Lawmakers may close loophole
By Melissa Daniels | PA Independent
HARRISBURG — A concerned resident saw something amiss in the state's unemployment system. Something lawmakers had not yet noticed.
So the resident told a local representative.
Was a state retiree actually collecting unemployment benefits after returning to perform contract work?
Surely not, he thought.
“A constituent brought it to my attention several months ago, kind of before it made statewide news,” Harris said. “They confidentially let me know this was happening.”
Harris and his staff investigated and, lo and behold, the resident was right.
An employee who retired from the state was re-hired to work as an annuitant, a temporary job taken while collecting state pension benefits. The contract ended, but the unemployment checks kicked in.
Three checks, coming from three different departments.
Harris was listening, learning.
But there were more such incidents, exacerbating the state’s insolvent unemployment system, a system already trademarked by overpayment
In 2011, 239 state annuitants received more than $1.1 million in unemployment compensation, compared with some $3 billion from the system as whole. The prior year, 220 annuitants collected more than $971,000, out of nearly $3.6 billion in payments, according to data from the Department of Labor and Industry.
Harris had heard — and seen — enough.
He sponsored House Bill 2346
, amending the state law’s ineligibility requirements, closing a loophole for “triple dipping” by making retirees who return to work ineligible for unemployment benefits.
Harris said his bill helps restore integrity to the system.
It also would save taxpayer money.
“It’s a small loophole,” Harris said. “It might not save us billions of dollars, but it’s worth fixing what slipped through the cracks.”
The problem stemmed from the way the state law is written. If a state retiree is brought back as a contract worker — an annuitant — the length of employment cannot exceed 95 days before he is subjected to pension penalties. So, typically, the contract employment would last 30, 60 or 90 days.
But, under state unemployment laws, this was defined as “involuntary” termination, rendering applicable workers eligible for benefits.
While the bill redefines eligibility for unemployment, retirees can still return to work on a contract basis, and that can be useful, said state Rep. Ron Miller
Retired employees, after all, often have decades of institutional knowledge.
But it was a “strange twist” that led to the unemployment collection, Miller said.
A strange twist that, consequently, accounts for millions of dollars in spending.
Lawmakers say they're not done looking, listening for problems in the hampered system.
“As we identify them, we will address them,” Miller said. “This is one that was identified, and we’re trying to address it.”
Pennsylvanians are watching.