Audit: RI disability pension paperwork missing

PROVIDENCE, R.I. (AP) — Rhode Island pension officials cannot locate documentation verifying the physical conditions of hundreds of former public workers who have received disability pension benefits since 2001.

The widespread bookkeeping mistakes were revealed Wednesday in an audit of the state's disability pension program, which supports former public employees who became disabled before retirement age. Currently, 559 former public workers are receiving the benefit.

Recipients are required to submit annual documentation of medical exams to verify their ongoing disability. The state also requires recipients to report any outside income so their benefits can be adjusted downward. But according to the audit, much of the paperwork is missing entirely.

"We found incomplete files, incomplete documents," said Rhode Island General Treasurer Gina Raimondo, who took office this year promising to review the pension system. "Sloppiness will not be tolerated. Anything that is inefficient or sloppy degrades the system."

The audit comes as Raimondo, a Democrat, and other top state officials grapple with the escalating costs of public pensions. The most recent estimate puts the state's unfunded pension liability at $6.87 billion, a large payout considering the state budget for the current fiscal year is $7.7 billion. The General Assembly plans a special legislation session this fall to find ways to address the rising cost to taxpayers.

Among the findings in the audit:

— Annual reports required by the state are missing for hundreds of individuals who have received disability pensions since 2001.

— In 2003, 206 former public workers in Rhode Island received disability pension benefits from the state. Yet not one of their files contained the correct paperwork from that year.

— For 2005, only one of 281 files contained the correct documentation.

— The state is also missing paperwork relating to outside income earned by pension recipients. The state requires recipients to report outside employment income so their state benefits can be adjusted downward.

The audit did not assign blame for the faulty paperwork or find any evidence of pension fraud. The audit concluded that it was "impossible" to determine whether the problem was the result of beneficiaries not submitting paperwork or the state failing to collect the information.

The system is overseen by the Employment Retirement System of Rhode Island, which is governed by a board led by the state treasurer. The state is supposed to remind beneficiaries to submit new documentation each year, but the auditors said they could find little evidence that such reminders went out in some years.

"There were clearly some holes," said Boyd Foster, an accountant with Sullivan & Company, the Providence-based auditing firm that conducted the review. "There's definitely room for improving the process."

The pension system is now reviewing its compliance and accountability procedures to ensure better record keeping, according to Dara Chadwick, a spokeswoman for the Employment Retirement System.

The state has shown modest progress in correcting the problem: 60 percent of the files from 2006 to 2008 contained the proper paperwork, and in 2009, the number of files with complete documentation rose to 82 percent.

But Chadwick said the audit shows more progress is needed.

"We have changes that need to be made," she said. "We're taking immediate action."