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LI superintendent gets state's biggest pension

BY SANDRA PEDDIE AND EDEN LAIKIN | sandra.peddie@newsday.com and eden.laikin@newsday.com

8:52 PM EDT, May 4, 2008

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As a retired Long Island school administrator, James Hunderfund enjoys a special distinction. He collects the largest public pension in New York -- $316,245 a year.

Hunderfund, 64, retired as superintendent from the Commack school district in August 2006, after 37 years in the system. In September 2007, he went to work as the superintendent of the Malverne school district, which has about 1,655 students. There, he collects about $200,000 a year in salary, according to state records. Altogether, Hunderfund is paid more than $500,000 a year.

In an interview, Hunderfund said he deserves the compensation, saying, "I think I earned every dollar I received." To receive that pension, he said he followed the rules allowed by the state.

The practice of retired school administrators earning second paychecks in school districts is not unusual on Long Island -- there are at least 39 retired central office administrators working in schools. But Hunderfund's half-million-dollar compensation package stands out, even in a region where school superintendents enjoy some of the highest salaries in the nation.

The size of his pension stunned several national pension experts.

'Pretty spectacular'

"I have never heard of one of that magnitude," said Steven Frates, president of the Center for Government Analysis, an Irvine, Calif.-based company that researches pensions. "That's pretty spectacular."

Just how Hunderfund did it provides a window into New York's generous pension system and the arcane rules that govern how payments are determined. For example, as he turns 65 this year, he is not subject to the state-mandated income cap of $30,000 for the interim paycheck -- a school district can pay him what it wants.

While state officials say they followed the state's rules in granting Hunderfund's pension, other school district pensions have come under the spotlight in recent months. They are the subject of civil and criminal investigations by the FBI, the Internal Revenue Service and the state comptroller and attorney general's offices.

Statewide investigations

The investigations -- which have spread statewide -- followed Newsday stories that began in February, showing how several school district lawyers, already paid hundreds of thousands of dollars in legal fees, had been improperly placed on payrolls with the approval of administrators and school boards. That qualified the lawyers for generous state pensions.

State records obtained by Newsday under the Freedom of Information Law cast a bright light on the generous pension packages offered retired school superintendents on Long Island. They now get nine of the top 10 state school pensions Of the nine, five are earning second paychecks in other districts.

Hunderfund, as one of those five, was able to land the job in Malverne even though he has been embroiled since 1999 in a bitter defamation lawsuit filed by a former school board member in Commack, Larry Shulman. A jury in Riverhead found against Hunderfund and ordered him to pay Shulman $100,000 in personal damages. The trial judge threw out the award and an appellate court reinstated it.

Hunderfund is appealing that verdict.

Malverne school officials say they did not know of the lawsuit when they hired him, but said they chose Hunderfund because he was the best candidate.

Began teaching in 1969

Hunderfund began his education career as a teacher in Haverstraw, Rockland County, on Sept. 1, 1969, which classifies him as a "Tier 1" employee. New York public employees are grouped in tiers, based on the date they began work. Each tier has its own set of benefits rules. Tier 1 employees -- those who began work before July 1, 1973 -- are allowed the most generous provisions for what they can include in pension calculations.

Later, the State Legislature limited what employees who started after that date could include in pension calculations.

In 1994, Hunderfund became the Commack superintendent. His personal lawyer, John Gross, advised him on his employment contract, Hunderfund said. Gross, a prominent education attorney, is a partner in the Hauppauge firm of Ingerman Smith, which has represented about 40 school districts on Long Island. In an interview, Gross said his firm never represented Commack or Malverne.

Ingerman Smith is where Lawrence Reich was a partner until December. Reich is the private lawyer who was falsely reported as a full-time employee by five school districts at the same time, helping him collect a state pension of $61,459 and health benefits.