Zurik: The retirement plan so good, it may be illegal - FOX 8 WVUE New Orleans News, Weather, Sports

Lee Zurik Investigation: The retirement plan so good, it may be illegal

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Harahan, La. -

It's a little known perk that only benefits less than 20 percent of Jefferson Parish employees, but costs the parish millions every year. And our questions to a statewide official had her telling us that the benefit is illegal.

Jefferson Parish has spent tens of millions of dollars of taxpayer money, giving an extra benefit to long-time employees.

April 26, 1986 is a significant date in Jefferson Parish: for employees hired before that date, the parish pays their full retirement contribution. The parish has been doing this every year since 1980.

When we asked Chris Cox, the parish's chief administrative officer, why officials decided to do this, he told us, "I do not, and I don't know what the significance of that particular date in April is."

Janet Howard of the non-profit Bureau of Governmental Research told us, "We looked at three parishes, what was going on in St. Tammany, Orleans and Jefferson, and Jefferson Parish is the only one that is doing that."

Jefferson Parish is part of the Parochial Employees' Retirement System. That system requires all employees to contribute 9.5 percent of their salary to the retirement fund. So for an employee hired before that April 1986 date, the parish picks up the tab on that 9.5 percent contribution. For an employee making $100,000 a year, the parish pays an additional $9,500.

"The employee contribution was costing Jefferson Parish government itself $3 million," Howard said.

But we have questions about the $3 million yearly payment, and whether the parish is following the law.

"I certainly hope so," Cox said, "I don't think that we have any legal issues there."

But the administrative director of the Parochial Employees' Retirement System has a different opinion.

After our inquiry, Dainna Tully wrote us a letter, explaining that state law says "each member... or employee... shall contribute an amount equal to a percentage of his earnings from each and every payment of earnings." Tully goes on to write, "The statutes cited are not permissive" -- meaning it's not optional. She adds, "They clearly state that the employee is to contribute to the retirement system a set percentage of pay."

When we told that to Cox, he replied, "If I can get a copy of that, I would certainly give it to our parish attorney."

The Bureau of Governmental Research has been looking into public pension systems all over the area. They found a few others where the employer contributed the employee's retirement contribution.

"There are a couple of cases, though, where state law allows individual employers to decide that they will pay the employees' contributions," Howard told us. These systems include the assessors, the sheriffs, and the clerks of court."

And that may be an important distinction. Let's look at the assessor's law, for example -- it specifically states that each assessor may elect to pay all or any portion of the employee's contributions. For Jefferson Parish employees, the law doesn't give parish government that option.

"I would make the argument that, unless there's a specific prohibition against it, the silence doesn't prohibit," said Cox.

But there's more. Right now, the parish still pays the retirement contribution for about 330 employees. But for some, the parish may be violating another part of the law.

For that, we go to an attorney general's opinion from 2006. That year, a clerk of court asked questions about his office contributing the employees' retirement contribution. Remember, state law specifically says all clerks of courts can do so.

The clerk wanted to know, if the office paid an employee's contribution, would that be considered additional compensation and part of the maximum salary allowed by law.

The attorney general said yes, writing that the employee contribution of a clerk of court can only be paid to the extent it does not result in the clerk's total compensation surpassing the statutory maximum.

In other words, the extra money kicked in for the employee's retirement contribution is considered additional salary, and can put the employee over the maximum salary allowed by the law.

This could be important in Jefferson Parish, because many of these 330 employees are at the top of the parish pay scale, the most the council allows them to be paid. So if the attorney general would have a similar opinion in Jefferson Parish, it could mean these employees are receiving compensation above the legal maximum.

The parish CAO doesn't think there's a problem here.

"The pay plan really focuses on what maximum compensation is, or salary is, for this particular employee, based upon this position that he or she occupies," Cox told us. "That doesn't specifically state salary and benefits."

Cox does say the parish will investigate to determine if tens of millions of dollars have been improperly paid by the parish into the state retirement system. He said, "If our parish attorney were to conclude that it probably wouldn't pass muster, we would request an opinion from the AG, and if the attorney general said that shouldn't happen, then absolutely we would stop that… My opinion is, at this point, that this not a problem. But I'm going to qualify that and state, we're going to ask our legal counsel, the parish attorney, to look into it."

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