Audit Report on New York City Pensioners Working for New York State After Their Retirement

Executive Summary

This audit was performed to identify those New York City pensioners who may be illegally re-employed (“double-dippers” or “disability violators”), and to quantify the amounts of any improper payments to individuals who appear to be violators of New York State Retirement and Social Security Law (RSSL) § 211 and § 212, or New York City Charter § 1117, during calendar year 2000. The five New York City retirement systems are:

• New York City Teachers’ Retirement System (TRS)
• New York City Employees’ Retirement System (NYCERS)
• New York City Board of Education Retirement System (BERS)
• New York City Police Department Pension Fund (POLICE)
• New York City Fire Department Pension Fund (FIRE)

This report includes New York City pensioners from TRS, NYCERS, and BERS. Normally, we also audit the remaining two retirement systems—POLICE and FIRE. However, we decided to postpone the testing of these two systems because of the World Trade Center tragedy.

To discover the extent to which retired City employees were being improperly re-employed by New York State, we asked the New York State Bureau of Payroll Audit (Office of the State Comptroller, Albany) to perform a computer match of the approximately 245,000 New York City pensioners against a listing of all New York State workers (approximately 250,000 annually) who received a W-2 wage statement for the year 2000. This matching process identified 1,158 individuals under the age of 70 who either received more than $17,000 in 2000 (service retirees) or $1,800 in 2000 (disability retirees). Of the 1,158 matched individuals, 501 were TRS retirees, 313 were POLICE retirees, 312 were NYCERS retirees, 25 were FIRE retirees, and seven were BERS retirees. Thirteen of the 820 retirees from TRS, NYCERS, and BERS appeared to lack valid reasons for being on this list of matched pensioners. Accordingly, these re-employed New York City pensioners may be in violation of applicable laws and regulations, and may have obtained $121,132 in improper pension payments in 2000.

The breakdowns for the three New York City retirement systems are as follows:

Consequently, we recommend that officials of TRS, NYCERS, and BERS:

• Investigate those individuals identified as receiving pensions while being re-employed in New York State public service. City retirement system officials should also commence prompt recoupment action against those individuals found to be illegally collecting pensions.
• Forward to the Department of Investigation, if the circumstances warrant such action, the names of those individuals found to be illegally collecting pensions.
• Ascertain whether previous pension overpayments have been recouped and whether current pensions have been suspended for those individuals who have been cited in previous audits as “double-dippers” or “disability violators.”
• Send special reminders to service retirees under the age of 70 and to all disability retirees that clearly state their responsibilities regarding public service re-employment.
• Set up a monitoring program, in conjunction with the other retirement systems, to identify those City retirees re-employed in New York public service.
• Reinforce to New York governmental agencies, in conjunction with the other retirement systems, the importance of maintaining effective procedures to ensure that City pensioners comply with State and City laws regarding public service re-employment.

The matters covered in this report were discussed with officials of the three New York City retirement systems during and at the conclusion of this audit. A preliminary draft report was sent to officials of the three City retirement systems and was discussed at exit conferences on May 16, 2002, and May 30, 2002. Officials from BERS decided that an exit conference was not necessary. On June 7, 2002, we submitted a draft report to the three City retirement systems with a request for comments. Each of the three New York City retirement systems provided us with separate written responses to a draft of our audit, which are summarized as follows:

• On June 21, 2002, we received a response from the TRS Deputy Director, in which he stated:

“Please be advised that the Teachers’ Retirement System (TRS) is in full compliance with all your recommendations.”

• On June 20, 2002, we received a written response from the NYCERS Deputy Director Finance, in which he either agreed to comply with or stated that NYCERS was already in the process of complying with the audit’s six recommendations.

• On June21, 2002, we received a written response from the BERS Executive Director, in which she stated:

“Our intense efforts at informing all our retirees and prospective retirees of the existing laws governing re-employment in the public sector, and of the strict consequences for violating these laws continue to produce dividends as evidenced by your conclusions. As to your recommendations, BERS will make every effort to comply where feasible. Although no violators have been found in this audit, BERS will continue its vigilance in seeking total adherence to the existing laws.”

We also received a written response from the City University of New York (CUNY), an authorized RSSL § 211 waiver-issuing agency for New York State. CUNY’s Director of Internal Audit stated in part:

“The University understands the importance of monitoring the employment activities of City pensioners and will continue to work with the retirement system to ensure full compliance with RSSL requirements.”

In addition, CUNY provided us with documentation for its cited employees. We took this documentation into consideration when preparing this final report.