Cleaning up ATRS | Arkansas Blog

Monday, September 21, 2009

Cleaning up ATRS

Posted By on Mon, Sep 21, 2009 at 4:40 PM

Did the Arkansas Teacher Retirement System need new leadership when it changed directors late last year? It's a "duh" question. The recent controversy about potentially millions in excessive pension payments recently discovered by new director George Hopkins is but one example of embedded past ills in a long list needing attention.

Today comes a legislative audit report for the fiscal year ending June 30, 2008, covering time when former Massachusetts legislator Paul Doane was still in charge. He left amid scandal over his state-financed travels to his other homes.

The audit isn't a pretty one. Payments were made to vendors before contracts were signed; a law firm was hired without proper bidding procedures; millions of dollars in late deposits and poor bookkeeping were noted; auditors found modifications to mortgage terms in real estate investments without ATRS board approval.

Hopkins says ATRS has taken steps to clean up practices cited in the audit.

Speaking of pension overpayments to double-dippers: Hopkins met with Gov. Beebe today on the matter and, a spokesman said, the governor encouraged Hopkins to continue to work to clarify legal issues. He seems satisfied with the course Hopkins is taking.

I ranted over the weekend about Hopkins pulling back from collections of pensions paid to retirees in seeming contravention of a state law that required retirees who went to work for colleges and universities (also ATRS member agencies) to reduce their pensions to reflect the new jobs.

Hopkins had been moving vigorously to collect what could be $10 million or more in overpayments He's come under heavy fire from affected retirees and legislators. But he said he'd also learned more about aspects of the law that could protect these retirees from being forced to make refunds. If so, those who followed the law and had their pensions reduced could, in turn, be due refunds, though perhaps not more than $1 million or so altogether.

Hopkins is seeking both private and attorney general's advice on several legal questions:

1) Whether a 1995 law that repealed the pension benefit reduction had the effect of repealing it for all time, even though a 1997 law by Dave Bisbee restore the benefit reduction. The question is whether the 1995 repeal gave even future retirees a "lockbox" protection against any reduction in future pension payents once they were vested. 2) whether ATRS was prevented by legal doctrine from claiming refunds of money that a previous director, Bill Shirron, told members they could keep. Shirron told retirees they could ignore the 1997 law requiring reports of new earnings from a member agency. 3) whether another legal doctrine prevents seeking refunds because, though ATRS had a policy to collect that money, it had never done tried to do and had not even created the necessary form for retirees to report that income. 4) whether a general statute of limitations applies to any recoveries of pension payments. There is none in the law specifically, but some general civil statutes of limitations might set 3- or 5-year limits, Hopkins said. 5) There are technicalities about individual laws that tie the various colleges to the retirement system. 6) since the law specifically exempted some ATRS retirees that went to work at other state agencies (such as the State Education Departyment) but not others, is there a constitutional equal protection argument against claiming it from some and not others.

Hopkins said he intended to follow the law, whatever it was. But with these new questions, he sad he didn't want to attempt to collect any money from those already notified, or send further notices, until they were clarified.

This sounds like a rational approach. I'm still not sure I buy the legal arguments, some of them developed, of course, by people madly seeking to avoidi refunds required by  a law they were well aware of. But the situation serves to build frustration about the out-of-control, shoddy operations that distinguished this retirement system in years past and the sad fact that there apparently will never be accountability for all those past wrongdoings.

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