January 11, 2014 in Region

State pensioners may be overpaid

Mike Baker Associated Press
 

SEATTLE – Washington retirement officials have identified dozens of pensioners who may have received excessive retirement payments, officials said Friday.

The Department of Retirement Systems said it is in the process of reviewing 98 cases in which someone may have improperly received pension payments while working in another government job. The state is also still collecting information from local government agencies that are supposed to provide details on the pension status of workers, and they may add more cases to the auditing process.

Mike Ricchio, assistant director of the administrative services division at the Department of Retirement Systems, is leading the review. He said local officials have been cooperative in the process.

“They are concerned about doing it right,” Ricchio said. “They want to know what it is they need to do in order to comply.”

State officials began gathering records on retirees last year in the wake of Associated Press stories about a pension system for firefighter and law enforcement officers. An AP story in November described cases in which some workers were able to retire and get rehired into similar jobs without any impact on pensions.

Lawmakers have worked in recent years to crack down on retire-rehire arrangements.

Retirement system officials have cast a wide net in their search for pension overpayments. While the cases identified in the AP stories are still being assessed because they are more complex, the department first discovered problems with people who had taken an early retirement option, an arrangement that came with stricter return-to-work rules.

State officials believe some of the 98 cases identified do not involve overpayments, but the review is in its early stages. So far, only one person has been ordered to repay part of his pension. The state determined this week that James Dow, who pursued the early retirement option when leaving the Bainbridge Island School District in 2011, shouldn’t have drawn pension payments over the following two years because he continued working as a paid contractor at the Bainbridge Island Fire Department.

State managers have decided to bill Dow for more than $35,000 in overpayments.

Dow said in an interview he was aware of the law when he retired but didn’t make the connection because he had been doing the Fire Department work for years, helping the city maintain its addressing system. He said he now sees the rules are clear and that it was a mistake on his part.

“I’m not going to challenge it,” Dow said. “The rules are the rules.”

State officials say they are also currently seeking overpayments for two other retirees who returned to one-day jobs. That will recover another $2,300 for the pension system. Those recoveries are in addition to about $880,000 in overpayments or recalculated benefit savings the state expects from other audits conducted following the AP stories.

Along with the review of individual cases, the Department of Retirement Systems said it has taken other actions in the wake of the AP series.

In response to a story that showed how some workers got late pay raises to boost pensions, retirement system staffers are now required to analyze the final 12 months of pay for workers in an older pension system. That will lead staffers to potentially ask questions about pay changes and explore written summaries from meetings at which the raises were approved.

The state has also found that independent contractors at some governments are handled by different staff members than typical employees. The staffers handling contractors may not know the rules for how those arrangements should be reported to the state, said the legal and legislative services manager at the Department of Retirement Systems.

State officials are now adding emphasis on contractor reporting in its training programs with employers around the state.

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