The New Jersey Division of Pension and Benefits is investigating 11 lawyers as part of the fallout of a state probe into Gloucester County Democratic Chairman Michael Angelini.

One is Timothy Higgins, a Democrat who works for several Camden County towns, a Treasury Department official confirmed.

Officials in Pennsauken and Oaklyn acknowledged this week that they had erred by allowing Higgins to keep accruing pension credits through his job as their municipal attorney despite a 2007 law barring the practice. They said they had taken steps in recent months to correct the problem.

Oaklyn sent a letter to the state in January seeking the return of pension contributions it made for Higgins during the last two years. Borough taxpayers funded more than $5,000 in unnecessary payments, according to local figures.

In February, Oaklyn received letters from the state saying it was reviewing the pension eligibility of Higgins and Carl Viniar, a former borough solicitor who works with Angelini at a law firm.

Higgins did not return calls seeking a comment.

Local officials explained their missteps as a misunderstanding of a change in the law rather than an effort to game the pension system.

The state probe began as an investigation by the Office of the Inspector General into Angelini, who worked at his own law firm while also accruing a public pension of more than $100,000 through his legal work for numerous public entities.

The office released a report last December that questioned how Angelini could have built up such a pension when he appeared to be working as an independent contractor rather than a government employee. It also said Angelini received pension credits for his government jobs even though he sometimes had others at his firm do the work.

Debbie Booker, a spokeswoman for the Department of the Treasury, wrote in an e-mail that the Inspector General's Office referred 20 additional names that arose during the investigation to the Division of Pension and Benefits.

The division "ultimately determined some of the individuals warranted further investigation," her e-mail said. "Our audit unit is sending out requests to 41 locations related to 11 individuals identified from the original 20."

Since April, the Treasury Department has repeatedly denied requests for information on the lawyers under review, confirming only that Higgins was one of the 11.

The state pension system is underfunded by $46 billion, and legislators this year passed a series of changes that made future part-timers, such as Angelini, ineligible for a pension. The inquiries spawned by the Angelini case came two years after a pension law that received far less attention.

Passed in 2007 and taking effect in 2008, it barred private contractors from accruing pension credits during the course of their work for public entities. A solicitor could still receive pension credits as a salaried employee, but arrangements under professional services contracts also allowing a lawyer to bill the entity could no longer count toward a pension, the law said.

Higgins also worked for a year at an influential firm founded by former Gov. James J. Florio, where he was hired in 2007 to lead its new office in Woodbury. Camden County Freeholder Director Louis Cappelli Jr., who joined the office as managing attorney in 2008, said Higgins left that same year.

Still unclear is the direction of the state review of Higgins. Other jobs as prosecutor for Pennsauken and solicitor for Gibbsboro - which pays a flat salary of $4,323 - entitle him to stay in the pension system.

Pennsauken Mayor Rick Taylor said the township originally received an opinion that Higgins was eligible to receive pension credit for his solicitor's job, too, though his firm was billing the township under a professional services contract while Higgins also received a salary.

But after doing more homework, Pennsauken decided to remove that position from the pension system early this year, according to Taylor.

"I wonder how much of it is confusion," Taylor said.

Oaklyn Clerk Bonnie Taft said the borough allowed Higgins, its solicitor, to accrue pension credit he should not have for two years, when he was billing Oaklyn on top of receiving a $34,000 salary.

Taft described the matter as an oversight, saying she started working in Oaklyn in September 2008, and had not known of the new rules. After learning of them and asking Higgins, she said Higgins told her he thought the previous clerk had removed him.

The line between employees and private contractors is historically blurry in New Jersey when it comes to government attorneys, who usually have political connections.

Until a recent change, pensions were based only on an employee's three highest-paying years, with additional credit for each year worked. The system allowed lawyers to reap the generous benefits of the public sector while also retaining the benefits of higher-paying private practice.

Consider Tony Drollas, a politically connected Republican from Burlington County.

He worked full-time for state government from 1988 to 1996, two years short of the decade needed to become vested in the pension system. He became vested after becoming solicitor of tiny Woodland Township, which paid him $1,500 a year - the minimum needed to stay in the pension system - through the end of 2007 while his firm, Capehart Scatchard, also billed the municipality.

Drollas, who is not one of the 11 under review, left the payroll in accordance with the new law.

Yet the Willingboro Municipal Utilities Authority still allows Solicitor Michael Armstrong to receive pension credit for his part-time position. He receives a salary and health benefits while his law firm bills for additional work.

Executive Director Joseph Bateman said the authority had received an opinion that it was permitted, while Armstrong said he thought the MUA had removed the job from the pension system after he directed it to do so several years ago.

Contact staff writer Maya Rao at 856-779-3220 or mrao@phillynews.com.