John Baillie retired from his $228,826-a-year job as the Chester County Intermediate Unit's executive director in January with an annual pension of $163,289.

But he didn't leave until six months later, after receiving almost $80,000 in pension payments along with his salary.

Barbara Burke-Stevenson retired as superintendent of Bucks County's New Hope-Solebury School District on Aug. 1, 2006, with an annual pension of $80,802. She stayed for another year, collecting retirement payments while getting a salary of $155,000.

Baillie and Burke-Stevenson are among hundreds of school administrators and other employees - no one knows how many - who have been "double-dipping" since the passage of a 2004 law that allowed them to work while collecting pensions for up to a year if employers say their departure would create an emergency, or if there is a shortage of qualified replacements.

The law's proponents, including the Pennsylvania School Boards Association and the state's Public School Employees' Retirement System (PSERS), say the practice is needed to staff unexpected vacancies or difficult-to-fill jobs.

But PSERS, in a ruling made public Monday, said Baillie and his board manipulated the system and broke the rules because the board had a qualified replacement. He was ordered to return the pension payments. PSERS said it was not conducting a general review but was responding to citizen complaints.

The ruling said the IU also inflated the compensation on which Baillie's pension was based and ordered that his pension be reduced. The IU board consists of school board members from each of Chester County's 12 districts.

The ruling bolsters critics, who say the law - passed mainly to allow school districts to hire retired athletic directors and coaches - is being misused.

State Rep. Karen Beyer (R., Lehigh), a former school board member and a member of the House Education Committee, said she planned to propose a law to stop what she calls "an abuse of the system."

Cases such as Burke-Stevenson's and Baillie's, she said, are "double-dipping - if it looks, walks and quacks like a duck, it is. You can't get away from it."

Experts say it is unclear how much the practice costs the retirement system; it depends on individual circumstances, and PSERS doesn't keep track.

What is clear: School employee pensions are a large and growing expense to taxpayers and are "about to become a truly burdensome expense to most school districts," a Pennsylvania School Boards Association study said this year.

In Baillie's case, the Intermediate Unit board said his departure would be an "emergency" because the board needed his help with important matters and selecting a successor. "We were looking at the best way to keep the IU going, hire the best person, and save some money at the same time" by not contributing to Baillie's pension, said Board President Kathy Pettiss.

But PSERS, in a Dec. 7 letter to Baillie, called the move "a planned manipulation of the system," adding that the board had acknowledged that a replacement for Baillie was available. And it said there is no evidence the board "made a good faith effort to find an interim or temporary replacement," despite having known more than six weeks in advance that Baillie planned to retire.

Baillie could not be reached for comment Monday, but in an earlier interview he defended the arrangement. "I think it is legitimate," he said, adding: "It saves money and eliminates emergencies - I don't know how bad that can be."

Pettiss said Monday that the board had thought the arrangement was proper. "We checked it out with our attorneys, and they said it was legal," she said. "We have to go with what they told us."

Burke-Stevenson's continued employment raises similar questions. Her agreement was signed on Aug. 31, 2005, 11 months before she retired and almost two years before she finally left her post.

Why didn't the school district simply hire a replacement, since it knew at least 11 months in advance about her impending retirement?

New Hope-Solebury School Board President William Behre, who joined the board after the agreement with Burke-Stevenson was ratified, said that with five new members joining the school board in 2005, it was essential to keep her on for an extra year to give them time to gain experience. "I'll leave it to the pundits to figure out whether it matched the letter of the law or not," he said.

Other cases raise questions as well. In the Philadelphia School District, Alfred Farlino retired from his job as the executive director of school services in July 2004, collecting an annual pension of $90,367. He returned to work at the district that August, first as interim chief operations officer and later in other positions.

The 2004 law says that employees can work and collect a pension for only "the school year during which the emergency or shortage occurs." But Farlino continued to work in the district at a series of high-level jobs for about 21/2 years, while still collecting his pension. He was paid $85,793 in salary last school year.

After leaving for a few months this spring, Farlino returned in July as interim chief operating officer, one of the top jobs in the the Philadelphia district, and a job he still holds.

Two other Philadelphia district administrators, Nilsa Gonzalez and Gwendolyn Morris, retired in the summer of 2005 but stayed on for almost two years, working for much of that time at posts similar to the ones they had retired from, while collecting pensions. And Shively Willingham retired as a principal in July 2004 but has since worked for more than three years in the district's central office, collecting his annual pension of $57,626. He was paid $97,600 last school year.

In a statement, the school district's legal office said that "retirees work on targeted projects that impact the district when there is a shortage of personnel" who possess "in-depth institutional knowledge."

In Philadelphia's Pennsylvania suburbs, interim or acting superintendents in at least four school districts - Radnor, Penn-Delco, Perkiomen Valley and Methacton, where Burke-Stevenson is now working - are all retirees, collecting pensions while filling in for superintendents who have departed until a permanent replacement is selected.

State Rep. Steven Nickol (R., York), who sits on the PSERS board, called the examples "troubling."

"If they aren't out there actively recruiting and it's a trumped-up emergency because they are not out there looking [for a replacement], this is a violation of the law, to me."

Beyer, the Lehigh County state representative, said that "as a former school board member, I can't imagine a situation where an administrative position not being filled would be an emergency."

David Davare, director of research for the Pennsylvania School Boards Association, disagreed, saying that the state requires districts to have certified administrators. "Is [the 2004 law] an essential tool to keep school districts in operation? I believe it is. Is there enough control? That's always open to debate."

Only anecdotal evidence exists on how many retirees are now back to work while collecting pensions. A PSERS file of citizen complaints and retiree inquiries about compliance with the law contains hundreds each year since 2004 - including 1,679 in 2004-05 alone.

This year, the Philadelphia School District has 849 people working while retired and collecting a pension. Most are substitute teachers or other short-term employees.

PSERS has $68.7 billion in assets and made $4.3 billion in pension payments to more than 162,000 people last fiscal year. As recently as 2003, district contributions were 1.15 percent of payroll.

That rate is 7.13 percent this year, more than double the average contribution for private employers nationally. A PSERS projection says it could increase to nearly 11.23 percent by 2013.

"I'm not aware of any private employers that have retirement systems with that high a contribution rate," said Michael Podgursky, a University of Missouri-Columbia expert on school-employee pensions.

Reps. Nickol and Beyer both said the state Department of Education should track how many retirees are working while collecting pensions and determine whether an emergency or personnel shortage exists. That would take new legislation, which Beyer said she is working on.

In New Jersey, retired superintendents and top-level administrators are allowed to work for up to two years for a school district and still collect their pensions. But they cannot return to the same employer within 120 days of retiring.

Beyer said she planned to include a similar provision in her proposal.

Contact staff writer Dan Hardy

at 610-701-7638 or dhardy@phillynews.com.