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Government retirees slip through double-dipping loophole

CHARLESTON, W.Va. -- At least 31 retired state employees used a loophole to get around the state law prohibiting double-dipping, including 17 retirees whose combined pensions and state pay topped $50,000 for the 2010-11 budget year, a legislative audit released Tuesday found.

The 31 all worked for the state as independent contractors, getting around a state law that prohibits retired state employees from earning more than $15,000 a year working for the state, according to the follow-up report to the Legislative Post Audits interim committee.

The analysis covers the 2010-11 budget year, and the list includes retired state Personnel Director Joe Smith, who first drew attention to the loophole by drawing more than $750,000 in pension and contractual pay over a six-year period, while working as an adviser to then-Gov. Joe Manchin.

In fiscal 2011, Smith drew $84,633 in state pay and a $46,123 state pension, according to the audit.

Smith's pay and pension total was second on the list, behind appraiser Gerald Terry, who received $115,260 in contractual pay from the Division of Highways, and a $22,286 pension for the year.

Under state law, retired state employees who earn more than $15,000 are to have their pension payments suspended -- but the law does not prevent the retirees from exceeding the cap by working as independent contractors.

Stacy Snead, director of the Legislative Post Audits Division, said Tuesday the Legislature should clarify the law, either by eliminating the $15,000 cap for all retirees, extending it to also apply to contractual work, or by prohibiting retirees from entering into state contracts.

In a response to the audit, CPRB Executive Director Jeff Fleck advised against eliminating the $15,000 cap.

"It would create an environment that would promote retirement as early as possible, so that a pension and salary could be acquired," Fleck advised.

That would change actuarial assumptions and require an increase in state payments into the Public Employees Retirement System, he warned.

Snead said the list of 31 double-dippers likely is incomplete, since auditors could track only retirees who had used their Social Security numbers as their Federal Employer Identification Number on their vendor contracts.

Retirees who created a new FEIN as independent contractors or were employed through a third party would not show up on the list, she said.

The list includes several well-known retired state employees.

That includes former Consolidated Public Retirement Board Executive Director Anne Lambright, who received $44,041 in payments from the Department of Education, the state Schools for the Deaf and Blind, Board of Medicine and Supreme Court, and a pension of $50,123.

Others include Andy Ridenour, the retired executive producer of "Mountain Stage," who received $27,500 as a contract employee for the Educational Broadcasting Authority and a $28,616 pension; as well as retired Public Service Commission Consumer Advocate Billy Jack Gregg, who was paid $39,848 by the PSC in addition to his $40,753 pension.

Reach Phil Kabler at philk@wvgazette.com or 304-348-1220.


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