Legislature debates public employee 'double-dipping'

Critics say rehire program is an abuse of the system and has exacerbated problems with retirement funds statewide

Posted: Monday, March 14, 2005

FAIRBANKS - City of Kenai retiree Fred Macvie is back on the job.

He's one of about 335 Alaska public employees or teachers collecting both a paycheck and retirement benefits.

The "double dipping" is possible through a retire-rehire incentive program created by the Legislature in 2001 with the goal of filling hard-to-fill positions with retirees.

Workers rehired through the program collect full retirement benefits while earning a paycheck. As the program nears its sunset date July 1, the Legislature is grappling with whether to extend the program.

It's one of the many issues facing lawmakers in addressing state-run retirement systems, which are an estimated $5.6 billion short on funds needed to meet obligations to retirees.

Senate Majority Leader Gary Stevens, R-Kodiak, is sponsoring legislation to extend the retire-rehire program another five years. The program is especially helpful to school districts that cannot attract qualified candidates for positions, he said.

"We still have a shortage of qualified teachers," Stevens said.

Critics see the program as one of the abuses of the system that have exacerbated problems with the state's retirement programs, the Public Employees' Retirement System and Teachers' Retirement System. When Macvie recently told the Senate Health, Education and Social Services Committee that collecting both a paycheck and retirement benefits has helped him pay for a new home, Sen. Lyda Green, R-Wasilla, was unsympathetic to his argument that the program should continue.

"Your story is exactly the reason some of us have questions about the program and speaks to our hesitation to continue this program," Green said. "I wish I hadn't heard your testimony."

The committee is scheduled to take up Stevens' bill again Monday.

Skeptics wonder if the program prevents younger workers from moving into higher positions.

"In one sense, we're creating an incentive for them (retirees) to never leave," said Fairbanks City Councilman Jeff Johnson, who want the program to end.

Legislators disagree on the financial impact of continuing the program and whether it would add to the $5.6 billion unfunded liability problem for the PERS and TRS.

Retirees who return to work under the program do not put any of their paycheck into the PERS or TRS pots like other employees do. However, they also do not accrue additional retirement benefits.

Sen. Kim Elton, D-Juneau, said that means the program is cost-neutral for the state. Additional costs would be borne by employers, such as school districts and municipalities, he said.

Johnson said the program costs Fairbanks money. The program has brought eight police employees out of retirement since 2001. Four still work for the department. They draw from the retirement pot the city uses to pay its PERS obligations but do not put any money in, Johnson said. The Legislature should not force the city to continue offering the program, he said.

The four Fairbanks Police Department employees still working under the retire-rehire program plan to leave if the July 1 sunset date sticks, said police department acting director Dan Hoffman. Those employees include the department's two most senior detectives. If they leave, the department's most senior detective would be someone who has one year experience in the job, Hoffman said.

Hoffman said he considers the retire-rehire program a useful tool for employers who need experienced workers, especially in agencies such as the police, where officers are relatively young.

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