NJ pension abuse: ‘Amount of money is substantial, in the millions’

Your tax dollars hard at work.

A new report by New Jersey’s independent watchdog agency finds millions of dollars in state pension funds may be going to people who should not even be in the system in the first place.

Acting State Comptroller Kevin Walsh said the Division of Pensions and Benefits in the state Department of the Treasury is struggling to clear a huge backlog of investigations with no end in sight.

“There are hundreds of cases outstanding, and some of those cases include cases that this office referred to them in 2012. The amount of money is substantial, it’s in the millions,” he said.

He said as investigators continue to sift through these old cases, some “municipalities, school districts, fire commissions, sewer authorities are putting independent contractors into the pension system when they shouldn’t be.”

Walsh stressed, “the work the Division of Pensions and Benefits has done has been effective but we need more of it, they’ve at most had 2 or 3 people who are doing this work.”

He said the Office of the State Comptroller report is recommending more resources be put into the Division to speed things up.

Another suggestion being made is that “the Legislature consider increasing their powers so that they can deal with entities at the local level especially when they’re uncooperative.”

Walsh said the Division of Pensions and Benefits does not have the same authority to compel compliance that other investigatory bodies do, and the report concludes the Division could perform its work more efficiently if it was given additional authority, such as subpoena power or the ability to refer the chief financial officer or certifying officer of a non-compliant entity for violations of the Local Government Ethics Law.

He noted public entities have often resisted requests for information when they are under investigation. As an example, he said one Central Jersey municipality took three years and six separate requests to provide requested information.

A 2012 Office of the State Comptroller report found many municipalities and school districts were violating state law by allowing professional service providers, mostly lawyers who had private practices, to improperly earn pension credits.

This latest report finds the situation has improved considerably, but abuses are still occurring.

The report also found the Division of Pensions and Benefits has saved taxpayers an estimated $59 million by removing or reducing pension benefits for about 185 independent contractors and other ineligible individuals.

The Office of the State Comptroller is an independent state agency that works to make the government in New Jersey more efficient, transparent and accountable.

You can contact reporter David Matthau at David.Matthau@townsquaremedia.com.