SPECIAL REPORT
Loophole allows educators to collect both salaries and pensions
State waivers permit retirees to double dip
During his tenure as Pioneer Central School District’s superintendent, David F. Kurzawa mastered the challenges of running a sprawling, rural school district. In retirement, he mastered the challenges of working the state pension system.
Kurzawa collected paychecks from two districts in his final months with Pioneer.
Then, once the 56-year-old educator left the Pioneer payroll with an $87,175 state pension, he started collecting a full salary as interim superintendent in the Silver Creek School District. That job paid him another $90,000 for 11 months of work.
“I didn’t plan on going [back] to work in any way but was called and offered a position,” Kurzawa said. “I’ve worked many years, and I think my experience and guidance has helped the districts I’ve gone to.”
It’s not unusual for retired educators to return to work full time while also collecting their pensions.
The state retiree who most benefits from this practice is James H. Hunderfund, 64, a Long Island superintendent who makes $200,000 a year from one school district on top of his $316,245 pension from a nearby district. And while no educator in Western New York can match Hunderfund’s $516,245 in payments, two dozen, including Kurzawa, have double dipped in the past three years alone.
Retired educators who are younger than 65 are not supposed to be able to earn more than $30,000 annually from the public sector and still be allowed to collect a full pension.
But the state offers retirees a loophole.
School districts claiming they can’t find anyone but a retiree to fill a job can ask the New York State Education Department for a waiver. Once the waiver is granted, retirees are permitted to keep their full pensions as well as collect full salaries. The state receives about 435 waiver requests a year. Only 10 to 15 a year are denied.
Double dipping is especially rampant on Long Island, where at least 40 retired administrators draw a salary as well as a pension, with some of them serving in their “interim” postretirement positions for years.
Waivers are routinely approved for Western New York educators, as well.
Since 2005, school districts in Erie and Niagara counties requested 34 waivers to hire 21 retirees, several of whom have had multiple assignments, according to records The Buffalo News obtained from local school districts. Four waivers involved teachers; the rest were for administrators.
A common practice
During his 13-year tenure with Pioneer, Kurzawa wasn’t afraid to embrace change.
His became one of the first local districts to create a Web site. The Cattaraugus County sheriff opened a substation in the high school. The district mandated a full Regents program before the state required it and even considered going to a year-round calendar in an effort to boost achievement.
“I probably pushed the envelope periodically,” Kurzawa said. “I believed in challenges like that.”
Kurzawa loved education, yet he retired at 56 — an age when many people in private sector jobs are in the prime of their careers. As it turned out, though, he wasn’t quite ready to leave the schoolyard.
Kurzawa’s colleagues in Pioneer bade him farewell at his retirement party in August 2002, but he didn’t officially retire until five months later.
In between, with permission from the Pioneer School Board, Kurzawa took a job as interim superintendent in Silver Creek under a consultant’s contract while also continuing to collect his Pioneer paycheck.
As soon as Kurzawa officially retired from Pioneer on Jan. 1, 2003, he requested state approval to remain as Silver Creek interim superintendent for 11 more months and also collect his full pension.
The state approved that waiver request — and later, many more for Kurzawa — allowing him to collect his full pension and post-retirement salary each time.
After his stint at Silver Creek, Kurzawa picked up several months of work in the Southwestern School District, on the tip of Chautauqua Lake.
Soon after that, he found work in the Frontier School District — and then back in Silver Creek, where he worked as interim superintendent from June to December 2007 and then as interim business administrator for three months in 2008.
Neither the state Education Department nor the Teachers’ Retirement System has any record of a waiver request for Kurzawa’s most recent stint at Silver Creek. Kurzawa said he believes the papers were submitted as required.
He also said he sees no problem with collecting a state pension as well as a public paycheck. The practice is common, he said, not only in school districts, but in other public agencies as well.
“We’re facing a shortage of [school] administrators,” he said, adding that there’s a need for experienced interim superintendents like him.
Waivers defended
To obtain information about local retirees who have gone back to work on the public payroll, The News filed more than 40 Freedom of Information Law requests with local school districts, the Board of Cooperative Educational Services, the New York State Teachers’ Retirement System and the state Education Department.
Many educators defend the need for waivers, saying there’s nothing wrong with earning a salary while collecting a pension. Whether a retiree or someone else fills a position, taxpayers still pay the salary, they say.
“Pensions and salaries are not both compensation for the same job. They’re compensation for two different jobs,” said Thomas L. Rogers, executive director of the New York State Council of School Superintendents.
Hiring retirees actually saves money for the school districts, he says. Retirees often work for less money than other administrators, and districts don’t have to provide health insurance or make payments into the retirement system.
The pool of qualified administrators is shrinking, educators say, so school districts are lucky to find retirees to fill in when a permanent hire is hard to find.
“To find good interims, you need someone who doesn’t need a steady income. Retirees are perfect,” Rogers said. “The interim comes in, does the difficult things no one wants to be blamed for and then steps aside.”
But critics say double dipping helps perpetuate a problem with roots that lie in a retirement age that’s too low.
In fact, once educators reach their mid-50s, staying at the same job can be counterproductive financially.
For many retirees, pension checks — which are exempt from state and Social Security taxes — exceed what the educators brought home, after taxes, while on the job.
“This is a very good deal, and it’s really aimed at making it worth your while to retire as early as you can,” said Edmund
J. McMahon, director of the Empire Center for New York State Policy, a conservative think tank that has analyzed state pension issues.
The average age when educators retire in New York State is 57, he said.
“When people retire that early, they’re not ready to stop working,” he said. “It’s completely understandable that, if they actually have talent that is in short supply, they’d seek to come back, keep working and get a payment on both sides.”
Locally, of the 21 retirees who have sought waivers in the past few years, 40 percent were 55 or younger when they retired. Only 10 percent were over age 60.
One of the busiest, along with Kurzawa, is Lawrence J. Zacher.
Zacher retired six years ago, at age 57, from the Whitesboro district near Utica. Since then, he has worked in the Gowanda, Grand Island, Lake Shore, North Tonawanda and Springville schools as well as in schools outside Western New York, in most cases as interim superintendent.
He’s currently in his eighth month as interim superintendent in the Owen D. Young School District near Utica.
Zacher has earned more than $300,000 through his post-retirement work, in addition to his $89,734 annual pension, according to records obtained from the state retirement system.
Others who worked in more than one local district since retiring include William R. Leardini, who retired at 55 as Wilson’s business manager. He then picked up work in Barker, Iroquois and Lockport, supplementing his $79,960 annual pension with close to $150,000 over the past six years.
Henry G. Peters retired five years ago, when he was 56, as assistant superintendent for exceptional education and student services in the Williamsville district, with a $78,763 pension. He later worked in Grand Island as an interim principal for a year and a half and then in North Tonawanda for several months, earning roughly $116,000.
Another Williamsville retiree, Richard A. Hitzges, earned $115,750 working as interim business official in the Kenmore- Town of Tonawanda School District for about a year. Hitzges retired at age 60 with a $93,940 pension. The Alden School District recently requested a waiver to hire Hitzges as its interim business official.
Retired superintendents from Grand Island, Eden, West Seneca and Lockport also have recently received waivers from the state to work during retirement. So have lower-level administrators from other districts, including Niagara Falls, Springville, Sweet Home and Orchard Park, as well as teachers from Starpoint, Hamburg and Buffalo.
Examining the practice
In recent weeks, New York State Attorney General Andrew Cuomo launched an investigation into double dipping, holding a hearing downstate and requiring districts statewide to submit information about the retirees on their payrolls.
State Education Commissioner Richard P. Mills announced at the end of May that he was suspending for 60 days approval of any waiver applications, to allow time for “thorough examination of the practice.” He defended the need for the waivers but acknowledged the system needs to be reformed.
Recently, the Board of Regents announced reforms to its waiver system in an effort to exercise better oversight over the process. Among other things, the changes will require school districts to provide more documentation regarding their need to hire a retiree and the state will have to keep better track of the waivers.
But none of the reforms addresses what some experts say is the major underlying issue — a state-established retirement age that’s more than 10 years shy of the retirement age set by the Social Security Administration.
“Double dipping is not the problem,” McMahon said. “The pension system is the problem. When you have a pension system that encourages people to retire in their mid-50s, you can’t complain about double dipping.”
