Scandals Spur Action on Pension Forfeitures
Should convicted public workers keep their pensions? States typically ask that question only after a high-profile scandal. Check out this map to see which states have forfeiture laws.
Jerry Sandusky, the former Penn State assistant football coach who has been accused of molesting young boys, some while he was employed by the university, received nearly $150,000 when he retired in 1999 and continues to receive monthly payments adding up to a $58,898 annual pension, according to the (Harrisburg, Pa.) Patriot-News. Gary Schultz, former Penn State interim senior vice president of finance and business who has been accused of not reporting child sexual abuse as well as perjury, has received nearly $331,000 annually since retiring in 2009 and collected a lump sum of more than $420,000 upon his retirement, according to the Patriot-News.
But, in a strange twist, it is more certain that Schultz will lose his public pension than Sandusky if both are convicted of what they are accused of. Pennsylvania law stipulates particular crimes for which a public employee can lose his or her pension, which are listed by the Pennsylvania State Employees' Retirement System. Perjury is one of them. The various crimes related to sexual abuse of which Sandusky is accused, more than 50, are not. Heather Tyler, a spokesperson for the retirement system, told Governing each case is reviewed after its completion to determine whether an employee's pension should be revoked, noting that the pension board has "no discretion in applying the law."
In the wake of the Sandusky scandal and amid the general push toward pension reform, Governing decided to take a look at pension forfeiture laws across the country. According to research by Governing staff, 25 states have some kind of pension forfeiture provision related to committed crimes, while 25 states plus the District of Columbia do not.
Some might find the idea repulsive: A public official alleged of committing or convicted of a crime could collect a pension check at the expense of taxpayers. California Gov. Jerry Brown is among them: as part of his pension reform package introduced this month, he has proposed revoking the pensions of public employees who are convicted of a felony related to their public duties, according to the Los Angeles Times, in part because of his anger over the Bell, Calif, corruption case. California already has a law addressing the pensions of elected public officials if they commit a felony.
The laws vary widely from state to state. Some require forfeiture for felonies; others open it to misdemeanors as well. In some, like Pennsylvania, specific crimes are listed for which a public employee can lose his or her pension. But in others, the state law stipulates more generally that pensions can be revoked for any crimes related to official duties. Most have statutes in the state code. South Dakota has administrative rules in place for its pension board.
Policies in some states, such as Idaho, Indiana and Colorado, allow only for public pensions to be used to pay for restitution in a criminal case, rather than outright revoked. For Governing's purposes, those laws were not considered full pension forfeiture policies, as an employee would continue to receive their pension outside what they are required to reimburse. Laws in a few states, including Texas and New Mexico, that cover only judicial officers were not counted, as they exclude the vast majority of public employees and officials. Statutes that revoke a pension only if a beneficiary causes the death or disability of a pension plan member, such as in Minnesota and Montana, were also not included.
Despite the scrutiny that public pensions are under, neither Keith Brainard, research director for the National Association of State Retirement Administrators (NASRA), nor Ron Snell, senior fellow at the National Conference of State Legislatures (NCSL), believes pension forfeitures would typically be part of broader pension reform. Instead, state policies are usually developed as reactions to high-profile scandals, such as the cases at Penn State and in California. The absence of a policy is largely a "headline risk," as Brainard calls it, rather than a "fiscal or actuary risk."
In Pennsylvania, state lawmakers are aiming to pass legislation that would add sex crimes against children to the list of crimes for which a pension can be revoked, the Philadelphia Daily News reported last November. Bills had been introduced this summer, the result of a Daily News report in July that former Philadelphia police officers convicted of child sexual abuse were still collecting city pensions, but gained renewed relevance after Sandusky's indictment on Nov. 4.
No bill has come to a vote, though. State Rep. Brendan Boyle, who introduced one of the bills, told Governing that he sent a letter to state Rep. Daryl Metcalfe, chairman of the House State Government Committee, asking for a hearing on his legislation, but nothing has been scheduled as of Feb. 29. Boyle admits "there is a certain amount of inertia" for any bill. "Other things are competing for time on the agenda," Boyle said. With other issues such as redistricting occupying the legislature's time, he acknowledged that it has been difficult to galvanize interest and support for his bill.
As in Pennsylvania, other historical examples show that pension forfeiture legislation is often proposed in response to a headline-attracting controversy. Tennessee's pension forfeiture policy has undergone an evolution when state lawmakers encountered new circumstances that weren't covered in previous incarnations of the law. The first law, effective in 1982, was adopted in response to a scandal involving former Gov. Ray Blanton, who was convicted of selling liquor licenses, according to a 2006 article in The Tennessean. It revoked pensions for state officials who were convicted of a felony in a state court. A second law was passed in 1993 after former county circuit judge David Lanier was conviced of federal sexual harrassment charges, The Tennessean reported, adding federal crimes to the list of reasons for which a pension could be revoked.
After Operation Tennessee Waltz in 2005, in which seven state legislators, some longstanding politicans who took office before the 1982 law was instituted, were convicted on corruption charges, legislators approved yet another forfeiture law. It established that elected public officials, elected or re-elected in 2006 and after, consent to the state's pension forfeiture policies each time they are re-elected -- regardless of their original entry date into office.
One of the most high-profile corruption stings at the time -- Operation Boptrot -- led to the Kentucky Legislature to update its pension forfeiture laws, which had covered only hired employees since 1956. As the result of a federal investigation that concluded in 1993, 15 state legislators, along with lobbyists and public officials, were convicted of crimes such as bribery, extortion, fraud and racketeering, according to the New York Times. The state statute, effective in 1993, demanded forfeiture of pension benefits if a legislator or former legislator is convicted of a felony related to their official duties.
Connecticut lawmakers scrambled to find a way to prevent former Gov. John Rowland, convicted in 2004 of selling access to his office for personal gain, from receiving the $50,000 annual pension to which he was entitled when he turned 55, the Hartford Courant reported in April 2008. A new law was adopted in October 2008, requiring the state attorney general to request a court order to have the pension rescinded. However, it was too late to revoke Rowland's pension; Constitutional law is routinely interpreted to prohibit laws being applied retroactively, NCSL's Snell said.
But in the case of former Illinois Gov. Rod Blagojevich, convicted on 18 counts of corruption last year, a statute was already in place to ensure he wouldn't receive any of the $65,000 annual pension he had earned as governor, the Associated Press reported. Tim Blair, executive secretary for the state retirement system, told Governing that Illinois's pension forfeiture policy went into effect on July 9, 1955, making it one of the oldest on record in a state that had endured several corruption scandals prior to the 1950's. But Blagojevich would be entitled, under state law, to the $129,000 that he paid into the state retirement system.
"If there's a high-profile case, and it looks like somebody who's committed a dastardly crime is now going to be supported in his or her old age at the expense of the taxpayer, people take a look at that," Snell said. "In the years that I've been looking at this, I can't spot any trend other than that."
'It's Not A Burning Issue'
Why do some states not have pension forfeiture laws? The reasons are difficult to pinpoint, and no conclusive research has been conducted. But situations in New York and Washington might provide some insight. Following a string of corruption scandals, the Seattle Times floated the possibility of a state pension forfeiture law in an extensive article on Washington's lack of a policy published in 1993. When asked about his organization's stance on the theorectical legislation, Mike Patrick, then-executive director of the Washington State Council of Police Officers, told the Times that his organization would fight such a policy. Legislation was proposed later in 1993, according to the Times, but didn't pass. As of 2012, Washington state still has no pension forfeiture policy.
In New York, pension forfeiture legislation was introduced annually from 1988 to 1992, Newsday reported in 1994, but never moved past the committee stage. "It's not a burning issue up here," an aide to then-state Sen. Caesar Trunzo, who repeatedly sponsored the proposals, told the newspaper. Police unions voiced firm opposition to the bills and lobbied against them, according to Newsday. "If I spend 18 or 19 years serving the public and commit one indiscretion, I shouldn't be penalized for a life's work," Kenneth Long, chairman for the legislative committee of the Metropolitan Police Conference of New York State, told the newspaper.
Current New York Gov. Andrew Cuomo successfully passed a pension forfeiture law as part of an ethics reform package last year. It will target select public officials who commit felonies, but only new plan members will be affected by the law.
Generally speaking, public employee unions don't fret over pension forfeiture policies, Steven Kreisberg, director of collective bargaining at the American Federation of State, County and Municipal Employees (AFSCME), told Governing. Firstly, instances of pension forfeiture are exceedingly rare, Kreisberg said, and it hasn't been a focal point of reform. AFSCME does favor certain policies, though, Kreisberg added, particularly those that give the judicial system the discretion to decide whether or not a pension should be revoked -- as opposed to a policy with "blanket application." Arizona, for instance, gives courts leeway in how much of a pension is rescinded. Connecticut requires the state attorney general to request a court order that a pension be revoked following a conviction, leaving the decision ultimately to a judge.
'The Public's Right to Conscientious Service'
NASRA's Brainard told Governing that there is also an interesting philosophical question at play with pension forfeitures. Are pensions gifts from the states, which can be rightly revoked for criminal behavior? Or are they earned elements of an employee's compensation, which are not subject to be annulled for any reason? After all, most convicted criminals don't typically lose their property as part of their sentence, Brainard said. Should the families of those convicted "be punished... because of something they had no control over?" Snell asked rhetorically.
"Normally, an employer wouldn't and probably couldn't go claim back wages that were paid," Brainard explained, "and pension benefits are part of compensation just as much as wages."
The Illinois Supreme Court provided an answer of sorts in a ruling concerning the state's pension forfeiture law. In declaring that the state pension board had a right to revoke former Gov. Otto Kerner's pension after his conviction of several federal felonies that took place while he was in office, Justice Robert Underwood wrote in 1978 that the pension forfeiture statute was designed for the purpose of ensuring "the public's right to conscientious service from those in governmental positions."
As Pennsylvania continues to confront the same issue more than 30 years later, Rep. Boyle expressed a similar sentiment.
"In light of all the attention that public pensions have received and the tight financial situation that we're facing, it's incumbent on us to ensure that the most egregious offenders don't receive public pensions," he said.
UPDATE: Maine Gov. Paul LePage signed a pension forfeiture bill into law on April 9, 2012. Alabama Gov. Robert Bentley signed a pension forfeiture bill into law on May 15, 2012. Story and map have been updated to reflect change.
Caroline Cournoyer, Kathy Gambrell, Derek Quizon and Tina Trenkner assisted in researching this story. Map by Mike Maciag.
State Pension Forfeiture Laws
Pensions of public employees and officials can be revoked for conviction of felony related to public duties.
Pensions of public officers, legislators and legislative directors can be revoked if convicted of any crime in connection with official duties; may award forfeited pension to a spouse, dependent, or former spouse.
Pensions of public employees and officials can be revoked for conviction of any felony related to official duties.
AB 1044, Chapter 322, Statutes of 2005
Pensions of elected public officials can be revoked for conviction of any felony relating to official duties.
Chapter 11a Sec. 1-110
Pensions of public officials and employees can be revoked for conviction of any crime relating to official duties.
Pensions of public officials and employees can be revoked for conviction of any felony involving a "breach of public trust."
Pensions can be revoked for public employees and officials convicted of any crime related to official duties.
ILCS 40 5/2-156
Pensions of public employees and officials can be revoked for conviction of any felony related to official duties. Trustees of individual pension fund make final decision after conviction.
Pensions of public employees and officials can be revoked for conviction of any felony related to official duties.
Sec. 12 MRSA 17062
Pension of public employees and officials can be revoked for conviction of crime related to official duties.
Joint Resolution 4 of 2010
Pensions of state legislators can be revoked for conviction of any felony committed while in office or a misdemeanor related to a member's official duties and responsibilities.
Title IV, Chapter 32, Section 15
Pensions of plan members can be revoked for conviction of any criminal offense related to official duties.
MCL 800.401; MCL 38.2701
Pensions can be withheld to pay for cost of incarceration. Court may withhold pensions of employees convicted of any felony arising from official duties.
Pensions of state legislators or statewide elected officials can be revoked for conviction of any felony related to official duties.
Pensions of public officials and employees can be revoked for conviction of any crime related to their public service.
Article 3-B of Retirement and Social Security Law
Pensions of certain public officials and employees can be revoked for conviction of certain felonies related to public service.
Pensions of public employees and officials can be revoked for conviction of specific list of felonies.
Pensions of public officials and employees can be revoked for conviction of specific list of felonies during time of public service.
Pensions of public officials and employees can be revoked for conviction of any felony during time of public service.
Pensions for public officials and employees can be revoked for conviction of specific list of crimes.
Pensions of public officials or employees can be revoked for conviction of any crime related to official duties.
Administrative rule dictates pension must be forfeited if member is convicted of any crime involving embezzlement for pension commission funds or property.
Pensions of public employees can be revoked if convicted of any crime related to official duties in either state or federal court.
Pensions of public officials can be revoked for conviction of any felony in association with the performance of public duties.
Pensions of public officials or employees can be revoked if service is deemed "less than honorable."