GoLocalProv Investigation: Johnston to Crack Down on Illegal Pensions
Tuesday, January 18, 2011
The town is expecting to reap huge savings by reducing retirement benefits that go above what is allowed by law or by union contracts. The savings could amount to as much as $3 million each year, according to Joe Rodio, Sr., the legal counsel for the town. Over the long term, the cost-cutting measures are expected to help rein in the unfunded pension liability, which was $47.7 million in 2009.
The task of reviewing and reducing pensions will be carried out be a new seven-member retirement board the town wants to establish. The board also will have the power to order retirees to pay back some of the extra money they earned. If necessary, the board could hire an investigator to help it root out abuse and fraud, said Mayor Joseph Polisena.
“Everything’s on the table,” Polisena said. “If you’re ripping off taxpayers, we’re coming after you.”
The current pension system is rife with private, sweetheart deals awarded by former mayors, according to Polisena. One private pension deal went to former Fire Chief Victor Cipriano. Last year, he earned more in his tax-free disability pension than he ever did on the job—thanks to an annual longevity benefit, an additional monthly disability pension, an instant pay raise in his first year retired, and other extra benefits.
Cipriano is not the only retiree making too much. Last summer, GoLocalProv reported that at least 25 firefighters had pensions that ran afoul of two state laws—one barring them from making more in retirement than they did while employed and another mandating that their pensions be approved by a retirement board, something Johnston currently does not have.
To make the problem worse, a number of disabled retirees are not truly disabled, according to Polisena. He said his office regularly fields anonymous tips about a town retiree who went out on disability and is working in construction or another physically taxing job. “It’s insulting to the taxpayers,” Polisena said. “It’s insulting to the people who have a true disability who aren’t working.”
The new ordinance will create a two-tiered system for disabilities, distinguishing between total disabilities and partial disabilities. Those on total disabilities will continue to receive two thirds of their salary tax-free in retirement. But those who are only partially disabled will be eligible for only half their salary, according to Bill Conley, the town solicitor and lead author of the ordinance.
Each application for a disability pension will be reviewed by three doctors. A majority of them must agree that there is a true disability. After that, each disability pension will be reviewed annually to make sure the retiree is still disabled, according to Conley.
“There’s significantly more oversight to govern disability pensions than there is now,” Conley told GoLocalProv. “Frankly, there is no oversight right now.”
The reform will affect all current and future retirees in the Police and Fire departments—approximately 200 current employees and retirees, according to Rodio. Their pensions currently exist in two separate funds. Under the new system, those two funds will be pooled into one fund. Teachers and municipal workers, whose retirements are vested in a state plan, will be unaffected. (Firefighters hired after 1999 who go out on a legitimate disability pension also would be exempted and instead be enrolled in a state retirement plan.)
Another key goal of the reform: Conley says that the ordinance has provisions to make the pension system much more transparent than it has been—going above and beyond what the state law requires in terms of disclosing information to the public, particularly when it comes to disability pensions. “There’s going to be a lot of sunshine,” Conley said. “Essentially the process is going to be as open as it can be without violating anyone’s privacy rights.”
The ordinance establishing the retirement board and the new approval process for disability pensions will be introduced at a town council meeting this Wednesday. After its first reading before the town council, the ordinance will go before a public hearing in February. At the end of the hearing, the council could approve the ordinance. After that, Conley said it could take a few months to set up the new retirement board and initiate the review of pensions.
“It’s going to play out in court I’m sure,” Rodio said. “This is just the beginning of the process. It’s the shot across the bow.”
A representative for the local police union did not return a call for comment. Fire Lt. Tom McCormick, a board member for Johnston Firefighters Local 1950, declined to comment saying the union was still trying to get a copy of the proposed ordinance.
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