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Cases involving several top state officials who recently tapped an obscure state law to gain generous early retirement packages by claiming to have been fired turn out to be only the tip of a lucrative state pension iceberg.
A review of pension records by CommonWealth reveals that more than 1,000 state employees have seized on a variety of special early-retirement provisions since 1990, with hundreds of them obtaining pensions for which they may not have been qualified.
In hundreds of cases, the timing of the application raises questions about the validity of a claim.
The review shows that at least four ex-state legislators, including former House majority leader Richard Voke, have been granted early pension payments, despite apparently not qualifying for them. In hundreds of other cases, the timing of the pension application raises questions about the validity of claims that the employee was terminated or their position was abolished.
State Treasurer Shannon O’Brien, who chairs the state retirement board, said she established new procedures two years ago to cut down on potential abuse of the system, but the questionable timing of pension applications has continued under her watch, and one of the cases now in question involving a high-level state official was approved by the retirement board after the new procedures were in place.
and former House majority leader Richard Voke.
Meanwhile, top state officials, including lawmakers voted out of office and ex-legislators fired from plum patronage jobs, have legitimately qualified for a benefit whose public policy purpose appears dubious at best. Among those tapping into the rich grab bag of retirement provisions is former governor Paul Cellucci, who is now collecting $42,573 a year while serving as US ambassador to Canada on a federal salary of at least $130,000 a year.
The statute governing these early retirement pensions–Section 10 of the state retirement law–dates back to at least the 1950s, and no one in state government today can say for sure what its original purpose was. “It’s hard for me to say what the intent is,” O’Brien said in an interview. “We don’t know.” But the law provides several routes to pensions paying at least one-third of the average of an employee’s three highest paid years for state workers who have 20 years of service but have not reached age 55, the age at which public servants become eligible for regular retirement benefits.
In an apparent attempt to give longtime public servants some protection against major shakeups, both political and organizational, Sec. 10 allows these early pensions for 20-year veterans of state service who are terminated or whose positions are eliminated. The statute also extends these benefits to those who fail “of nomination or re-election,” a provision tailored to benefit state lawmakers who are voted out of office. In addition, the law makes public employees with 30 years of service eligible for early pensions before they are 55 years old.
Earlier this year, the Boston Herald reported that four top administration officials and a deputy to Attorney General Thomas Reilly recently applied to begin receiving these lucrative “termination” pension benefits. In all five cases, the Herald raised questions about whether the officials had actually been terminated or had their positions abolished.
But possible misuse of the decades-old law runs far deeper than a handful of cases. Of the 1,100 pensions approved since 1990 under the special retirement statute, fully one-third were granted to state workers who had passed the 20-year qualifying mark by less than a year. In 10 percent of cases, employees cashed in within a month of their 20th anniversary in state service.
“That hardly seems a coincidence,” said Michael Widmer, president of the Massachusetts Taxpayers Foundation.
Some of those obtaining the deal had political connections that raise further doubts about whether the “termination” represented the sort of unwelcome hardship on career bureaucrats the law was designed to relieve.
Susan Costello was a rising Republican activist when former Gov. William Weld took office in 1991, and the welfare department employee found herself promoted to the post of assistant secretary for administration and finance in the Executive Office of Health and Human Services soon thereafter. In January 1996, Costello applied for an early termination pension, based on a letter signed by the acting human services secretary informing her that her “function has been eliminated” from the human services office. Costello, then 42, had accrued 20 years and two days of state service as of her termination date. After leaving state government, Costello joined an Andover-based lobbying firm headed by Weld’s ex-chief secretary, John Moffitt, and began collecting $28,814 a year from the state. Costello will draw about $350,000 in pension benefits before she reaches age 55.
Richard Copp, a spokesman for the health and human services office, said Costello’s position was eliminated as part of a reorganization plan, her duties apparently divided up and reassigned to two newly created posts. Costello did not return phone calls seeking comment.
In 1998, Ilyas Bhatti, who held top state jobs through Democratic and Republican administrations, including head of the Metropolitan District Commission, left his position as an associate project director on the Central Artery Project to start his own consulting firm, according to published reports. But a letter from the Mass Highway personnel director said Bhatti, who was 53 at the time, was being “removed” from his position “due to reorganization.” As a result, Bhatti began collecting $37,295 a year.
“My position was eliminated,” Bhatti said in telephone interview. Doug Cope, a spokesman for Mass Highway, confirmed that the position Bhatti left was not filled, but said that Bhatti elected to leave state government on his own.
In at least four cases, former legislators appear to have been granted early pension benefits they did not qualify for. Lawmakers who choose not to seek re-election cannot receive retirement payments before they reach age 55. However, Voke, the former House majority leader, former state representatives Francis Mara and Angelo Marotta, and former state senator Paul Harold all began receiving early pension payments in the 1990s after leaving office voluntarily, before they were 55.
Reached at his Charlestown home, Voke, who began receiving his pension of $25,672 per year when he was 50, refused to discuss the issue. Mara and Harold, who were age 45 and 44, respectively, when they applied for their pensions, both said they were led to believe they were eligible for the benefit and that retirement board officials raised no questions about their applications.
Questions are being raised now. “Our initial interpretation of the law would not allow an application [for early pension] to be granted in these cases,” said Jon Tapper, a spokesman for O’Brien, who took office after the four cases in question. O’Brien’s office is now reviewing the four ex-lawmakers’ pensions.
O’Brien said the large number of termination pensions going to workers who had just crossed the 20-year qualifying threshold raises a red flag. “It suggests to me that the law may have been misapplied in the past,” said O’Brien.
In the case of other ex-lawmakers, the application of the law appears to have been sound, but the public policy rationale questionable. After being defeated for re-election in 1990, former state senator Theodore Aleixo, now a Beacon Hill lobbyist, began collecting a “termination” pension of $18,103 per year at age 48. Former state representative Vincent Piro began collecting an early pension of $16,351 per year at age 49, apparently qualifying after losing a bid to move up to the state Senate in 1984.
The law has also been a boon to former legislators who were installed in high-paid patronage jobs by one administration, then removed by another. Former Democratic state representative Timothy Bassett of Lynn, who resigned from office after being on the losing side of the 1985 House leadership battle, was named head of the Massachusetts Government Land Bank by then-Gov. Michael Dukakis. When he was replaced by the Weld administration in 1995, Bassett, then 47, was awarded $212,000 in severance pay by the agency. But he also earned the right to begin drawing a $38,419 per year pension.
In 1990, former state senator Carol Amick, a Bedford Democrat, was named by Dukakis to head the Low-Level Radioactive Waste Management Board. When she was fired in 1999 to make way for a Cellucci administration appointee–state Sen. Thomas Norton, a Fall River Democrat who had crossed party lines to endorse Cellucci–Amick, then 52, qualified for a $36,409 annual pension.
Cellucci himself qualified for an early pension on the grounds of 30 years of government service, a provision that does not require termination or failed re-election. When he resigned last year to accept his diplomatic appointment, the former governor had served in state government for just 25 years. But Cellucci was able to credit six years of service from the 1970s as a member of the part-time board of selectmen in his hometown of Hudson, a post that earned him $1,000 to $1,500 per year, in order to qualify for a state pension two years before he turned 55.
O’Brien’s office claims to have tightened review of the termination pension requests by requiring all applications since September 2000 to come before the retirement board. Previously, applications were handled administratively. However, the pattern of one-third of pensions being awarded to workers within a year of qualifying– which records show as well established under her predecessor, Republican Joseph Malone–has continued during O’Brien’s three years in office.
After Herald reports of recent early-retirement grabs on questionable grounds, O’Brien pledged to review all the termination pensions granted since she took office in 1999. Of the five cases reported by the Herald, the retirement board chaired by O’Brien approved four. (The board has twice denied the application of Peter Forman, Gov. Jane Swift’s former chief of staff, claiming there is insufficient evidence that the 43-year-old former Republican legislator was in fact fired by Swift. Forman is appealing the decision to the Division of Administrative Law Appeals, a state arbitration panel.)
In two cases, the retirement board has ordered hearings to reconsider their approval. These cases involve Bruce Bullen, the former director of the state’s Medicaid program, who left to become chief operating officer of Harvard Pilgrim Health Care, and Barbara Burke, the former correspondence director for Swift, who started work as a $68,000-a-year manager at the MBTA three days after leaving the governor’s office.
In the wake of new questions raised by CommonWealth, O’Brien said she will call for a commission to consider a complete overhaul of the law. “Everything’s on the table,” said O’Brien, including the provision for giving early retirement benefits to lawmakers who are voted out of office. “I certainly think it’s something that we need to be questioning.”
But in terms of re-examining questionable pensions approved before she took office in 1999, O’Brien balked. “We’re talking about hundreds and hundreds” of cases, she said. “I think my first response is to make sure that all of the claims under this board under my administration are valid ones.”
“Even by Massachusetts standards this seems extravagant,” said Widmer, the Taxpayers Foundation president, of the lucrative early-pension provisions. “This defies any logic or comprehension.” As to the hundreds of potentially suspect pensions that seem to have been approved with little scrutiny, he said, “This is an abuse under the best of circumstances. In the midst of a fiscal crisis it is an absolute absurdity.”
