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State moves to stop unemployment benefit abuse

Some 45 cities and towns had responded to a call by the state to identify questionable unemployment cases involving municipal employees as of earlier this week, as the state begins a review of loopholes that drew the attention of Governor Deval Patrick and state lawmakers.

More letters could come in by the end of the week, the deadline the state set to hear from cities and towns. The Department of Unemployment Assistance, a division of the state Executive Office of Labor and Workforce Development, requested the information after city and town officials circulated accounts of a number of questionable practices, including teachers collecting unemployment compensation during summer vacation and public safety officials collecting after mandatory retirement.

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“We’ve had some healthy responses from cities and towns,’’ said Joanne Goldstein, secretary of the Executive Office of Labor and Workforce Development. A spokesman for the department said it had received 45 responses.

A meeting of municipal officials with department state representatives to discuss the issue is scheduled for next Tuesday. Also, the state labor department is forming a task force to explore the issues raised, conducting an internal review, and inviting public feedback on its website (www.mass.gov/lwd), which is separate from the department’s fraud hot line.

“This is more about having a thoughtful conversation about some of the issues that the municipalities have raised,’’ Goldstein said, noting that there were several different issues involved, so there was not a one-size-fits-all solution.

On March 7 Patrick filed a bill to plug one loophole by not allowing those on a public pension who return to work for a municipality part time to also file for unemployment compensation.

In addition, Senate Republicans were scheduled to meet with municipal officials Wednesday and have promised comprehensive legislation to address what Senate minority leader Bruce Tarr of Gloucester called “egregious examples of a system gone wrong.’’

The activity on Beacon Hill and in the state agency is the result of a letter to Patrick that was signed by 24 municipal finance officers late last month detailing what they saw as flaws in the municipal unemployment system. South of Boston, the letter was signed by officials in Dedham and Foxborough.

“I was surprised by how quickly people responded to this,’’ said William Keegan Jr., town administrator for Dedham. “The one thing that sticks out in our mind is that the laws haven’t been changed in 20 years, and haven’t been looked at, at least from what I know. What’s helpful right now is that they get looked at. We might not be able to solve all the problems, but if they solve some of them, that will be a step in the right direction.’’

Lynnfield Town Administrator Bill Gustus authored the letter that detailed holes in the state’s unemployment compensation system as it relates to municipal employees, including scenarios that were termed “questionable’’ or, in one case, defying “the laws of sanity.’’

“I wouldn’t have written it just to blow off steam; I wrote it with the intent that something would be done,’’ said Gustus, who said his effort began when a retired police officer received unemployment compensation after being told that working additional police details would cut into his pension - the scenario the governor’s bill seeks to curtail. “If I’m surprised, it’s by how quickly the thing has developed, and the urgency that seems to be building to get something done on these issues.’’

Among the cases cited in the letter:

■After taking mandatory retirement at age 65, some former police officers and firefighters collect unemployment benefits along with their pensions.

■Teachers who have been informed that their contracts may not be renewed for the following academic year receive a notification letter in the spring, and many receive a lump-sum payment in June to cover their salary through August. Despite being under contract, receiving pay and medical benefits, some file for and receive unemployment compensation benefits in July and August, then resume teaching when the school year begins.

■Teachers in an area of “critical need’’ are allowed to return to teach at full pay after they retire, without any income limitations or pension offsets. Once the school district fills the position, however, the retiree is allowed to collect unemployment benefits in addition to his/her pension.

■When they are paid by the municipality (and not the school district), some school bus drivers are eligible for unemployment benefits for school vacations, holidays, and other days off. (It was not mentioned in the letter, but municipal officials said that school crossing guards and substitute teachers also have filed for and received unemployment benefits because school was not in session or they were not called in to work.)

■One municipality hired a reserve police officer full time, and sent him to the state’s police academy. The recruit did not receive a passing grade at the academy and was returned to the reserve ranks, where he or she applied for and was granted unemployment benefits.

The letter also cited “a quirk in unemployment law’’ in which municipalities are required to pay a portion of unemployment compensation for a call firefighter who loses his or her full-time job, even as it continues to pay the individual for working as a call firefighter. In a similar case, one community hired unemployed residents on a part-time basis specifically to help the individuals survive the recession, but when their previous employers failed, the town was obligated to fund their unemployment benefits, even as they continued to work in their part-time positions.

Because municipal employment is relatively stable, cities and towns usually self-fund unemployment compensation, which means it is paid directly from the city or town’s annual budget.

While the cases represent a relatively small portion of a multimillion-dollar municipal budget, Gustus said he suspects that the total payoff in all 351 municipalities may exceed $1 million.

But local finance officers say that every dollar saved helps their budgets, and that it was an issue that bothered people, which was evident from the first discussions on the group e-mails.

“It was interesting to see how it really struck a nerve with so many people,’’ Foxborough’s chief financial officer, Randy Scollins, said. “It didn’t sound like it was devastating any one particular town, but when you heard of all of the different circumstances impacting so many municipalities across the state, you realize it wasn’t a bunch of one-offs.

“It’s gratifying to see that the governor and/or his staff recognized that this was an unintended use of these benefits. That he so quickly filed legislation to address one aspect of it was gratifying. To see that we could actually identify the problem, raise it, put pen to paper and send it in, and to see the response, is fantastic.’’

David Rattigan can be reached at rattigand@aol.com.
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