The Week of Three Pressers, pt. 1: Legalizing pension clawbacks

As promised, the stub has now been fleshed out with more pulse-pounding details of today’s presser!!!

This morning, Governor Shumlin held the first of his three news conferences in three successive days. The subject was a new proposal (pretty much exactly as outlined a few days ago in the Freeploid: a bill that would allow the state to seek repayment of a public-sector employee’s pension if that employee is convicted of padding his/her pension fraudulently. The amount of repayment would be at a judge’s discretion, and could be full or partial.

(If today’s presser was any indication, I expect that Thursday’s and Friday’s will also focus on a top-priority item for the Legislative session that begins next week.)

The front of the room was crowded today; there were so many public officials (and others) on hand that they may well have outnumbered the reporters. There was a purpose to the abundance of suits: to showcase broad support for the proposal. Among those playing Pip to Shumlin’s Gladys Knight: Attorney General Bill Sorrell, Treasurer Beth Pearce, State Police Commissioner Keith Flynn, Speaker Shap Smith, and House Judiciary Committee Chair Bill Lippert (who spoke for himself and on behalf of his Senate counterpart Dick Sears), plus representatives of several public-sector unions and members of the state pension board.

Shumlin and Smith promised quick action on the bill, but would not offer a timeframe or deadline. But today’s presser was clearly designed to show that all interested parties are on board with this.  

First of all, in response to a Comment posted by ApacheTrout (Kilgore’s brother?), the proposal would allow flexibility in how much illicitly-obtained pension money could be recouped. It would be up to a judge to determine the figure of repayment. Could be the whole megilla, could be just a portion thereof.

And now, on to the rest of the story.

Shumlin went to great pains, repeatedly, to confine this scandal to a single bad apple. At one point, literally. Yeah, he pulled out the aw-shucks-just-a-VErmont-boy routine again:

As a kid who used to work on an apple farm, I can tell you that when you find one worm in an apple, it doesn’t mean that all the apples have worms.

… I am proud of our state police force, and we should be clear, it was my suspicion that this was an isolated incident of fraud, and so far our investigation has backed that up.

Shumlin bases his faith in the single-fraudster theory on the clean results of two internal audits. So far, no other fraudsters have been found. Of course, the audits covered only three months’ worth of VSP time sheets for the entire force, plus another three months’ worth for the Winooski post, where Deeghan plied his trade. But Shumlin’s faith is strong.

(We’re still waiting for results of an independent forensic audit commissioned by the State Auditor’s office; Secretary of Administration Jeb Spaulding expects that report “in a month or so.”)

As for reforms that would actually address Deeghan’s exploitation of an apparently lax system, State Police Commissioner Flynn offered a few “meaningful changes,” including…

— New restrictions on requests for leave, comp time or personal time. From now on, they must all be approved by a supervisor.

— Overtime claims will be more thoroughly vetted, and compared with duty logs and other databases. Also, whenever a trooper reports more than 20 hours of overtime in a single pay period, it will be red-flagged for special review.

— A change in the watch-commander system. Currently, a single lieutenant is on call during the night shift in the north and south. In the future, those lieutenants will actually work the shift and take direct responsibility for any supervisory decisions that need to be made.

The comic relief in today’s news conference was provided by the Freeploid’s Mike Donoghue, who came with an apparent brief to push the transparency issue (a priority for the paper in 2013, as stated by publisher Jim Fogler). Donoghue pushed and prodded for new information on the Deeghan case, and Shumlin refused to take the bait. The Administration’s position is that it won’t comment on Deeghan or release any more information until the court case is over, for fear of tainting the prosecution. Which led to the following exchange:

DONOGHUE: How many criminal cases have been overturned by the Vermont Supreme Court because of an outside comment?

SHUMLIN: You probably wouldn’t ask that question unless you knew the answer.

DONOGHUE: Zero. So there should be no problem with you making a comment.

SHUMLIN: I know you don’t agree with our position, but we have to balance our concern with transparency with our wish to win the case.

A while later, Donoghue brought up the 973 bogus traffic citations allegedly submitted by Deeghan. Because his defense attorney objected, those motorists have yet to be notified that they were, in a sense, victims of Deeghan’s fraud. Donoghue asked Shumlin if it was “crazy” that the defense attorney could block notification.

SHUMLIN: As soon as the folks who are prosecuting this case have it resolved, immediately following that resolution, a letter should go out to all the people whose names were used fraudulently, to reassure them that there was no actual effect on their record.

DONOGHUE: But the effect may have already happened.

SHUMLIN: All I can tell you is what I have asked to happen.

When Donoghue asked another follow-up, Shumlin resorted to the old standby, “No comment.”

Finally, near the end of the presser, the Associated Press’ Dave Gram asked the obvious question: how did state law come to bar clawbacks of illicitly-obtained pension money?

The answer: Nobody knows. Jeb Spaulding offered his educated guess:

I think that goes back to the 1940s when the system was put in place, and the thinking was that your pension was like a property right. So they made it untouchable.

In other words, it’s another example of something I’ve come across many times in Vermont: satisfaction with the status quo. I’ve called it “grandfather’s lightbulb” syndrome, after the old joke:

–How many Vermonters does it take to change a light bulb?

— CHANGE IT? But that was my grandfather’s lightbulb!

This exemption for ill-gotten pension gains is one more of our grandfather’s lightbulbs. We don’t change it when it burns out; we wait until someone falls down the stairs in a darkened hallway.

I plan to attend tomorrow’s presser as well. Stay tuned for the latest.  

12 thoughts on “The Week of Three Pressers, pt. 1: Legalizing pension clawbacks

  1. Along these lines, does the state take the same approach to tax credits/subsidies to corporations that don’t fulfill promises on job creation?

  2. You gotta call out bad behavior, regardless of party. We rest on our laurels, bad things happen. For example…

    Treasurer Beth Pearce had a lot of nerve showing up at a presser about pension abuse after she has knowingly spiked the pension in her own office.  For the last three years she has allowed excessive overtime despite concerns from the administration on overtime and spiking.  One person in her office worked over 1,000 hours of OT for the last three years, and several others have over 400 hours of OT.  She has continued to allow this excessive overtime, while the legislature passed a law to reduce spiking.  Excessive overtime diminishes already underfunded pensions by creating unforeseen future cash obligations.  Even worse, the excessive OT was charged off to the pension funds.  Isn’t anyone going to look into this?  State employees, teachers, anyone?

  3. Scroll down (and read while you’re at it) the Digger story that barely scratched the surface of the problems n the Treasurer’s office. The spreadsheets detail the thousands and thousands of hours of OT in Beth’s office. Another digger story has her admitting she charges off the OT to the pension funds, highly unethical if not illegal. Just because the Vermont press is dormant, doesn’t mean it’s not true.

  4. There are clawback provisions in the VEGI statute but the claws are not very sharp.

    32 VSA 5930b(d) Recapture. To the extent a business authorized to earn employment growth incentives under this section experiences a 90-percent or greater drop below application base jobs…all authority to earn and claim incentives pursuant to this section shall be revoked, and such business shall be subject to recapture of all incentives previously claimed, together with interest and penalty.

    Hypothetical: A company has 100 jobs, proposes to create 10 more and gets a VEGI award. It creates the jobs in year one but is purchased the next year and the new (out of state) owner lays off 30 workers (the 10 new workers plus 20 more). This drops payroll from 110 workers to 80. In this situation, the company is NOT subject to recapture. Remarkably, the company will not be subject to recapture unless it lays off all but 10 of its 110 workers.  

  5. … and risk hurting the business’ fee-fees, and potentially lessen the likelihood that other corporate pirates will come to Vermont seeking risk-free tax breaks.

    Seems like a good deal to me, but then I’m just an irresponsible blogger.  

  6. What problems. Wendy ‘junkyard-dog’ Wilton’s manufactured so-called ‘problems’, which turned out to be a load of crap & also a smear meant to deceive the gullible public during an election?

    “Thousands & thousands”? Hyperbole was not missed, nor the concern trollery. To defend WW’s “charges” & her patently false & misleading disinformation you would have to be a supporter. I suggest you scroll down & read the story sir.

    Over three years:

    In an interview, Pearce answered questions without hesitation as she commuted between campaign stops[..]Pearce says while overtime in her office has increased because of personnel changes, overall expenditures on staff have declined by $200,000 over the last several years[..]Pearce said Wilton’s accusations are unfounded and she chalked it up to election year politics. The IT project is on track and under budget, she says. The expenses associated with the pensions are audited every year, and, she said, there have been no findings, i.e., any irregularities in the reporting.[..]The project, which was estimated to cost $13.5 million, will come in $1.5 million under budget, Pearce says. The state has spent $7 million to date and Pearce hopes to have the project completed next year.

    From Wilton’s hometown newspaper, Herald/Times Argus story:

    By contrast, her Republican challenger, Wendy Wilton, has turned the treasurer’s race into a spectacle of partisan belligerence and bogus attacks. Unlike any other candidate running for state office this year, Wilton has dragged politics into the gutter[..]as a state candidate, she has been a disaster, fueled by more than $100,000 in super PAC money from a Burlington heiress, Lenore Broughton, who set up an organization to push conservative causes.

    Excessive overtime diminishes already underfunded pensions by creating unforeseen future cash obligations.

    Unforseen? Are you sure about that? Not positive but appears to do the exact opposite, by paying OT rather than hiring & training new employees plus other associated employment costs, it seems to be a savings despite the fact that it is overtime & affects pensions, ever hear of pennywise but pound foolish? Looks like Ms. Pearce has, if this practice represents a savings.

    Ever the consummate professional:

    Pearce has said that the General Fund portion of the budget had been in a “surplus” position of about $100,000 a year for the last two years. Her office transferred that money to the Survivors Benefit Fund for the families of public sector workers who die on the job.

  7. Even if true, which I can’t speak to, how would charging legitimate costs for administering pension funds to those funds be either illegal or unethical?

    Overtime may or may not be cost-effective vs hiring and training additional staff.  Unless you claim the hours are simply made up (a la Deegan) the available evidence supports the conclusion that using overtime has been cost-effective in this case.

    Surprised you can hear the crickets over the sound of that axe being ground…

  8. you do not think the so-called ‘crickets’ mean you are correct as it is clear the source you yourself provided disproves your accusations.

  9. because no one here is interested in engaging with you on this red herring.

    Don’t read too much into that beyond having better things to do.

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