Our Voice: Root out state pension scammers and make them reimburse system

April 17, 2013 

When public servants game the state retirement system to line their pockets, who do they think gets stuck with the bill?

Former State Auditor Brian Sonntag doesn't think they care. Local officials and retirees involved in pre-retirement raises designed to artificially inflate pension checks show a clear disregard for what is right, he told The Associated Press.

"They're thumbing their nose at colleagues -- the people who follow the rules -- as well as the public," Sonntag said.

The contradiction inherent in a career spent serving and protecting the community followed by a retirement devoted to gouging the public is bewildering.

And yet it happens frequently and to sometimes outrageous degrees.

A two-year AP investigation found some particularly galling examples at Lakewood Fire District 2 near Tacoma, where three managers were given significant raises just before retirement. In two cases, $17,000 raises were awarded just four days before the officials were set to retire. A third got his raise 13 weeks before retirement.

It brought their annual pay to more than $175,000 each -- a higher salary than Seattle's fire chief, who was overseeing a department about 10 times larger, the AP reported.

It didn't cost Lakewood much because the raises were in effect for such a short time before retirement. But because they're part of a state retirement program that calculates payments based on a worker's final salary, the state system got stuck for a bundle.

The last-minute raises increased retirement pay for the three officials by $1,000 per month. Two of them retired in their mid-50s, and the three combined are likely to milk the system for an extra $1 million in their lifetimes.

But the abuses uncovered by the AP were far more widespread than a few loathsome anecdotes can illustrate.

The investigation found that the average first responder retiring under the Law Enforcement Officers' and Fire Fighters' Retirement System Plan 1 were paid 5.5 percent more in their final three months of work than the same period the year before.

It may sound innocent, but the increase was much larger than workers received in any other pension system in the state and more than double the average raise for all workers who departed over that time period, according to the AP's analysis.

The LEOFF-1 system was discontinued in 1977 when lawmakers realized it was too generous to sustain for the long haul. However, workers who started under the system are still eligible for those benefits.

About 1,000 veteran public servants have retired into the LEOFF-1 system during the past decade, leaving only about 200 active workers remaining.

The state should honor the commitment it made to these workers when they started their careers. But the widespread abuse goes beyond fulfilling reasonable obligations.

The practice of awarding last-minute raises to inflate retirement numbers -- aptly called "pension spiking" -- is against Department of Retirement Systems rules. Public officials who engage in it and approve such raises for workers know what they're doing is wrong.

The Legislature should demand action that includes a thorough investigation that identifies the abusers, rolls back their pensions to levels they actually earned and requires restitution for overpayments.

Anything less amounts to awarding bad actors who abuse an already generous pension system.

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