New York State educators hit pay dirt with pensions

By Mary B. Pasciak NEWS STAFF REPORTER - First of two parts
Updated: 08/10/08 9:49 AM

In retirement, John H. George does a little painting, spends a lot of time with his grandchildren and devotes himself to the North Tonawanda Botanical Gardens. He’s spending his golden years much like countless other Western New Yorkers. Except for one thing. His public pension — $205,809 a year — exceeds his former salary.

It’s the biggest state pension of any retired public employee in Western New York and the ninth largest statewide. It also was years in the making.

When George was ready to retire from the North Tonawanda schools at age 64, he cashed in hundreds of days of unused vacation and sick time he had racked up during 17 years as superintendent.

As a result, during his final 12 months on the job, George received more than $500,000. When the state calculated his pension, that extra money was counted.

“I wouldn’t apologize for it,” he said. “It was some unusual circumstances I happened to be in that resulted in that. I certainly paid my dues.”

Thousands of other retired educators in Western New York and throughout the state enjoy the fruits of similar end-of-career payouts that fatten their pensions, too.

Like the former Lewiston-Porter school superintendent who also engineered a pension — $143,802 — that was bigger than his salary.

Or the retired Buffalo high school principal with a six-figure pension.

And the Depew math teacher with a pension of more than $90,000 a year — about equal to his pay while working.

“It is this elephant in the room that’s been growing more obese this decade that everyone refuses to recognize,” said Edmund J. McMahon, director of the Empire Center for New York State Policy, a conservative think tank. “The issue is, somebody’s paying. All this stuff has a cost.”

System invites abuse

Pension costs to New York taxpayers have increased fivefold since 2000.

The Buffalo Public Schools, for example, paid $3.6 million into the state retirement fund in 2000-2001 but kicked in $18.9 million in 2007-08.

State pension funds are invested in the stock market to help pay pension benefits, but when the stock market tanks, as it did recently, taxpayers end up footing a bigger share of the pension bill.

At the same time, critics say, the state pension system is designed to invite abuse.

Stories abound of police racking up overtime in their final years of employment to punch up their pensions. So do reports of double dippers — those who collect a public pension while continuing to work on another public payroll.

For example, there are sex offenders and other criminals who have been forced out of their jobs but who continue to collect their public pensions.

And some retired elected officials draw paychecks as well as pensions in two different public arenas.

At the forefront of the statewide debate on pensions are the public schools, where contract language and state laws permit high-level administrators and teachers to retire relatively young — 55 — with pensions that are, in some cases, bigger than their salaries.

State officials are aware of the outrage such lucrative pensions create but say the kind of inflated pension that George received is a thing of the past. Lump sum payments for unused sick and vacation time are not included in pension calculations for employees hired after 1971, they said.

But some 10,000 educators remain in the state’s Tier 1 pension classification, meaning they were hired before 1973, including an unknown number of people hired before 1971.

That group includes Niagara Falls Superintendent Carmen Granto, 65, who has worked for the district for 42 years.

Granto’s contract allows him to cash in his unused days.

At one point, he had accrued 45 vacation days and 747 sick days, worth about $220,000 when cashed in.

Granto plans to retire in 2009. But rather than taking a lump sum upon retirement, as George did, Granto is cashing in over three years, boosting his annual paycheck, normally around $130,000, to just over $200,000.

That’s likely to add $33,000 to his pension, making it higher than his base salary, a pension scenario similar to George’s, according to Buffalo News calculations.

The buybacks he, George and others in Tier 1 received originated at a time when teaching and administrative salaries were low, Granto said.

“When I started teaching, I was making $5,000 a year. It took me 15 years to pay off my student loans,” he said.

Exempt from state tax

During a 44-year career that began in September 1964, George worked as an art teacher in Genesee County and then in the Williamsville school system before becoming an administrator. After working his way up through the ranks, he was named North Tonawanda superintendent in 1989.

George was viewed as a good superintendent who enjoyed his work. He rarely used his vacation time. He rarely called in sick.

His reluctance to use his benefit time ultimately paid him huge dividends.

George received up to five weeks’ vacation a year under his contract, which also stated that the district would pay him the full value of his unused vacation time upon retirement. He also could cash in his unused sick time at one-half its value.

That’s exactly what he did. By the time George retired in September 2006, at age 64, he had accrued nearly three years of unused time.

He cashed in 195 vacation days for $149,026.

He cashed in 426.5 sick days for $165,649.

And he collected his base salary for $183,417.

All told, George received $533,749 during his final year in North Tonawanda, according to documents provided by the school district and the New York State Teachers’ Retirement System.

When it came time for the state to calculate his retirement benefits, his unused sick days and vacation time added an extra $52,865 a year onto his pension, according to a News analysis.

Not only is the resulting $205,809 pension bigger than George’s base salary had been, but, like all state pensions in New York, it is exempt from state income tax and Social Security tax.

George said it’s not surprising that his pension is the highest among local superintendents because for many years he was the highest paid among his peers.

“My compensation was also high in comparison to others, and that got factored in,” he said.

He added that he accumulated so many sick and vacation days because he stayed in one district for so long.

“I didn’t take much time off,” he said. “Vacation time was always in the summer. And I was fortunate to have good health all those years.”

In announcing his retirement, George had said he would devote more time to painting. He’s done some of that but said most of his time has been devoted to his grandchildren, including one who died in 2005. George runs a foundation in his grandson’s memory and spends many days tending to a garden in the child’s honor at the North Tonawanda Botanical Gardens.

No tweaking needed

Six-figure pensions are not unheard of among educators.

Statewide, 696 former teachers and administrators have pensions of more than $100,000, according to the New York State Teachers’ Retirement System. The largest annual pension, $316,245, goes to James H. Hunderfund, a former Long Island superintendent.

Locally, 15 retirees in Erie and Niagara counties, including George, draw six-figure pensions, records show.

The 15, all retired administrators, include Marion Canedo, the Buffalo superintendent who retired four years ago with a $121,137 pension, and longtime Orchard Park Superintendent Charles L. Stoddart, whose pension is $109,266.

Canedo and Stoddart, like most retired school administrators in the region, did not see much of a golden parachute on their way to retirement. Canedo did not receive any lump sums in her final year, according to Buffalo payrolls.

Stoddart, after serving more than two decades as superintendent in his district, collected $15,732 for unused vacation time.

Their pensions reached six figures under the basic state pension formula. Educators such as Canedo and Stoddart, who began teaching prior to 1976, collect up to 79 percent of average earnings in their final three to five years. Those hired after 1976 get up to 60 percent; they cannot count unused vacation or sick time toward their pensions.

Others, though, like John George and Walter S. Polka, capitalized on huge buybacks of unused time.

Polka retired from Lewiston-Porter in 2003, after running the district for 13 years. In the four years leading up to his retirement, Polka cashed in more than $172,000 in sick time.

The year he left, he collected another $119,106 for unused sick days and vacation time. Those buybacks helped boost his pension to $143,802 — well over his annual salary of about $109,000.

Polka did not respond to a request to comment.

“Although not in any way a typical practice [among superintendents], I am nevertheless embarrassed when these reports surface,” said Donald A. Ogilvie, superintendent of the Erie 1 Board of Cooperative Educational Services. “The public pension system is already

a substantial benefit that shouldn’t require additional tweaking to squeeze out a few more dollars.”

Sweetening the pot

In some districts teachers get pension- inflating buybacks, too.

In Niagara Falls, for example, teachers can cash in up to 300 unused sick days, the equivalent of more than $40,000 for a veteran educator.

More than a dozen teachers who launched their careers before 1971 and who retired in the past few years saw their pensions increase because of the extra money they received by cashing in their sick days.

Other districts, including Buffalo, further sweeten pensions by offering lump sum retirement incentives in addition to sick and vacation day buybacks.

Buffalo teachers and administrators can cash in 220 unused sick days. Administrators can cash in five weeks of unused vacation days as well. The district also offers “early retirement incentives” to many veteran teachers and administrators — up to about $26,000 for teachers and $50,000 for administrators.

In just two recent years, the combined payout was $14.5 million to 522 people.

Aside from retired superintendents, the Buffalo retiree with the biggest pension is former Grover Cleveland High School Principal Benjamin L. Randle Jr., who received $51,662 for unused sick, vacation and personal time in his final year, boosting his pension to $101,032.

At least eight other principals who retired from Buffalo get pensions of more than $90,000.

Some smaller school districts in Erie County, including Depew, offer similar incentives.

For many years, until 2005, teachers in Depew got a $35,000 retirement incentive when they left the district. Teachers also can trade in their unused sick days for health insurance coverage or for cash.

Many teachers took the cash. In four recent years, the district gave out $2.6 million in incentives to 32 retiring teachers.

At least 10 teachers each received golden parachutes of more than $100,000. One, a math teacher, got $111,000, according to payroll records. He ended up with a pension of $91,362, the same amount he made while working.

It all makes for a comfortable retirement for many former school employees — but, some argue, at too high a high cost to those footing the bill.

“The pension fund is essentially the taxpayers of New York State,” McMahon said.
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