Republican Sen. Steve Oroho and Assembly Republicans Alison Littell McHose and Gary Chiusano, of the 24th Legislative District, said today’s report by the Office of the State Comptroller identifying over 200 people who are mistakenly enrolled in the Public Employee Retirement System (PERS) indicates that more work needs to be done in training local officials about the eligibility requirements that must be met in order to legitimately participate in the system.
The comptroller’s audit found that many local government entities are not in compliance with a 2007 state law that prohibits unqualified independent contractors from participating in PERS.
Last year, Oroho, McHose and Chiusano sponsored a bill (S-1392/A-2452) that was signed into law requiring officers who certify the eligibility of program participants in the Public Employee Retirement System (PERS) to undergo training in order to prevent pension and benefit fraud.
“This report is troubling news for taxpayers and employees who are eligible to participate in PERS,” said Oroho. “Having ineligible people in the system is a contributing factor in the perilous condition the pension system was in prior to the reforms signed into law last year. This is another aspect of the pension system that needs much closer attention. Local officials should know that nothing should be taken for granted.”
In response to today’s report, Governor Christie has asked the Commissioner of the Department of Community Affairs, Richard Constable III, to require that auditors at the local government level ensure compliance with the statutory requirement that prohibits municipalities from treating vendors as employees.
“This audit sounds an alarm to all local governments that they must be diligent in certifying pension enrollment as well as all other aspects of employee compensation,” said McHose. “The legislation signed into law by Governor Christie last year was specifically intended to address this issue.
“The sample size of this audit is relatively small but taxpayers could be paying millions of dollars to people who don’t belong in the system,” commented McHose. “The training made available to local officials is not meant as an exercise, it should be utilized to ensure those responsible understand the differences between private contractors and those who are legally eligible to participate in the system.”
Governor Christie has also directed the Division of Local Government Services to include as part of the municipal Best Practices questionnaire for this year that municipal CFOs certify that the municipality has complied with the existing pension eligibility law that requires vendors to be removed from the pension system so they are not wasting pension resources. A lack of compliance could put local aid payments at risk.
“It is extremely disappointing when you read between the lines of this audit and realize that millions of taxpayer dollars are being sent or committed to individuals who are not entitled to be in the PERS program,” said Chiusano. “Every government agency and department must closely examine every cost and be absolutely certain they are legitimate expenses.
“Much attention has been given to eliminating the waste of tax dollars throughout government by putting mechanisms into place that help in complying with the laws,” explained Chiusano. “The certification program is not another layer of bureaucracy, but an opportunity to give help to local government. Apparently, many think this law is only a suggestion and not a mandate. They couldn’t be more mistaken.”
Senator Oroho, Assemblywoman McHose, and Assemblyman Chiusano are already in touch with State officials. If more reform is needed in statute to deal with this pension abuse, the legislators would sponsor and support such legislation.