Numerous government employees have been illegally collecting both a salary and pension, also known as “double-dipping,” including one individual who did so for an extraordinary 14 years, according to the latest audit report by V.I. Inspector General Steven van Beverhoudt.
The report, released Monday, identified systemic failures across numerous departments that have cost the Government Employees’ Retirement System millions, and blatant violations of the V.I. Code’s “return-to-work” law.
Double dipping is not inherently illegal, but the law limits the number of hours a retiree may return to work as a government employee or contractor — and forbids some from returning to work at all, depending on the terms of their pension benefit.
According to the report by the Inspector General’s Office, one of the re-hired retirees owes GERS $458,341, and there are at least 14 others who owe in excess of $10,000.
“GERS cannot rely primarily on retirees and agencies self-reporting the employment information or obtaining the information through media reports. When the government entities do not comply with the return-to-work law, the government’s sponsored retirement system is not protected from potential fraud, waste, and abuse,” van Beverhoudt wrote.
The scope of the Inspector General’s audit was fiscal years 2015 through 2019, and the report noted that a COVID-19 emergency executive order suspending the return-to-work law did not affect the audit’s findings.
GERS completed an internal review in 2018 that “showed seven Government employees illegally receiving a GERS pension and a salary. In addition, the report showed that GERS had overpaid the seven individuals a total of $1,292,767. GERS subsequently suspended the seven individuals’ annuity payments because of non-compliance with the return-to-work law.”
Since that time, GERS has been working to analyze the status of 65 re-employed retirees for possible violations, with the vast majority — 56, or 86%, being employed in the executive branch. Eight are working in semi-autonomous agencies, and one is employed by the Legislature, according to the report.
GERS issued another report in May 2020, but had only finished reviewing 37 of the 65 re-employed retirees, 22 of which had committed violations, van Beverhoudt noted.
“Consequently, GERS determined, and its report shows, that GERS paid $2,068,736 in annuities to 22 retirees who violated the return-to-work law” and “did not collect $1,172,676 in contributions from retirees and the Government that was due to GERS when the employees exceeded the allowable period for which they could return to work without forfeiting their retirement benefit,” according to the report. “GERS collected $335,541 in repayment, leaving $2,905,871 owed.”
Juel T.R. Molloy factor
It was a media investigation that prompted the GERS audit and the Inspector General’s review, after The Daily News obtained copies of documents detailing the employment of Juel T.R. Molloy in December 2018.
Molloy worked for Gov. Kenneth Mapp as a senior policy adviser for Human Services, Health, and hospitals starting on Jan. 5, 2015, at a salary of $97,000.
Mapp claimed at one point that she worked for the Public Finance Authority, and records showed that the PFA cut a check to GERS in 2016 to cover two pension obligations for Molloy totaling $89,609.90 — meaning one government agency used taxpayer funds to pay a pension obligation to a different government agency.
GERS has long refused to provide the names of employees caught double-dipping, and the Inspector General’s audits do not identify employees by name. The report released Monday does not identify Molloy by name, but notes that “News articles about the re-hiring of a high-profiled retiree during the previous administration, and reports from GERS that this issue was not isolated, led the Office of the Virgin Islands Inspector General to commence an inspection on the Government’s compliance with the return-to-work law.”
What the law allows
The law allows certain critical workers like police, nurses, and teachers to collect unlimited hourly payment and a pension for up to two years. Further, certain employees may continue working for up to 600 hours a year for two years. The law also prohibits a retiree from being rehired as a contractor at a higher pay rate than they earned as a government employee, “and in any case such rate of compensation shall not exceed $55,000 per year.”
Lawmakers are also permitted to receive a government pension while earning their salary as a senator, and a member of the Judiciary may receive compensation while receiving “an annuity for non-judicial service.”
Mapp issued an executive order on March 2, 2016, requiring all departments and agencies to educate retired employees on the law’s requirements around receiving a pension and salary, and provide GERS with a copy of every NOPA for retirees who’ve been re-hired. Gov. Albert Bryan Jr. also issued a COVID-19 emergency executive order on May 7, 2020, “that suspended the return-to-work law during the state of emergency or until rescinded,” according to the Inspector General’s report.
The audit sheds light on the scope of the government’s double-dipping problem.
“From the past and present administration, we asked Personnel officials about the Division’s role in notifying GERS when a retiree returns to work. The officials gave different accounts of how GERS is provided the employment information,” according to the report. “In one instance, Personnel officials stated that Personnel sends GERS a NOPA for all employees. A second account was that the Government department or agency sends the NOPA to GERS, and thirdly, the retiree was responsible for taking the NOPAs to GERS.”
GERS officials “said they did not always receive NOPAs from Personnel. We did not find that Personnel had established a policy that provided consistency in notifying GERS on re-employed retirees. Therefore, the lack of a policy creates a systemic problem for the Government,” van Beverhoudt wrote.
Pension system left hanging
The Inspector General asked what GERS is doing to prevent the practice of double-dipping and the answer essentially is not much.
If a retiree doesn’t self-report that they have a new government job or contract, “GERS officials stated that they would not be aware and have no way of knowing when the Government hires a retiree unless the agencies and instrumentalities report that information to GERS. To complicate matters, officials stated that Government agencies and instrumentalities do not always notify GERS when they hire a retiree,” according to the report. “The officials said that GERS obtains information on a retiree’s hiring when it is a high-profile person and announcements are made.”
The Inspector General’s office analyzed 15 of the 22 retirees that GERS determined owed at least $10,000.
“We found that at least 4 of the 15 retirees noted in the previous finding held positions that are routinely given a public announcement and are jobs that are of high public visibility. Also, at least 11 of the 15 retirees held exempted positions. Many of the exempt positions were positions at the top tier of management within the hiring departments,” van Beverhoudt wrote.
Double pay for 14 years
In one case, an employee “who double dipped for 11 years started making regular retirement contributions in the last year of re-employment. Although regular contributions started, the retirees’ retirement pay continued. This situation occurred in 4 of the 15 cases reviewed,” according to the report. In addition, “regular contribution payments were not paid by 4 of the 15 retirees sampled; one of the four retirees double dipped for 14 years.”
In October 2020, “to alleviate double dipping, GERS received limited access to the Personnel system. GERS can now routinely compare its computer system against Personnel’s system to obtain information,” according to the report. “This access provides GERS with an added recourse to identify hired retirees.”
There were retirees who had been hired at semi-autonomous agencies, and van Beverhoudt identified “19 retirees employed across these entities of the Government. Of the 19 retirees identified, we found that GERS’s list contained four of those retirees. Therefore, a total of 15 re-employed retirees were unknown to GERS.”
Agencies with double-dippers
Seven of the 15 were employed at the V.I. Water and Power Authority between 2016 and 2020, one at Waste Management from 2018 to 2019, and seven at the Legislature between 2015 and 2019, according to the report.
“These Government entities denied GERS the ability to evaluate and monitor the retirees’ employment status to include, at a minimum, the annual and maximum time limit afforded to return-to-work and the salary limit of not exceeding $55,000 per year along with other factors applicable to the law,” according to the report.
The law itself deserves additional scrutiny, van Beverhoudt added.
“We believe that the law may have to be revisited too. At a minimum, the law should address part-time employment of retirees whose special skills may be needed on an emergency or part-time basis,” according to the report.
The report noted that GERS responded to the audit and “will continue its efforts to reconcile, determine, and collect all overpaid contributions owed by retirees who violated the return-to-work law.”