the Florida fund early last year, after getting indications that the federal government may have been overcharged. The office has conducted similar audits in other states, especially where pension funds have shown a surplus.