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Some States Tackle Public Employee Pension Abuse

1 min readBy: Joseph Bishop-Henchman

From the NCPA’s review of a USA Today article:

A state auditA tax audit is when the Internal Revenue Service (IRS) conducts a formal investigation of financial information to verify an individual or corporation has accurately reported and paid their taxes. Selection can be at random, or due to unusual deductions or income reported on a tax return. in Utah identified more than 4,300 public employees in the state who also collected public pensions. A review in Florida found more than 9,000 — among them, prison wardens, college officials, and the former chief judge of the state’s highest court, according to the St. Petersburg Times.

The nation’s state and local retirement systems lost about $800 billion in 2008, says Keith Brainard, research director for the National Association of State Retirement Administrators.

What some states are doing:

  • New Mexico Gov. Bill Richardson proposed changes in November that would bar new government retirees from double dipping; state legislators had already backed a broader plan that would also have limited current retirees.
  • The board that runs South Dakota’s public retirement system will meet this week to consider changes that would make public employees wait four months after they retire before seeking a new government job.
  • Florida Gov. Charlie Crist signed a law in June that requires new retirees to wait at least six months before returning to work.
  • Arkansas lawmakers are considering a measure that would stop elected officials who quit from returning to work.
  • Utah lawmakers will consider an overhaul when they convene in January.

Employees who double dip tend to collect benefits sooner:

  • South Dakota’s planned changes will save only about $5 million a year, says the system’s executive director, Rob Wylie.
  • New Mexico’s proposed changes would save about $7 million.
  • An audit this year for Utah lawmakers suggested that double dipping by employees there could cost the state as much as $900 million over the next decade.