NNY entities named in AG's investigation

Two north country municipalities and the state Teachers' Retirement System will be included in a state attorney general's investigation intended to curb "pension padding" in the state retirement system.

Lewis County, the town of Massena and the teachers' system are among 28 state agencies, authorities and local governments that will be asked to provide payroll information on their most recent retirees as an initial step in the investigation, Attorney General Andrew M. Cuomo announced Thursday.

The New York Power Authority and state departments of Health, Transportation and Correctional Services are also included.

Selected agencies or municipalities had relatively high salary or pension recipients or are local governments that spend more on pension costs than the state average of 2 percent of their annual budgets, according to the attorney general's office.

"Some public employees may boost their income toward the end of their careers by monopolizing overtime shifts and other pension padding practices, which, in turn, raises their pension benefits," Mr. Cuomo said in a statement. "This type of manipulation causes a one-two punch to the taxpayer — first through unnecessarily high payroll costs for the public employer and again through artificially inflated pension payouts."

Mr. Cuomo — in a press conference at the C.W. Post campus of Long Island University that was made available via teleconference — said that his office's three-year investigation into other types of fraud in the state's Common Retirement Fund led to anecdotal evidence that pension padding has been going on for decades.

The intent of the new initiative is to determine the extent and causes of the practice in order to find ways to curb it, he said.

"I'm not really interested in the evolution of the problem," Mr. Cuomo said. "I'm interested in the solution."

Since pension benefits are determined based on earnings from an employee's final three years, there is an obvious incentive to maximize salaries in those years, the attorney general said. However, those salaries should be at a fair value, not artificially high, he said.

Mr. Cuomo said his office is targeting the retirement system primarily because of its sheer size. At $130 billion, the retirement system is roughly the same size as the state budget, he said.

"When the system is that large, even a little fraud makes a big difference," Mr. Cuomo said.

Stephen J. Acquario, executive director of the New York State Association of Counties, also spoke at Thursday's announcement. He called the planned pension probe a "smart proposal" that is particularly welcome in these tough economic times.

"For too long, Albany has put off for tomorrow something that could be fixed today," Mr. Acquario said.

Due to rising pension costs, public employer contributions to the Employee Retirement System in 2011 will increase from 7.4 percent of total payroll to 11.9 percent, according to an attorney general's office release.

If 1 percent of 2009 pension costs were improperly inflated, elimination of those practices could potentially save taxpayers $500 million over 20 years, the release states.

The attorney general's office has sent letters to the 28 selected entities seeking information on their 10 most recent retirees or all employees who retired in 2009 if there were more than 10. That information is to include annual salary, overtime pay and overtime hours for the final eight years of employment.

For each year for which individual data is submitted, the entity is also to provide the average salary, overtime pay and hours for overtime-eligible employees and the average salary for all employees.