School superintendent gets state's biggest pension

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.

After a Newsday story in February about Reich's state pension, State Comptroller Thomas DiNapoli froze his pension and ruled that he would have to pay back the money he had collected. A second lawyer, Albert D'Agostino, has had his pension suspended by DiNapoli's office after Newsday reported that he was collecting six figures after being granted retroactive credit for 21 years in the system.

A small universe

The universe of school district attorneys is small on Long Island. Three or four law firms handle much of the business. Coincidentally, Ingerman Smith, for example, represents the Jericho school district, where Hunderfund's wife, Anna, works as assistant superintendent for curriculum and instruction. Since July 1999, the district has paid the firm $578,780 in legal fees, according to district records. Anna Hunderfund said she had no influence over the district's selection of a law firm.

Gross collected pension credits and health benefits after being reported as an employee of Northport Village - the kind of arrangement now being examined by authorities. He is no longer listed as a village employee, but retains health benefits through the village.

It was Gross who advised Hunderfund on the provisions he should seek in his contract, Hunderfund told Newsday. Those provisions proved to be critical.

Perks, benefits included

Compensation and length of time in the system are among the factors used to calculate a state pension. As a Tier 1 employee, Hunderfund was allowed to include many perks and benefits from his Commack contract to increase the final calculations.

Among them: unused sick days and vacation pay, life insurance, a tax-sheltered annuity, a car allowance and a conference allowance, according to records.

Those additions, records show, significantly boosted the amount used to calculate his pension. In the 2004-05 school year at Commack, for example, Hunderfund received $237,513 in regular salary, according to state records. On top of that, he had $234,224 in additional compensation, effectively doubling the total. That included $7,500 he received in lieu of taking a car, $7,000 in unused conference expenses and a $9,793.50 payment for not taking health insurance through the district, among other things.

Most public employees' pensions are based on their three highest compensation years. As a Tier 1 employee, Hunderfund was allowed to base his pension on five years' compensation.

"I have never heard of one who's orchestrated it that well," said pension expert Frates.

Hunderfund said he and not Gross negotiated his contracts with Commack and that he was simply "following the system" in securing his retirement benefits. In the interview, Gross confirmed that he advised Hunderfund on the particulars of his contracts, but said he did not negotiate with the school board on Hunderfund's behalf.

In response to questions about Hunderfund's compensation, Commack school board president Mary Jo Masciello said board members were aware that some of Hunderfund's benefits could qualify for pension credit, but said the state, not the district, approved the final pension.

Defamation lawsuit

On top of the items that added to Hunderfund's total compensation package, Commack records also show that he received merit bonuses through the 2005-06 school year. Those stipends came at a time when Hunderfund was personally named in a defamation lawsuit that alleged he had engineered an anonymous flier sent to district voters before an election in 1999 that characterized Shulman as "vengeful" and "immature."

Commack school officials said they do not know the cost of Hunderfund's legal defense in that case because it is being paid by the publicly funded New York Schools Insurance Reciprocal, an insurance company overseen by a board of school superintendents. Ron Falcone, the claims manager handling the case for that company, declined to provide the cost.

Shulman's lawyer, Mark Yagerman, estimated the cost to be at least $250,000, based on the time lawyers spent at trial and in depositions, as well as the various appeals. He said Hunderfund was liable only for the cost of punitive damages.

A current and former Malverne school board members both said they were unaware of the lawsuit when they hired Hunderfund. Current member Patrick Coonan said he wasn't bothered by the lawsuit and that Hunderfund had the best qualifications of the candidates they considered.

'He does a good job'

"The man's qualified," he said. "He does a good job."

Former school board member Phyllis Wright said she was unaware of the lawsuit or that Hunderfund was collecting a pension. But, she said, "Superintendents are few and far between."

State law limits what a retiree can earn in public employment to $30,000 until the year the person turns 65. Hunderfund turns 65 this year, so he is not subject to that cap.

"When I started working as a teacher for $5,000 in 1969," he said, "I never thought I'd make that much money."

He added, "We just followed the system."

Staff writer John Hildebrand contributed to this story.

Path to $316,000 pension

James Hunderfund started work as a teacher in September 1969, making him a Tier 1 employee in the state retirement system. The tier has generous pension rules that allowed Hunderfund to add nonsalary items to his compensation, significantly boosting his final pension. Those rules also allowed him to base that final figure on a formula using his final five years of total compensation.

He used these items to arrive at his pension:

2006-07 (worked partial year) $46,220.00 regular salary $1,250.00 car allowance, instead of taking a car $11,606.58 health insurance buyback $19,386.87 taxable value of life insurance $33,000.00 tax-sheltered annuity $24,958.80 unused annual leave $48,531.00 unused sick pay TOTAL $184,953.25

2005-06 $257,388.00 regular salary $10,296.00 merit pay $7,500.00 car allowance, instead of taking a car $9,000.00 cash for conference expenses $10,593.99 health insurance buyback $19,385.00 taxable value of life insurance $40,000.00 tax-sheltered annuity $37,321.26 unused sick pay TOTAL $391,484.25

2004-05 $237,513.03 regular salary $9,501.00 merit pay $7,500.00 car allowance instead of taking a car $7,000.00 cash for conference expenses $9,793.50 health insurance buyback $911.00 taxable value of auto stipend $19,385.00 taxable value of life insurance $40,000.00 tax-sheltered annuity $40,377.38 unused annual leave $99,755.88 unused sick pay TOTAL $471,736.79

2003-04 $216,957.00 regular salary $14,813.28 merit pay $7,000.00 cash for conference expenses $8,773.53 health insurance buyback $1,821.00 taxable value of auto stipend $19,385.00 taxable value of life insurance $26,000.00 tax-sheltered annuity $22,780.00 unused annual leave $43,391.60 unused sick pay TOTAL $360,921.41

2002-03 $204,503.00 regular salary $7,000.00 cash for conference expenses $7,886.60 health insurance buyback $1,821.00 taxable value of auto stipend $19,385.00 taxable value of life insurance $20,000.00 tax-sheltered annuity $55,727.17 unused annual leave $43,968.36 unused sick pay TOTAL $360,291.13

2001-02* $159,206.29 regular salary $6,368.29 merit pay

$5,831.00 cash for conference expenses

$6,071.00 health insurance buyback $1,516.89 taxable value of auto stipend $16,147.71 taxable value of life insurance $15,827.00 tax-sheltered annuity 21,094.83 unused sick payTOTAL $232,063.01

*He worked a partial year.

In the penthouse Top 10 pension earners in the New York State Teachers' Retirement System. Five of the 10 are working in Long Island school districts.

$316,245 James Hunderfund, 64, retired from Commack in 2006. Now in Malverne, making $200,000.

$205,809 John H. George, 65, retired from North Tonawanda in 2006.

$196,050 William J. McDonald, retired from Floral Park- Bellerose in 2005.

$195,403 William J. Brosnan Jr., 61, retired from Northport in 2006. Now at a school support center in Holbrook, making $176,000.

$194,200 Thomas J. Caramore, 61, retired from Bellmore-Merrick in 2005. Now in Baldwin, making $212,000.

$192,399 Joan L. Colvin, 66, retired from Jericho in 2007. Returned to work at Jericho, making $180,000.

$190,123 Les A. Black, 62, retired from Brentwood in 2006.

$189,909 Sidney A. Freund, 59, retired from Dobbs Ferry in 2006. He had worked earlier in three Long Island districts.

$187,468 Carol D. Eisenberg, 69, retired from West Hempstead in 2007. Now in East Islip, making $173,910.

$186,826 Lawrence F. Pereira, 63, retired from Massapequa in 2005.