Widow seeks child support from taxpayers for son conceived after police captain’s death

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New Jersey pension board officials are considering whether to provide pension benefits for a child that was conceived through in-vitro fertilization using sperm harvested from the body of a retired Newark police captain, who died in a scuba diving accident.

The N.J. police officer's widow is seeking pension benefits for the child, who was born more than a year after the officer died in an accident.

The retired police captain, Gary Prystauk, was 50 at the time of the accident, in which doctors say he had a heart attack while diving in the icy Shrewsbury River in November 2006.

His widow, Francia Prystauk, says that the couple had been married for 18 years and had tried numerous times to start a family, but each attempt resulted in a miscarriage. After the accident, while she was at the hospital, she made the decision to harvest her husband’s sperm, after a business card fell out of her purse from a fertility clinic that the couple had  visited earlier.

“I had a moment of clarity,” she said. “I took it as a sign.” Doctors removed a specimen about six hours after the husband’s death.

Prystauk used the specimen several months later, and the child was conceived in March 2007. Her son Jacob was born on Dec. 7, 2007.

The pension board originally denied paying benefits to her son because he was born more than one year after the death of his biological father. Her new appeal is based on a court ruling she received declaring Jacob to be the biological son of Gary Prystauk.

Prystauk, 40, is currently receiving pension benefits of $4,273.50 per month as the widow of a retired officer. She is seeking another $1,282.05 for Jacob, which he would receive until the age of 18.

A recent appellate court ruling in Philadelphia found that a child who was conceived after his father’s death was entitled to social security survivor benefits. In that case however, the sperm was donated by the father while he was still alive and the father was involved in the decision to have the child

The police and fireman’s pension board said it does not know what to do, and has turned the matter over to its attorneys to decide.

However, the widow Prystauk thinks the issue is clear: “Jacob had a father, he just happened to pass away.”

The Star-Ledger

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Correction department employees switching jobs to scam pension system

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A Fox undercover operation in Boston has exposed shady, but legal loophole in the Massachusetts Department of Correction that allows managerial and administrative workers to retire many years earlier than they would otherwise be entitled to receive full pension benefits.

Here’s the way it works: A department employee in another group, makes a career switch and becomes a correction officer, a more hazardous job that allows employees to retire far earlier than other positions.  As long as the employee remains a corrections officer for 12 months, they are treated for retirement purposes as though they spent their entire employment in that position.

The practice is known as group jumping, and Fox found 14 instances of the practice since 2005.

One such employee interviewed briefly by Fox, was Cheryl Nelson. She spent nearly thirty years working as an office assistant in the department, before becoming a corrections officer in 2008. She acknowledged that she is on track to now retire with a full pension 11 years than she could have as an administrative employee.

Nelson disagreed she was gaming the system. “It helps me as a single person to better my retirement. I’ve got to think about my future,” she said. “I don’t think I’ve taken advantage of anything with the state. Absolutely not,” she said.

Mike Widmer, President of the Massachusetts Taxpayers Foundation disagreed with her assessment and said there was only one reason an employee would switch to a corrections officer at the end of their career, that being to enhance their pension benefits at the expense of taxpayers.

Widmer called maneuver legal “but it’s absolutely wrong. It’s wrong morally and it’s wrong fiscally.” He added that group jumping has been going on for years.

Gov. Deval Patrick has already weighed in on the issue, and suggested a special commission look into the problem, but last year’s legislative body failed to do so. The governor’s spokesman, Jay Gonzalez, said that a comprehensive pension reform package is in the works and will be proposed early this year.

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Top UC executives demand higher pension payments, threaten lawsuit

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Despite the massive unfunded liability in the University of California’s pension fund, three dozen of the state’s highest paid executives in the system are threatening to sue unless their pension benefits are dramatically increased, according to a story Wednesday in the San Francisco Chronicle.

The highly paid executives want UC to calculate their retirement payments based on their entire salaries, instead of a $245,000 limit imposed by federal law. They say that in 1999, regents agreed to lift the salary cap if the IRS granted a waiver, a courtesy sometimes granted to institutions like UC.

The IRS granted the waiver in 2007, although UC President Mark Yudoff now opposes the increases based on the fund’s deteriorating financial condition and continued cutbacks across the UC system by virtue of the state’s chronic budget problems. UC officials say that the increase was never guaranteed, but subject to various levels of final approval.

In a Dec. 9 letter obtained by The Chronicle, the executives said, “We believe it is the University’s legal, moral and ethical obligation” to increase the benefits, the executives wrote to the Board of Regents. “Failure to do so will likely result in a costly and unsuccessful legal confrontation,” they wrote, using capital letters to emphasize that they were writing “URGENTLY.”

The University’s pension plan is currently unfunded in the amount of $21.6 billion, and officials have been rushing to boost tuition payments, reduce benefits for future employees and requiring them to pay more of their salaries into the plan.

For the 2011 year, UC hiked its tuition 8 percent, most of which- about $175 million- will go straight into the pension fund. Last year, tuition was raised 32 percent.

The increased pension commitment would add about $5.5 million annually to the pension liability and about an estimated $51 million to make the change retroactive to 2007, as the executives are demanding.

UC’s pension troubles have been brewing for the last couple of years, as only recently it determined that its existing pension obligations far exceeded the monies in its pension fund. Largely contributing to the problem was that neither UC nor any of its employees had paid into the fund since 1990.

“I think it’s pretty outrageous that this group of highly compensated administrators of a public university are challenging the president and the chair of the Board of Regents,” said Daniel Simmons, chairman of UC’s Academic Senate and a law professor at UC Davis.

“What outrages me the most is that these 36 people are blind to the fact that this is a public entity in dire straits,” said Simmons, who also served on the retirement task force and opposed the higher pensions.

San Francisco Chronicle

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Despite weak economy, local governments pushing through property tax increases

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While families are finding it tough these days to keep up with everyday outlays amid persistent unemployment and stagnant wages, cities are raising property taxes to boost payments to pension plans to maintain retiree benefits agreed to long ago, without much thought about how they would pay for it all.

Instead of the hoped-for and unrealistic projected annual gains, stock market losses have turned pension funds upside down, and city managers are scrambling to figure out how to make sense out of an impossible situation.

To keep up with dramatically rising pension costs, cities are cutting back hard on basic services, dipping into reserves and attempting to renegotiate pension benefits with stubborn unions. Even that doesn’t seem to be enough, and according to a report in the Wall Street Journal, cities throughout the country are beginning to aggressively raise property tax bills.

“Unless governments really want to squeeze essential services…there are likely to be a lot more property tax increases” across the country, said Don Boyd, a senior fellow at the nonpartisan Nelson A. Rockefeller Institute of Government at the State University of New York.

Upper Moreland, Pennsylvania is a good example of the pension funding crisis, and how it’s affecting city finances. As recent as 2005, when times were good, the city paid about $100,000 into its pension funds. Now that times are tough and revenues are down, the city paid $681,000 into the funds as its 2010 contribution. Next year’s estimated costs are set to be $1.1 million.

The city also receives contributions from the state, but only if the Upper Moreland makes contributions that are recommended by actuaries. And the only option left to enable a full payment now is to increase property taxes by 13.6 % in 2011.

In worse shape is Rolling Meadow, pop. 25,000, a suburb of Chicago. Officials there are planning on raising property taxes 9.8% next year, on top of the16% increase in 2010. The reason here is the same as elsewhere- increased pension and health costs for city workers. Despite the big increase in taxes, the police and fire pension plans are only about 45% funded.

City leaders made the same mistake here as in cities, large and small, across the country. Oversized promises were made for pension and health benefits with little concern how they would affect the communities when employees started retiring at age 50 and 55. Now that it’s happening, it may be too late to preserve all the benefits unless the taxpayers are willing to pay much higher taxes.

Even while increasing property and other taxes, lawmakers are starting to square off for a looming battle over reducing some of the generous retirement benefits won by the state and municipal unions.

What seems certain is that retirement eligibility, in many cases as early as age 50, will be pushed much higher for new hires and existing employees who have a long way to go before retirement. Employees will also likely be required to increase their own contributions into pension funds.

In Illinois, lawmakers recently passed a bill that would lift the retirement age for firefighters and police from 50 to 55. Other states are watching closely and may soon follow with their own version of it. Whether that will help enough, remains to be seen.

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New Jersey unfunded pension liability soars

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New Jersey is finding itself in even a more precarious position than previously thought regarding its unfunded pension liability.

A report released on Thursday by the state Department of Treasury showed that the unfunded liability grew by over $8 billion in the most recent fiscal year ended June 2010. The total deficit now amounts to $53.9 billion. Besides the unfunded pension liability, the state has an additional $67 billion unfunded balance in healthcare benefits for current and future retired employees.

At June 30, the pension system was about 62 percent funded, down from 66 percent one year earlier.  The statewide system covers about 728,000 working and retired state, county and municipal employees.

Gov. Chris Christie skipped a $3.1 billion payment to the fund this year, saying that he will continue to pass on making contributions until the entire system is overhauled.  The last contribution made to the system was in fiscal 2008, when then-governor Jon Corzine paid $1 billion.

A statement released by Treasury Spokesman Andy Pratt said “If all the required contributions to the pension funds had been made over the last decade, New Jersey would still not have enough money to pay all the benefits state and local governments have promised to public employees.”

Christie has proposed an overhaul of the system that union leaders and workers will find tough to accept. If adopted, his plan will cut the deficit to just $14 billion by 2026. On its present course, the system’s deficit would be about $125 billion by then.

The plan suggested by Christie includes freezing cost-of-living adjustments, rolling back a 9 percent benefit increase that was promised for 2011 and increasing the retirement age to 65. Employees would be required to pay 8.5 percent of their salaries into the system, up from 5.5 percent, and shoulder a much larger portion of their healthcare costs.

An October report from Chicago-based Loop Capital Markets said that 20 states, including New Jersey, California and Illinois, underfunded or skipped pension payments between 2007 and 2009. The report said that 91 of 145 pension systems it reviewed had less than the 80 percent of future benefits funded, that actuaries recommend.

Critics say the main issue in the unfunded systems is that lawmakers repeatedly agreed to union demands for ever-increasing retirement benefits, relying on unreasonable estimates of investment returns, and not identifying new sources of funds to pay for the pension payments and health benefits.

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San Diego firefighter gets $424,000 in lawsuit after being punished by city for calling out pension abuses

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Paul Vandeveld though he was doing the right thing in 2006 when he agreed to provide information to then-City Attorney Michael Aguirre about the commonplace practice in the department called “pension spiking.” The practice involves promoting department employees to higher paid positions immediately before they retire, in order to get substantially higher pension benefits from the city’s pension plan.

Paul Vendeveld was held back from promotions after he agreed to provide information to the city attorney about pension plan abuses.

Shortly thereafter, Vandeveld, 44, tried to help a fire captain that was being harassed by fellow firefighters, because many in the department thought he had leaked information to the press about a battalion chief who had been arrested for drunken driving.

The firefighter sent out an email defending the battalion chief using a phony email address containing the name of a prominent union leader, so that it would be read by recipients. A few hours later, feeling remorseful, he sent an email saying that it was he who had sent out the earlier email.

A subsequent investigation found that he was guilty of conduct unbecoming of a firefighter, and was briefly suspended. Afterwards, he was repeatedly passed over for promotions to captain, even though every job review ranked his job performance as “satisfactory” or “outstanding”, and he was “next in line” for promotion.

Vandeveld’s attorney said that the fire department used the benign email as an excuse to punish him for cooperating with the city attorney in the pension spiking investigation.

“This firefighter was cooperative with and supportive of the efforts of the City Attorney’s Office to eradicate wrongdoing in the pension system,” Aguirre said. “He was trying to help to do the right thing. He was ill-advised, though, to use someone else’s name … and that was wrong.

The 12 member jury reached a unanimous decision that he should be paid the difference between what he received as a fire engineer, and what he would have received as a caption. The jury also awarded him $60,000 in punitive damages and lost wages from the time of his suspension.

The San Diego Union-Tribune

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San Diego mulling over response to illegal move by pension officials

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Originally billed as too good to be true, it may not be true after all. In 2003 when San Diego pension officials encouraged city workers to participate in a special program to purchase additional years of service that they didn’t actually work, they knew that they were pulling a fast one on the city.

Now an appeals court has ruled that the special program promoted by the pension board was illegal, and that as many as 2,200 current and retired employees may be required to take big cuts in their expected pensions, or fork over up to $50,000 to keep their current pension payments.

The special program, first enacted by then-mayor Susan Golding in 1997, allowed workers to participate in a so-called “purchase of service credit” program. City employees could make a lump sum payment determined by actuaries, in order to add extra years to their actual years worked, so they could retire early, or retire with more years of service, entitling them to a higher pension payment.

The general idea of the program was that the employee would pay an amount equal to the present value of the future incremental benefits, so that taxpayers would not be on the hook for such amounts. The problem occurred immediately and over a number of years because workers weren’t changed enough for the extra benefits. In 2003 when the discrepancy was discovered, the amount undercharged to city employees was nearly $13 million.

In order to fix the problem, the pension board voted on Aug. 15, 2003 to substantially hike rates to properly charge for the purchased benefits. Under the revised program, an employee could purchase an additional year of service for 27 percent of their annual salary, up from 15 percent. Public safety employees would be required to pay 37 percent of their annual salary to purchase an additional year of service, up from 26 percent.

Instead of implementing the well-publicized increases immediately, the board delayed the rate increases to Nov. 1, encouraging workers to take advantage of the cheap buy-in rate. Once the word got out, workers bought into the program at a furious rate. During the short 10-week window, more city employees bought into the program than the entire previous six years combined. The average credit purchase was about $65,500, when the fully-funded amount should have been $103,200.

Former city attorney Michael Aguirre sued the pension board in November 2007 over the illegal credit purchases. Anyone retiring after that date is subject to the appellate court decision.

The amount calculated as the undercharge to employees was determined to be about $100 million. The appellate court ruling found that the pension board was responsible for matter and ordered it to fix the mistake by adjusting pension benefits, without charging the city for the deficiency.

The city council has until the end of January to decide how it will handle the problem and whether it will exempt some or all of the employees from additional payments, and instead charge taxpayers. If the city does nothing, employees will see their benefits adjusted or have the option of paying additional monies to keep their existing pensions.

Retirees and union leaders have already told the city that they intend to sue if workers are forced to make up the deficiency in their original credit purchase, or if payments are adjusted.

San Diego Union-Tribune

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