Monday, October 19, 2015

State fails in its bid to make retiree repay $89K in pension benefits.

Today was a end of a nightmare for William Zagorski, a 75-year old who retired in 2006 after having worked as a faculty member at both Rutgers and Union County Community College from 1972 through 1999.  In 1996, he took on an additional job at Mercer County Community College (MCCC) as an overnight classical radio announcer.  His job at MCCC was a post-retirement job that he held until 2012. New Jersey statutes allow a retired pensioner to work in another pensioned position without penalty as long as he earns less than $15,000 per year.

Zagorski's nightmare began when the Public Employees Retirement System (PERS), the state system that was paying Zagorski's pension, discovered that MCCC had failed to properly enroll Zagorski in the PERS pension system.  This discovery caused Michael A. Czyzyk, a PERS supervisor, to write Zagorski in February 2012 and demand that he reimburse PERS $89,113.68 in pension benefits and other payments that Czyzyk claimed were improperly received.

Even though Czyzyk realized "that MCCC was solely responsible for enrolling Zagorski into PERS, but failed to do so," he believed that the pension statutes imposed "'per se liability,' regardless of anyone's intentions or mistakes."

Zagorski appealed PERS' ruling and the Office of Administrative Law (OAL) judge determined that "it is simply unconscionable to lay the entire liability at the feet of [Zagorski] for the failure of the 'system' to detect, for sixteen years, that he was in a PERS-eligible position but was not enrolled."  He added that "equity and fairness in this matter dictate that [Zagorski] cannot be liable for repayment of substantial retirement benefits that were erroneously paid through no fault of [Zagorski's]." PERS, however, rejected the judge's holding and decided to hold Zagorski liable for the full amount.

The Appellate Division of the Superior Court, however, held in an October 19, 2015 opinion that the PERS' "demand for full reimbursement to be unreasonable and excessive."  The court did, however, permit PERS to make adjustments for years where MCCC paid Zagorski in excess of $15,000.