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

Citing pension abuses that have been uncovered in a series of Newsday stories, Paterson said in a statement, "At a time when the state is facing an unprecedented fiscal crisis, we must be honest about flaws in current operations."

State Attorney General Andrew Cuomo, who helped hammer out the sweeping package of reforms, lauded the governor and legislators for approving the legislation. "A top priority of this office has been protecting the taxpayer," he said in a statement. "With taxes going seemingly ever higher, we have a zero tolerance policy for fraud and abuse." 

The new 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 bars a public-sector retiree from returning to the same or similar job for a year. 
The reforms follow a series of stories on pension abuses. Newsday found private attorneys were being reported as public employees so they could get 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.

The attorney general, New York comptroller, Federal Bureau of Investigation, Internal Revenue Service, U.S. Education Department inspector general and the Nassau district attorney all launched investigations. 

Cuomo, whose investigators have found abuses statewide, has called the depth and breadth of the fraud "staggering." To date, his office has reached settlements of more than $1.2 million with 65 attorneys.

State Comptroller Thomas DiNapoli, whose office oversees the largest retirement system in the state with more than 1 million members, also lauded the new legislation. 

"This is real progress toward protecting taxpayers' dollars and preserving the integrity of the retirement system," he said in a statement.

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.

The new legislation, which was approved unanimously by the legislature in June, sparked an outcry from various 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 the law is implemented - were intense over the last few days, political sources said Friday. 

Some law enforcement groups had objected to the provision prohibiting a retiree from returning to the same or similar job for a year. Paterson, however, made clear in his approval message that he wanted to put a stop to retirees returning immediately to their jobs in order to collect both a pension and a salary.

The new law's highlights

The new pension-reform law increases penalties and oversight. Following are the key elements:
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.