NJ Governments Breaking The Law At Taxpayer Expense [AUDIO]
An Office of the State Comptroller (OSC) investigation has uncovered widespread improper participation in the state pension system among attorneys and other professionals working as independent contractors for local governments.
OSC reviewed 58 municipalities and school districts and found that an overwhelming majority of those local governments failed to comply with a 2007 state law that required all public entities to determine whether their professional service providers were bona fide employees as opposed to independent contractors.
"We decided to investigate just how widespread the problem of improper participation in the state pension system is and what we learned is that the problem is extensive," explains State Comptroller Matt Boxer. "Despite the requirements of state law and the guidance issued by state agencies, local governments across the state have not done nearly enough to ensure that only eligible employees receive pension benefits."
Governor Chris Christie's spokesman, Michael Drewniak says, "These individuals are vendors, not public employees, and giving them pension credits is a taxpayer rip off and a violation of the law. Full compliance with the law is mandatory, not permissive, and the administration has acted swiftly to end the abuse. 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."
Drewniak says Christie has asked the Commissioner of the Department of Community Affairs, Richard Constable to institute the following: Directing the Division of Local Government Services to include as part of the municipal audit compliance process that the auditors examine and test for compliance with the statutory requirement that prohibits municipalities from treating vendors as employees. The municipal Best Practices questionnaire for this year will require municipal CFOs to certify that the municipality has complied with the existing law that requires vendors to be removed from the pension system so they are not wasting pension resources. Failure to comply could jeopardize local aid payments.
Following his examination Boxer has referred 202 pension enrollees to the state Division of Pensions and Benefits for further review and removal of improper pension credits. He estimates that a review of the remaining 515 towns and 597 school districts not included in his survey could uncover hundreds of other inappropriately enrolled people and millions of additional dollars in pension savings each year.
The 202 enrollees being referred to the Division of Pensions and Benefits consist of 176 attorneys, 21 engineers, four health care professionals and one auditor. The pension credits of six of those individuals already have been voluntarily removed by local governments based on OSC's inquiries.
The 202 enrollees have accrued pension credits that could result in the state paying them a total of approximately $1.9 million per year in pension benefits. OSC conservatively estimates that a review of the remaining 515 municipalities and 597 school districts not included in its survey could uncover hundreds of other inappropriately enrolled individuals and millions of additional dollars in pension savings each year.
Boxer says some local governments just failed to check to see if employees would be eligible, others thought certain workers were 'grandfathered' in, but that's not allowed under the law and in some cases they opted to keep their attorney enrolled in the pension system based on legal advice from the very attorney whose pension eligibility was in question.
"Government officials should not be relying on pension eligibility advice from the very attorney whose eligibility is at issue," says Boxer. "That just flies in the face of common sense……..We need to work aggressively to ensure that pension credits are received only by those government employees who have earned them."