For former Suffolk Conservative chairman Edward Walsh, it was the cruelest of April fool jokes, even if the punchline was unwittingly his own doing.
A day after his conviction on federal corruption charges, the state retirement system on April 1 issued a $6,794 check to Walsh, the first of what he thought would be a lifetime of monthly pension payments, following his retirement in February as a correction lieutenant after 25 years and two weeks.
The check, based on a preliminary state estimate, would mean an annual pension of $81,528. That’s more than the $79,224 annual pension that went to another official convicted recently on corruption charges, former Assembly Speaker Sheldon Silver. The pension was a security blanket for Walsh, who is facing 33 to 41 months in federal prison for illegally taking pay while playing golf, gambling and politicking on county time.
But last week, state Comptroller Thomas DiNapoli ruled that trial evidence showed that Walsh’s theft of services put him nearly three months short of the 25 years he needed under special state legislation for Suffolk correction officers to collect a pension of 50 percent of salary no matter what his age.
While Walsh was already facing the possibility of forfeiting $200,000 for theft of services and another $250,000 in fines, the impact of DiNapoli’s ruling was far more devastating.
It means that Walsh, age 50, would not be able to start collecting his full pension until he turns 62. If the estimated pension stands, that’s a loss of $978,336 in pension benefits.
The earliest Walsh could begin collecting any pension at all is five years from now, at age 55. If he does start collecting early, his pension benefit would be cut 27 percent, or $22,012, to $59,516 annually. The problem with collecting pension early is that the payment does not go up at age 62; it remains $59,516 a year for life.
More immediately, DiNapoli’s ruling means that Walsh already owes the retirement system $13,588 for two months of payments in April and May that he has already received, according to Matthew Sweeney, a comptroller’s spokesman, and if Walsh fails to make the advance payments, it will be deducted from future benefits.
If all this news is not bad enough for the ex-party chairman, the state comptroller has yet to determine Walsh’s Final Average Salary — a calculation based on his highest three years’ pay, including overtime, which decides the final dollar figure Walsh will receive. Sweeney said that the state will not make that calculation until Walsh reapplies later when he is eligible to collect.
While the state comptroller ruled on Walsh’s length of service, the pay Walsh illegally took while he was not working also could lower his final benefit.
“The calculation will be based on his creditable service,” said Sweeney. “Wages paid in connection with the removed service and any other payments adjusted out by the employer will not be considered in calculating a benefit.”
William Wexler, Walsh’s attorney, who has vowed to fight the state ruling that stopped Walsh’s payments, questioned the basis for their decision. “They are going to have to have proof,” said Wexler. “And I don’t think the proof exists to satisfy the comptroller’s purposes.”
However, the courts have given the comptroller wide latitude to protect the pension system. A key 1979 Appellate Division case involved Elsa Nutt, a longtime school cafeteria worker in upstate Cassadaga Valley school district. Although the school initially believed she had enough time to qualify for a 25-year state pension, a state audit showed that she fell one month shy because of district fiscal problems that closed the cafeteria for a month in September 1975 and involuntarily furloughed Nutt.
Although her lawyers argued the state could consider it an unpaid leave of absence, the court decided that state rules required the employee receive comptroller approval beforehand.
In making its ruling, the appellate panel found that as long as the comptroller’s actions are “not irrational or unreasonable, it should be upheld by the court” because he has a duty to approve only “legitimate claims . . . to insure the continuing strength and soundness of the fund.”