Kansas pension audit finds system of abuse and fraud

Nicholas C. Fondacaro
Posted: Sep 09, 2015 3:48 PM
Kansas pension audit finds system of abuse and fraud
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FRAUD ALERT: An audit of the Kansas Public Employees Retirement System found numerous cases of double dipping – collecting benefits from the system while having an alternative income.

By Nicholas C. Fondacaro | Watchdog Arena

An audit by the Kansas legislature finds that public employees are double dipping by having an income while collecting benefits from the state’s $16 billion pension system.

The review of the state’s disability benefits program flagged 38 cases for further investigation on suspicion that beneficiaries were still bringing in an income and ineligible for disability benefits. Of the 38 cases, the auditors determined that at least 16 of them are ineligible to receive benefits through the disability program.

In addition to disability fraud, auditors investigated concerns  about abuse of the retirement and service credits program.

“Service credits are used to help determine when an employee is eligible to retire and are awarded in one quarter increments to members who work any length of time during a quarter” the audit says.

Auditors used a targeted sample of 34 teachers and randomly selected 21 other individuals who worked for the state. The auditors discovered that seven teachers were still receiving service credit while they were no longer instructing students. Instead they were working as officers for their local education associations.

The Kansas Public Employees Retirement System is a fairly large system which makes it a prime target for abuse and fraud.

“KPERS is a $16 billion public pension system for 1,500 public employers and covers about 295,000 state and local public employees” the report stated “KPERS currently has about 100 FTE staff who work in the following five divisions; administrative, benefits and members services, fiscal services, information technology, and investments. KPERS also contracts for actuarial and investment services.”

With so few employees managing such a large pool of beneficiaries, it’s easy to understand why abuses can slip through the cracks. But the report doesn’t just focus on the problems: it also maps out how the state can prevent future abuse of the system.

The Legislative Post Audit Committee, the group that wrote the report, recommends requiring proof of identity and regular monitoring by the respective agencies to cut down on abuse and fraud in the system. The authors also expresses optimism that KPERS can cut down on abuse and fraud, saving the system–and taxpayers–money.

This article was written by a contributor of Watchdog Arena, Franklin Center’s network of writers, bloggers, and citizen journalists.