Hughes sues over state pension

January 22, 1995|By Thomas W. Waldron | Thomas W. Waldron,Sun Staff Writer

Former Gov. Harry R. Hughes says the state owes him about $250,000 in back pension payments, and he is suing the state retirement board to get a 17-year-old decision reversed.

Mr. Hughes is challenging the board's 1978 decision to withhold his pension -- earned during his 22 years as a legislator and transportation secretary -- while he was governor from 1979 to 1987.

"I earned it. It's just a question of whether I'm entitled to it or not," Mr. Hughes, 68, an attorney in Baltimore, said last week.

The case, which has dragged on for more than three years, is headed to the state's highest court.

Mr. Hughes and his attorneys said they have not calculated the amount of money at stake.

But using a state pension formula, it can be determined that his pension would have been about $20,000 in 1979, based on his years of service and his final $48,000-a-year salary as transportation secretary.

Assuming 5 percent annual cost-of-living increases in the pension amount plus all the accumulated interest, the figure in question would be more than $250,000.

The practice of collecting a pension while working for the state -- so-called "double dipping" -- has been controversial. As governor, Mr. Hughes lobbied against double dipping by state employees.

He said Friday, however, that his concern was directed at people who retire from a state job, then return to collect a salary for a similar job while receiving a pension.

"I don't think it's a double-dipping question," said his attorney, John F. X. O'Brien, who was state personnel secretary during Mr. Hughes' second term. "We're talking about a person who served time in two different systems."

Harriet Granet, an assistant attorney general who represents the state retirement board, declined to discuss the case.

Mr. Hughes is now receiving an annual state pension of at least $84,000 for his 30 years in state service, according to Peter Vaughn, executive director of the State Retirement Agency.

The actual pension figure is higher because it includes additional contributions made by Mr. Hughes when he worked for the state, an amount that is confidential under law, Mr. Vaughn said.

Mr. Hughes qualified for a state pension after serving 16 years in the General Assembly and six years as transportation secretary under former Gov. Marvin Mandel. Mr. Hughes resigned in 1977 and began collecting a pension under the state Employees' Retirement System.

When he was elected governor in 1978, the state retirement office canceled his pension -- effective when he took office in January 1979. In 1987, when he left office, Mr. Hughes asked state retirement officials to reconsider the 1978 decision.

Mr. Hughes argued that as governor he was enrolled in the gubernatorial retirement plan, a pension established by the legislature in 1978. The governor's pension arrangement was separate from the Employees' Retirement System from which Mr. Hughes had earlier received his pension payments, he maintained.

The retirement office disagreed, although officials acknowledged that Mr. Hughes had a good argument.

In a "Dear Harry" letter dated July 19, 1990, state Attorney General J. Joseph Curran Jr. -- who had been Mr. Hughes' lieutenant governor in his second term -- characterized the legal question as "close and difficult."

"Because of my admiration and respect for you, it is a problem that has weighed on me especially heavily," Mr. Curran wrote.

In October 1991, Mr. Hughes requested a formal hearing, and the case was heard by Administrative Law Judge Louis N. Hurwitz in May 1992. That fall, Mr. Hurwitz ruled against Mr. Hughes, a decision upheld by the state retirement board.

Mr. Hughes filed suit to appeal in Baltimore City Circuit Court, where the case was assigned to Judge John Carroll Byrnes.

In a ruling last October, Judge Byrnes said the board should reconsider its decision, suggesting that it had not considered the full picture, including the intent of the 1978 legislation establishing the governor's retirement plan. While favorable to Mr. Hughes, the ruling stopped short of ordering the board to give him the disputed pension.

The state retirement board appealed Judge Byrnes' decision to the Court of Special Appeals. But last week, the Court of Appeals decided to hear the case itself, bypassing the intermediate court. Arguments are set for May.

Mr. Hughes noted that state law allows certain state retirees to collect a pension and a paycheck. A judge who is also a retired state employee, for example, can collect a state retirement check and a judicial salary.

Even in his own administration, one appointee collected a state salary while drawing a state police pension, Mr. Hughes said.

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