Pension Payoff: Community college deal attacked

A pair of influential East Valley lobbyists qualified for state retirement payments worth thousands of dollars for the rest of their lives because of a special deal with Maricopa County Community College District, officials at the Arizona State Retirement System said.

MCCCD pact with lobbying groups under fire

District kept misusing plan despite report

Use of state benefit plan called improper

Roc Arnett, president of the East Valley Partnership, is eligible to receive more than $10,000 annually from the state's pension plan despite never having been enrolled prior to the 2003 deal with the college district, according to retirement system records.

Susan Carlson, executive director of the Arizona Business & Education Coalition, stands to make more than $35,000 a year as a result of a similar arrangement the organization made with the district in 2002. Without the deal, Carlson would have received $6,600 in annual pension benefits from the state because she previously worked as a school teacher, retirement officials say.

The two lobbyists for private, nonprofit corporations were enrolled in the state retirement system under agreements that list them as employees of the college district. The private organizations reimbursed the district for salaries and other costs related to the arrangements.

District Chancellor Rufus Glasper allowed Arnett and Carlson, as well as the employees of their organizations, to continue being listed on the district's payroll even after he learned late last year that the state Auditor General had declared a similar arrangement in Santa Cruz County to be "improper." That decision by Glasper allowed those workers to continue stockpiling state retirement benefits.

Glasper has notified Arnett and Carlson that their arrangements to be listed on college district employee rolls will end in December. He did not notify officials at the state retirement system, who learned of the deal from a story published earlier this month in the Tribune.

"I think it's criminal and I think it's fraud," said Rep. Russell Pearce, R-Mesa. "This is a scam that's just unbelievable. This was a deliberate, orchestrated effort to game the system."

Pearce, who heads the House Appropriations Committee, directed legislative staff to look at shoring up loopholes in state retirement law to make sure this doesn't happen again. He also levied harsh criticism against Glasper for not immediately reporting the deal to state retirement officials as soon as there were questions about its legitimacy.

Pearce and other lawmakers are considering changes in state law that would require government entities in the pension plan to notify the retirement system if someone is found to be improperly enrolled. There is currently no such requirement in the law.

"If this isn't criminal, then it should be," said Sen. Karen Johnson, R-Mesa.

Glasper said he didn't see any need to report Arnett or Carlson to the state, but decided to remove them from the employment rolls to "avoid the appearance of doing anything wrong."

He made the decision after meeting with attorneys representing the district, as well as members of the East Valley Partnership and the Arizona Business & Education Coalition.

"You can always have hindsight," Glasper said regarding his decision not to report the issue to officials running the state retirement system.

Glasper, the district's chief financial officer when the deals were cut, insists there is nothing wrong with listing Arnett and Carlson as community college workers because their organizations share similar goals.

The deal qualifies Arnett and Carlson to get retirement payments based their near six-figure salaries unless they are kicked out of the system and their money is refunded. Arnett and Carlson both made more than $99,000 last year, according to district payroll records.

Arnett never paid into the state retirement system before the district listed him as an employee, according to state retirement records.

Under state statutes, anyone turning 65 while enrolled in the retirement plan automatically qualifies for a benefits package. Arnett was 61 years old when the district put him in the retirement system. He is now 66.

Arnett did not return repeated phone calls seeking comment.

Carlson, 63, a former school teacher, qualified under a different provision in state law that allows workers to retire if they have paid into the system for 10 years and are at least 62 years old.

Carlson worked for the Mesa Unified School District from 1989 to 1994 making about $29,000 per year, according to school records. Her deal with the college district allowed Carlson to boost her annual retirement pay by almost $30,000 a year because it will be based on her current salary, according to David Cannella, spokesman for the retirement system.

Based on her years of teaching and her previous salary, she stood to make about $6,600 a year until the college district listed her on its rolls, according to Cannella.

The Arizona Business & Education Coalition Web site states Carlson was a teacher for 15 years in the Kyrene Elementary School District. She said she worked there from the late 1960s to the early 1980s.

State retirement records, however, only show her paying into the retirement system for 11 years prior to working at the Arizona Business & Education Coalition.

Carlson refused to answer questions about the arrangement made with the college district, or the benefits she will receive from the state retirement plan.

Charles Jirauch, who was involved in setting up the agreement between the district and the Arizona Business & Education Coalition in 2002, said the intent was to save the nonprofit organization time and money. The coalition was a start-up company at the time, and its executives did not want to waste time and effort setting up a retirement plan and payroll services, Jirauch said.

State retirement officials are investigating whether to boot Arnett and Carlson out of the system and refund their money, which would eliminate any future benefits they stand to get from the state as a result of their arrangements with the district, Cannella said.

"There's no question it isn't fair if people are being improperly enrolled," Cannella said. "We do our best to police that. We rely on employers to provide true and accurate information."

Access to the state's retirement system is one of the bonuses government agencies use to attract and retain quality employees who can earn more money in the private sector, Cannella said. The plan is guaranteed for life.

Besides the financial perks, workers for the nonprofit groups also receive legal protection against lawsuits arising out of their work for the private organizations, as any community college employee would, said Chris Chesrown, a district spokeswoman.

That means the district could be liable if someone sued Arnett, Carlson or any of their employees because of their work for the private organizations, Chesrown said. She would not go into further detail.

"I'm not going to get into hypothetical situations, but we protect and stand by our people," she said.

Jerry Walker, a member of the MCCCD governing board has no problem with the way Glasper handled the deal, despite the criticism coming from Pearce and other state lawmakers.

"The Legislature can call it anything they want until they pass a law that makes this illegal," Walker said.

He said the special interest groups did a lot of work for the district and were entitled to all the benefits that other district employees receive.

To qualify for state benefits, an employee must work 20 hours a week and 20 weeks a year for a government agency, according to state law. District officials, including Glasper and Walker, said these groups do a lot work for the district, but have not provided the Tribune with any documentation showing employees meet state retirement standards.