A landmark pension reform bill that closes the loopholes allowing some public employees to collect six-figure salaries on top of six-figure pensions is expected to signed into law Friday by Gov. David Paterson, sources said.

The bill, which was approved unanimously by the Legislature in June, sparked an outcry from various law enforcement groups seeking to be exempted from some of its provisions. Negotiations over the wording of the governor's approval message -- seen as important because it influences how a law is implemented -- have been intense during the last few days, sources said.

The deadline for signing the bill is midnight.

The legislation increases the penalties for pension fraud, requires greater accountability on the part of agencies seeking to hire public retirees, and bars attorneys from serving as both employees and independent contractors for school districts.

It also prohibits a public-sector retiree from returning to the same or similar job for a year. State Sen. Dean Skelos (R-Rockville Centre), Senate majority leader, offered an amendment to the bill that would have exempted police and firefighters with 10 or more years of experience from that provision. However, it did not garner any support in the Assembly.

Among the law enforcement groups objecting to the legislation are the state District Attorneys Association, the state Sheriffs' Association and the state Division of Criminal Justice Services.

John Grebert, executive director of the state Association of Chiefs of Police, said law enforcement agencies rely on retirees in key positions because of their experience. He said state Civil Service Department officials had told them that under the new law they would have a much harder time getting waivers -- the paperwork that current law requires when a retiree seeks to earn more than the current salary cap of about $30,000 a year.

David Ernst, state Civil Service Department spokesman, declined comment. The reforms follow a series of Newsday stories on pension abuses. Newsday found private attorneys being reported as public employees so they could get guaranteed pensions and health benefits, as well as dozens of retired school administrators returning to work in the schools, often collecting six-figure salaries on top of six-figure pensions.

After the stories began in February, the State attorney general, state comptroller, Federal Bureau of Investigation, Internal Revenue Service, U.S. Education Department inspector general and the Nassau district attorney all launched investigations.

New York State Attorney General Andrew Cuomo, whose office has uncovered pension abuses statewide, worked closely with legislators in hammering out the pension reforms. To date, his office has reached settlements of more than $1.2 million with 65 lawyers statewide.

New York State Comptroller Thomas DiNapoli, whose office oversees the largest retirement system in the state with more than 1 million members, has begun a review of all attorneys on public payrolls. To date, the office has revoked pensions or pension credits from 39 professionals statewide.

Last month, DiNapoli announced tougher retirement reporting rules and the creation of a new compliance unit to weed out pension cheats. The new unit will be staffed by about 20 people and will monitor who is being reported as employees and how their pension credits are being counted, DiNapoli said.

Behind the bill The new pension legislation, heralded by legislators as one of their most important achievements of the session, increases penalties and oversight of pension reporting. Following are the key elements of the law.

Bars lawyers from simultaneously serving as both employees and independent contractors of school districts or BOCES and makes any violation of that a felony. Increases the penalty for pension fraud to a felony and makes it subject to a fine of up to three times the amount of money collected. Requires school districts and Boards of Cooperative Educational Services to report annually all lawyers who were hired, their pay and their employment status. Requires school districts to break out all compensation and benefits paid to school administrators and to post that information on their web sites. Mandates that school districts and BOCES report to the state comptroller all earnings of retirees. Compels any school district to demonstrate an urgent need when it seeks to hire a retiree and show the detailed efforts it made to hire someone who is not retired. Prevents a retiree in any public-sector job from returning to work in the same or similar position for one year.

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