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School Boards Get Lesson on New Pension Fraud Measure

June 24, 2008

By Eden Laikin and Sandra Peddie, Newsday, Melville, N.Y.

Jun. 24–Dramatic new legislation barring attorneys from serving as both employees and independent contractors for school districts effectively shuts the door on that practice, the head of the New York State School Boards Association said yesterday.

“We will advise our members to get on the same page and to make sure that they are crystal clear about the financial arrangements,” said Timothy G. Kremer, executive director of the association. In the past, he said, school board members didn’t understand that there was a problem in allowing private attorneys, who were paid retainers, to be also reported as employees allowing them to receive public pensions and, often, lifetime health benefits.

Newsday began writing last February about attorneys being listed as school district employees. At that time, some district officials and attorneys said the practice was acceptable and routine.

Kremer said the association, which initially opposed the reform legislation, will hold workshops to train school board members on the law. Although Internal Revenue Service rules bar a person from being treated as both an employee and independent contractor for the same work, the new legislation would make anyone doing so at a school district in order to collect a pension guilty of a felony. It also makes any violator subject to a fine of up to three times the amount earned.

The bill, which passed the State Senate yesterday on a 60-0 vote, also seeks to bar retired school administrators from returning to the same or similar jobs for a year after retiring. This spring, Newsday highlighted examples in which retired administrators were rehired to six-figure jobs. Some districts defended the practice, saying there were few candidates for the positions.

Mike Cohen, a former school superintendent who stopped his state pension when he was rehired to work in the Brentwood School District, said he applauds “anything that brings new people into the pipeline.” Sachem civic activist Fred Gorman also said he supported the bill, saying “It is a very small step in the right direction.”

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Copyright (c) 2008, Newsday, Melville, N.Y.

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