New Jersey audit finds wide abuse of state pension benefits

Posted: July 18, 2012

Five years after the New Jersey Legislature barred the payment of pension benefits to part-time municipal service providers, mainly attorneys, the practice continues in towns across the state, according to a report released by the state comptroller Tuesday.

In a review of just 58 of the state's more than 1,000 municipalities and school districts, investigators found that all but one had failed to properly pull those disqualified from receiving benefits from their pension rolls.

In those entities alone, that could amount to $2.2 million a year in illegal pension and health benefit costs to the state, according to comptroller A. Matthew Boxer's report.

"Local governments across the state have not done nearly enough to ensure that only eligible employees receive pension benefits," Boxer said in a statement. "We need to work aggressively to ensure that pension credits are received only by those government employees who have earned them."

The scathing report found an instance of a municipal attorney himself advising local politicians on whether he should be pulled from pension rolls.

The comptroller's office said it had found that little had been done to enforce the 2007 pension reform law. It recommended that state officials undertake a comprehensive review of every local government entity and commit more resources to policing.

The report noted that the Division of Pension and Health Benefits, which is charged with overseeing the system, employs just one person whose "primary" task is to investigate compliance with pension laws.

Following the report, Gov. Christie asked Department of Community Affairs commissioner Richard Constable to put stricter controls in place to prevent future abuse.

"We didn't go through the exercise of achieving hard-fought, critical reforms of the pension system to ensure its long-term health and solvency only to have it abused and disregarded by those who want to do favors for their political or business connections and cronies," Christie spokesman Michael Drewniak said in an e-mail.

The comptroller's office has submitted the names of 202 persons it has determined to be independent contractors to the division for removal from pension benefits. The majority of these individuals are attorneys for the local governments, but among them also are engineers, health care professionals, and an auditor.

The report cites municipalities from across the state as remiss, including Audubon, Barrington, Gibbsboro, Gloucester City, Haddon Township, Somerdale, Pennsauken, Brooklawn, Merchantville, and Oaklyn in South Jersey.

In Magnolia, investigators found that the municipal attorney had actually advised the borough that he was eligible for pension benefits, which he did until the chief financial officer threatened to quit if the attorney was not removed from the rolls.

The borough did remove the attorney in 2010, according to the report.

Contact staff writer James Osborne at 856-779-3876 or

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