Posted on 02/14/2005 10:34:26 AM PST by NormsRevenge
San Diego's pension system has issued a report on how it handles payments once a retiree dies, but some City Council members say it raises more questions than it answers.
The report states that since 1996 the pension system inadvertently has paid 36 individuals after they died. Those 36 are among 114 cases in which payments to deceased retirees might have occurred and are under review. The report does not mention the 114 number.
"I view that as a material fact that should have been included in the report," Councilman Brian Maienschein said.
Maienschein is a member of the council's Government Efficiency and Openness Committee, which requested the report Jan. 31 after pension board member Diann Shipione testified that she suspected the system pays hundreds of dead people.
The committee is scheduled to discuss the report today.
"We were trying to be responsive to their request for numbers," said Paul Barnett, the system's assistant administrator.
Certain issues, such as the period the system was expected to cover in the report, was not exactly clear, Barnett said.
Administrator Larry Grissom told The San Diego Union-Tribune this month that payments had been made to about 200 retirees after they had died. Barnett said Friday that Grissom was referring to an outdated list that included a number of retirees who might have been paid after death.
That 200 figure since has been reduced to 114, Barnett said.
Councilwoman Donna Frye, the efficiency and openness committee's chairwoman, complained of a lack of clear and concrete numbers from the system.
"The numbers don't necessarily add up, and you can't get a straight answer," Frye said. "These are not tough questions."
Pension system officials acknowledge that benefits sometimes are paid after a retiree has died because of delays in learning of the person's death. The system, which includes 10,712 current workers, has 6,058 retirees, survivors and spouses collecting benefits.
Typically, a delay in learning someone has died is one or two months, but it has been as long as a year, Barnett said.
In one case, a retiree died in November 2002 and his family continued to receive payments totaling $106,000 over the next 11 months. The discrepancy was discovered in a "death match audit," a computerized check in October 2003 of Social Security Administration records of known dead people.
The system recovered the full amount of the overpayment, Barnett said.
Before that mistake was discovered, such audits had been done three times: in 1996, 2000 and 2001. After the $106,000 overpayment was discovered, the system began performing quarterly audits.
"People dying is what we deal with, unfortunately, on a regular basis," Barnett said. "We (now) have very good procedures to monitor (when members die). . . . But there was a period of time when we were not closing out cases in a timely fashion."
Since 2001, most members have been paid by direct deposit, which leaves no paper trail such as a canceled check. That has made it harder to catch payments after death, pension officials said.
The system also learns about deaths through newspaper obituaries or notifications by relatives, labor unions and financial institutions.
Councilwoman Toni Atkins, the third member of Frye's committee, applauded the system for tightening its auditing procedures, but she said she was concerned that the report did not include a full accounting of the potential problem, including the 114 potential overpayments under review.
"I get irritated when people don't give me the whole picture," Atkins said. "We should not have to pull teeth, and we shouldn't have to figure out what the right question is."
Shipione has said the problem of payments to dead retirees is a symptom of a larger issue of mismanagement that has led to a $1.37 billion deficit in the city's $3.6 billion pension system.
The deficit was caused by underfunding that the council began in 1996, benefits increases approved in 2002 and the stock market downturn of 2000-02. Failing to report the scope of the deficit to potential bond holders is a central part of an ongoing federal investigation into the city's financial practices.
Shipione said she will recommend to the committee that newly hired City Auditor John Torell audit the system for payments to dead retirees.
"This system can't be relied upon to audit itself," Shipione said.
Shipione, who first brought the massive pension underfunding issue to light, said she was disappointed with the report.
"I still haven't seen anything about the amount (the deceased) were overpaid, the length of time they were overpaid and whether any money was recovered," Shipione said.
That kind of information was not immediately available Friday, Barnett said.
The report provided some financial data for nine of the dead retirees over the past year. Total overpayments for eight of them were $61,906. Of that, $43,600 is linked to one case that is being litigated for alleged fraud. The retirement system also owed $1,239 to the estate of the ninth member, as of the Feb. 4 report.
The California Public Employees Retirement System performs two computerized checks each month for members who have died, said spokesman Darin Hall. One is an Internet-based search and the other is a review of lists of known dead people provided by the Social Security Administration.
Even with those checks, it is sometimes hard to find out about deaths among its 413,000 retirees before monthly checks are mailed, Hall said.
"That's always going to be an issue," Hall said.
Brian White, chief executive officer of the San Diego County Employees Retirement Association, said nearly all deaths of retirees at the county are reported by their families, who may be eligible for survivor benefits. The retirement association pays out $250 million in benefits annually.
"Most people are honest, so they report it," White said.
The retirement association pays Pension Benefit Information, which provides research services, to identify dead retirees and beneficiaries through various databases, including the Social Security Administration, every quarter, said Kathryn Baroni, the company's client services manager.
Baroni said the company also updates the county's files annually.
White said the company's latest report found that pension checks totaling about $83,000 during a one-year period were paid to 13 retirees who had died. About $20,000 remains uncollected, he said.
Now why should anyone question such a noble cause as payments to the dead? After all, they need to eat too...well, just ask any liberal Dem who wants to get elected...
I guess the question is, who do ya sue to get the money back.. ? lol
$115K per year pension. No wonder the system is bust.
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