Several former West Virginia public employees, now retired, have taken advantage of a loophole allowing them to collect their pension and earn a state government paycheck at the same time.
The Legislative Auditor's Office released a report Tuesday on the controversial practice during the West Virginia Legislature's September interim meetings.
The auditors found that 35 retired state workers were performing work for the state, all while receiving annuity payments from their public pensions.
The practice is sometimes called double dipping, though that usually applies to retired state employees who return to state service as employees. West Virginia Code sets a cap on how much a retired state employee can make if they return to work at another state agency or contract with the state.
State employees who retire and then seek reemployment on a full-time basis must have their annuity suspended until retiring again. A retiree can return to work on a part-time or legislative per diem basis as long as their income stays below $15,000 per year.
Auditors compared social security numbers of retired state employees in the Public Employee Retirement System with contractors registered in the state's centralized accounting system, called WVFIMS.
They looked at former employees who retired in 2011, and who also received vendor payments between. Jan. 1, 2011, and Jan. 31, 2012. They found 31 former employees who made more than the $15,000 threshold. They found four more former employees had been rehired as temporary employees and paid more than $15,000 while still receiving pension annuities.
Another 79 retired state employees, acting as contractors, had phone numbers listed in the state employee phone directory. The auditors were unable to determine if another 321 former state employees were contract employees in 2011 for various reasons, including state agencies couldn't verify the employment status of 209 individuals.
The practice first came to light last year with Joe Smith, the former director of the Division of Personnel and a member of the state Racing Commission. Smith provided contract services for both the Manchin and Tomblin administrations while still receiving his full public pension annuity.
Smith retired from the Division of Personnel in July of 2001. In April 12, 2005, Smith signed a sole-source contract with the office of former Gov. Joe Manchin. Shortly afterward Smith formed Personnel Consulting, LLC. Smith's duties were providing advice to the Governor's office regarding personnel decisions and making sure the state was complying with laws and regulations.
Smith became a commissioner with the West Virginia Racing Commission in May 2009. Smith's consulting contract was terminated in November 2010 by the office of Gov. Earl Ray Tomblin after renewing the contract six months earlier.
According to a January 2012 report from the Legislative Auditor's Office, Smith acted with the privileges and authority of a state employee. Smith was provided with office space, meetings rooms, computers and supplies, printers and copiers, internet and telephone. He was also given a phone number, state phone directory listing, parking space, security access card, and key.
Emails between Smith and other state employees show that Smith often approved and signed documents, such as WV-11 forms, which allow pay rate changes for employees.
The Legislative Auditor's Office recommends that lawmakers either eliminate the $15,000 cap for all retired state employees, or prevent retired state workers from collecting pension annuity payments when they do contract work for the state. They also recommend that the Legislature put a specific limit on contracted retired state employees.
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