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Sandusky Pension Dispute Moves One Step Closer to Resolution

by on April 30, 2014 11:04 AM

Attorneys for the State Employees' Retirement System and convicted pedophile Jerry Sandusky have filed written opinions regarding what should happen to the pension Sandusky earned while working for Penn State.

Sandusky, a former Penn State football coach, saw his pension forfeited in October 2012 after a judge sentenced him to 30 to 60 years in state prison following his conviction on 45 counts of child sex abuse.

At issue is whether SERS' decision to revoke Sandusky's pension under the Pennsylvania Public Pension Forfeiture Act was appropriate. In 2004, Act 140, which governs pensions for public employees, was amended to include as grounds for pension forfeiture the crimes Sandusky was convicted of -- indecent assault and involuntary deviate sexual intercourse.

Sandusky is appealing the decision in an effort to give the funds to his wife, Dottie, who still resides in State College.

In January, attorneys for Sandusky and SERS presented witnesses before hearing officer Michael Bangs, including Sandusky, who testified via closed-circuit TV from state prison.

After the hearing, Bangs ordered both parties to file written arguments. StateCollege.com obtained copies of those briefs through a Right to Know request.

In the documents, SERS' attorney Steven Bizar describes the situation as "a unique case, with a fact pattern that is unlikely to ever be repeated before this board."

Bizar says under the Forfeiture Act, any public employee who is convicted of a crime forfeits his public retirement benefits.

"Here, several of the elements necessary to prove that Sandusky has forfeited his benefits are not in dispute," Bizar argues. "For instance, it is undisputed that Sandusky was a 'public employee' solely by virtue of his SERS membership. Moreover, it is undisputed that Sandusky was convicted of crimes, which were specifically identified in the 2004 amendments of the Forfeiture Act as being crimes that merited forfeiture of benefits."

Sandsuky's attorney, Charles Benjamin, argues Sandusky was not a school employee when he committed the crimes that led to forfeiture of his benefits and that losing his pension violates the Pennsylvania Constitution. Specifically, Benjamin says Sandusky retired in 1999 and only worked on a "volunteer" basis for Penn State aside from a 95 day emergency hire for the 1999 football season.

However, Bizar argues those claims do not have merit.

For example, Bizar says a 1999 written agreement between Sandusky and Penn State shows Sandusky was employed at Penn State because the university paid Sandusky $168,000 in one lump sum and provided him with an office, tickets and access to Penn State's athletic facilities in exchange for a collaborative effort for outreach programs that provided positive visibility to the university's intercollegiate athletics program.

"The letter agreement puts the lie to Sandusky's contention that he 'retired' in 1999. If anything, in June 1999, Sandusky retired from his position as a football coach, but then continued as a PSU employee in a new 'outreach' position, as Sandusky described it when he was negotiating the letter agreement with PSU," Bizar says. "

Bizar says Sandusky worked with Penn State to enhance the university's image from 1999 until at least 2009. For example, Sandusky participated in a program that included distributing hundreds of thousands of trading cards of Penn State athletes. Additionally, Bizar argues that the collaborative effort between Penn State and Sandusky's charity, The Second Mile, was another image-building initiative for the university.

"The Second Mile and PSU enjoyed a symbiotic relationship, which The Second Mile benefited from increased donations and recognition as a result of its association with PSU, and PSU benefited by enhancing the reputation of the university and its athletic program through its close alliance with a well-respected charity," Bizar says.

Benjamin says Penn State paid Sandusky $168,000 for services rendered and not for future employment. In 2000, Sandusky became a paid consultant for The Second Mile and "at no time thereafter did (Sandusky) discuss, let alone reach an agreement, with Curley or any other PSU representative, about the nature, extent and identification of any collaborative efforts that he would make with PSU regarding the outreach programs" mentioned in the agreement, Benjamin says.

Bizar also argues that Sandusky's 1999 retirement as football coach was a "sham," coordinated by Sandusky and Penn State Athletic Director Time Curley that allowed Sandusky to benefit from a state retirement incentive. After retirement, the university immediately rehired Sandusky as an "emergency hire" so that he could coach in the 1999 football season.

Additionally, Bizar argues forfeiture of Sandusky's pension does not violate the state's constitution.

"Pennsylvania courts have held that it is not unconstitutional to apply the Forfeiture Act to an employee who was promoted, or changed job classifications, after July 8, 1978 (the effective date of the Forfeiture Act," Bizar says. "Here, Sandusky received tenure in 1980, was rehired with a salary increase in 1999, and entered into the letter agreement setting forth his new position with PSU in 1999."

Bizar claims the forfeiture of Sandusky's pension is consistent with case law.

"Here, the board must apply real world experience to a situation that could not have been envisioned by any drafter of the Forfeiture Act. Because of (Sandusky's) fame and infamy, his football successes and his abhorrent crimes, and, most importantly for the present purposes, his unconventional employment relationships with PSU, Sandusky is not like any other state employee whom the Forfeiture Act applies. But Sandusky's unique position cannot immunize him from the laws on this Commonwealth."

Benjamin argues that Sandusky complied with all conditions necessary to receive a retirement allowance and therefore the pension cannot be adversely affected by subsequent legislation, which changes the terms of the retirement contract, "whether the employee chooses to retire immediately or to continue in active service."

Benjamin says the 2004 amendment to the Forfeiture Act does not apply to Sandusky because it "would have unilaterally changed the terms of the SERS contract in a manner that did not reasonably enhance the actuarial soundness of the retirement fund."

The next step in the process is for Bangs to prepare and issue findings of fact, conclusions of law and an opinion or recommendation. Afterward, there will be a period of time for each side to file exceptions to the hearing officer's opinion or recommendation. Then the SERS' board will vote on the appeal, which will be by notational ballot, not during public session. Once the vote is complete, it will be become public record.

If the board denies Sandusky's appeal, Sandusky has the option to appeal the decision in Commonwealth Court.

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Jennifer Miller is a reporter for StateCollege.com. She has worked in journalism since 2005. She's covered news at the local, state and national level with an emphasis on crime and local government.
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