Police pension board targets disabled retirees who become re-employed

May 20--Tired of waiting for the city to act, Scranton's police pension board voted to start the process to reduce pension payments of certain disabled retirees if they become re-employed.

The pension board and city discussed the issue in the last two years, but held off taking any action pending the appointment of a third-party administrator who will oversee disability pensions.

At issue is a decades-old ordinance, which has never been enforced, that authorizes the pension board to reduce a disabled retiree's pension if the person becomes re-employed and their combined income from their pension and job exceeds their salary at retirement. The reduction is equal to the excess amount they earn over their final salary.

For instance, a disabled officer who earned $50,000 would qualify for a pension of 50 percent, or $25,000. If that person took a $30,000-a-year job, their combined income would be $55,000. Their pension would be reduced by $5,000 to bring them back to their pre-retirement earning level.

Members said at Wednesday's police pension board meeting that they thought the third-party administrator would be responsible for enacting a procedure to begin enforcing the ordinance. They recently learned those duties were not included in the request for proposals (RFP) the city issued for the post.

"I was told the city is not interested in having that be part of the job of the third-party administrator," said Paul Helring, president of the police union and a pension board member. "The city keeps blaming the police pension board. We are trying to correct it."

Edwin Abrahamsen, the city's labor counsel, said the city did not include the duties in the RFP because it wants the administrator initially to focus on managing new requests for disability pensions. Enforcement of the ordinance could be added at a later date or those duties might be assigned to some other office, he said.

"I think there is a misunderstanding here," Abrahamsen said. "We never said to anyone the city is not interested. The city is interested, but it needs to be explored. We need to proceed cautiously with that and really investigate it."

The city received only one response to the RFP, which was opened Friday. The quote will likely be rejected, however, because the company did not include several required affidavits. City Controller Roseanne Novembrino said if the quote is rejected, the RFP will be reissued.

The police union has been clamoring to enforce the ordinance in hopes it would help improve the financial condition of the pension fund, which is severely financially distressed. It is not known how many retirees might be affected because no one has researched the matter yet.

Controversy over the issue reignited in February, when The Times-Tribune reported that Michael Kreischer, who retired on a disability pension in 2002, was working as a part-time detective in Monroe County.

It is not clear if Kreischer would be affected by the ordinance because it depends on whether his earnings coupled with his pension reach the income level that would trigger a reduction.

Helring said many police officers are frustrated because the excess payments some disabled retirees receive are contributing to the pension fund's financial woes. The fund's distressed status was the key issue that led the city to halt cost-of-living raises to retirees as of 2014 -- an issue Helring said is a major concern.

"I feel bad for the retirees," Helring said. "They put their time in, now they're taking the COLAs (cost-of-living adjustment) they were promised."

Helring acknowledged the police pension board should have acted long ago to enforce the payback ordinance, but it "didn't do its job properly." It is time to change that, he said.

"My goal is to get the pension fund financially sound," he said.

The board voted to have its solicitor, Larry Durkin, create rules and procedures that would allow it to enforce the ordinance. Durkin forewarned board members it is a massive undertaking that likely faces a legal challenge from the affected retirees.

Officials first have to identify those who might meet the criteria under the ordinance. Then they must take steps to discover how much the retiree earns at the new job. If the board seeks to reduce a retiree's pension, it would have to provide the person a hearing to challenge the decision. Those all are labor-intensive steps, Durkin said.

"On a day-to-day basis, someone has to do that stuff," Durkin said. "We have to come up with a system to do it in a way that is consistent with the rights of the individuals."

Contact the writer: tbesecker@timesshamrock.com; 570-348-9137; @tmbeseckerTT on Twitter

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