Social Inequity and the Public Treasury: Why Should Some Get a Larger Share Than Others?

Number of teachers in Wisconsin: 59,552; number of millionaires in Wisconsin: 89,977. Continuing average income boost for millionaires in Wisconsin and elsewhere, thanks to the recent extension of 2001 Bush-era federal tax cuts: Approximately $100,000 per year. If the State of Wisconsin increased taxes on resident millionaires to take back just one-twentieth of the extra money they've been keeping in their pockets thanks to the Bush tax cuts, that would totally wipe out the need to slash teacher salaries under Walker's scheme. Totally. Would Wisconsin millionaires walking around with an extra $100K in their pockets every year notice the loss of five or six grand apiece? Unlikely. Will hard-working school teachers notice the loss of five or six grand from each of their pockets, thanks to Gov. Walker? Damn right they will. Read that again, because it reflects our broader public policies quite well. It adds up to: No pain for millionaires, who already in many cases enjoy effective tax rates below those imposed on rank and file workers, including teachers; and, meanwhile, huge pain for teachers. - In Wisconsin, it's teachers vs. millionaires, Salon Media Group, March 4, 2011

Laid-off California State Retirees Double Dip

The sense of entitlement that comes with government employment knows no bounds. These people believe they are above the average taxpayer in skills, education and intellect and, therefore, deserve a disproportionate share of the taxes collected from the people (albeit, almost 60% of Americans receive more in federal benefits than they pay in federal taxes). Take for example special education teacher Sally Magnuson, one of hundreds who were allowed to return to teaching and get a salary and retirement pay.

September 22, 2010

SacBee - Across California, retired state and local government workers are drawing taxpayer-funded unemployment benefits on top of their pensions.

These are workers who voluntarily retired, went back to work part time in their old jobs – collecting both a government pension and a government paycheck – then lost that second job during government budget cuts. Under state law, many of those pensioners now qualify for unemployment benefits.

In Sacramento County, 53 former sheriff's deputies collected more than $300,000 in unemployment benefits from 2009 through March of this year. Those former deputies also got a pension during that time.

About a dozen Placer County government retirees earned almost $60,000 in unemployment benefits on top of their pensions between 2007 and 2009. Four Alameda County government retirees collected $7,400 for unemployment benefits in the first six months of 2010.

And in Roseville, two retirees are drawing unemployment checks that could reach $450 a week on top of their pensions. Roseville officials are appealing the claims, but the checks will keep rolling until an appeals board rules.

The money to pay for the unemployment benefits comes from the coffers of local governments, which are on the hook for any unemployment claims their laid-off workers file.

This form of "double dipping" – collecting unemployment benefits for leaving essentially the same job you retired from years before – is legal under state and federal law.

The state long has allowed government retirees to go back to work for their old employer while collecting a pension, so long as they don't work more than 960 hours a year – about six months.

Officials have defended the practice, saying the public is getting a valuable service from experienced workers at a fraction of the cost. That's because the government no longer needs to pay the retirees benefits.

But in the downturn, these retirees have been among the workers axed by government agencies looking to trim costs. And when the retirees are let go? Under federal and state labor laws, they have virtually the same rights to unemployment benefits as anyone else who loses a job.

Unemployment benefits for government workers are entirely taxpayer funded. Workers in California don't pay into the unemployment insurance fund. Instead when a worker files a claim with the state, the Employment Development Department turns around and bills government agencies such as counties for the cost. Typically, the maximum benefit for most workers is half of what they earned in a year, and the costs are magnifying the cuts local governments must make to balance their budgets.

It's not clear how many state and local government retirees are collecting both pensions and unemployment benefits or are in position to do so.

No agency in the state appears to be tracking the amount of unemployment benefits going to retirees. Officials with the Employment Development Department, the State Personnel Board, the Department of Personnel Administration and the Controller's Office said they couldn't provide such data. The federal Department of Labor also doesn't track such information.

State: Payouts legal

Officials with the Employment Development Department, the agency in charge of unemployment insurance, said that in approving unemployment benefits for pensioners they are simply following state and federal labor laws.

"There is nothing in federal law that prevents a retired worker, who is collecting a pension and also working, from collecting (unemployment) benefits following a layoff," Jose Carnevali, a spokesman for the U.S. Department of Labor, wrote in an e-mail response to The Bee.

Under federal law, states can set limits so that retirees earning above a certain amount in pension benefits don't qualify for unemployment benefits.

California, however, has among the most pensioner-friendly laws on the books. The state limits unemployment benefits only if the pension was 100 percent funded by the government. Many government workers pay a percentage of their salary into the pension system while they work.

Pension reform advocates say the payouts are another example of a broken system where generous pensions combined with early retirement ages are bankrupting state and local governments.

"Under no circumstances should a public employee who retires at a young age be allowed to also collect unemployment from a public sector job," Marcia Fritz, president of the California Foundation for Fiscal Responsibility, wrote in an e-mail to The Bee.

Cost to taxpayers unclear

Currently, 5,986 retired annuitants are registered to work for the state, according to figures from the Controller's Office. That's up from 4,303 in August 2008.

But the figures could be misleading, said Jacob Roper, a spokesman for the Controller's Office. Just because a retiree is eligible to work doesn't mean a department is giving them hours. "They may or may not be working," Roper said.

No agency appears to keep similar data on how many retired annuitants are registered with cities and counties.

Some individual state agencies were able to show they have reduced the number of retirees on the payroll.

The California Highway Patrol went from having 71 retirees on the payroll in October 2006 to 10 today. The Department of Motor Vehicles went from 311 in July 2008 to 78 at the start of this month. Neither agency, however, was able to say how many of the retirees cut from the work force filed for unemployment benefits or how much those benefits have cost.

Sacramento County has 22 retirees on the payroll. That's down from 168 in 2009 and 320 in 2008, according to the Sacramento County Employees' Retirement System.

The state Legislature in recent years has taken some steps to limit unemployment benefits for retirees. In 2004 lawmakers prohibited retirees with a California Public Employees' Retirement System pension from returning to work for at least 12 months after receiving unemployment benefits. The Legislature passed a similar law in 2007 aimed at retirees covered by county pension systems.

Alabama Retiree's State Job Raises 'Double Dip' Questions

November 22, 2009

AL.com - Former state Finance Director Jim Main brought a state employee out of retirement in 2007 to work as a contract employee making nearly $60,000 a year while continuing to draw her state pension of more than $30,000 a year.

Gov. Bob Riley has campaigned vigorously against the practice called "double dipping," commonly defined as receiving two incomes from the same source, such as a government job and a government pension.

Main rehired the employee, Sandra Porter, under a contract with Auburn University Montgomery. After a year she began working for Paragon Source, a company that had a $6 million no-bid, sole-source contract to work on the Finance Department's computer system. She has since returned to the state payroll, receiving $66,000 a year.

Porter in 2007 received $58,275 from the AUM contract and $30,516 from her state pension. During her 34-plus years of state service the average of her highest three years of salary was $34,724, according to the Retirement Systems of Alabama.

Her hiring under the AUM contract appears to conflict with Riley's 2006 campaign promise to fight double dipping. He complained about legislators working in two-year community colleges, drawing pay both as lawmakers and state employees.

Neither Main, appointed by Riley in May to a vacant seat on the Alabama Court of Criminal Appeals, nor Porter returned phone calls seeking comment.

But Jeff Emerson, Riley's chief spokesman, said Main's hiring of Porter is not double dipping because she had earned her retirement benefits.

"Actual double dipping is when an elected official holds two or more taxpayer-funded jobs and faces potential conflicts of interests or can't devote needed time to each job," he said. "Being retired isn't a job, and merely receiving retirement benefits isn't a conflict of interests."

Double dipping, however, is defined by the American Heritage Dictionary of Business Terms as: "Working for wages while receiving pension benefits from the same organization." Other dictionaries offer similar definitions.

Sen. Quinton Ross Jr., D-Montgomery, director of adult education at Trenholm State Technical College in Montgomery and one of the Riley administration's targets, said the Porter case "shows how hypocritical this administration has been about certain issues."

"With people closely associated with the administration, it (double dipping) doesn't apply," he said. "It's only applicable outside the realm of the administration."

The AUM contract that allowed Porter to work in the Finance Department full time while continuing to draw her retirement pay was signed by Main on Dec. 11, 2006.

The contract was never presented to the legislative Contract Review Committee for its review or approval.

Porter, who retired from the state in 1998, was assigned under the AUM contract as executive assistant to then-Deputy Finance Director Andy Hornsby. She was among seven people on the same contract that the Finance Department hired through AUM for "consulting support for financial management services."

The contract, signed by Finance Department lawyer Richard Carter, AUM Chancellor John Veres, Hornsby and Main, called for Porter and the other six people to be paid $58,275 each between Jan. 1, 2007, and Dec. 31, 2007.

The other six employees were dispersed to other agencies and are no longer employed by the state, according to acting Finance Director Bill Newton. No other retired Finance Department employees were recalled to work for the department or Paragon Source, according to Newton.

After the AUM contract expired at the Finance Department, Porter became a subcontractor for 10 months for Paragon Source, which was already working with the department.

During that period, she also continued to draw her state retirement.

Hornsby, who is now retired, said Janet Lauderdale, the CEO of Paragon Source, asked that Porter be placed on Paragon Source's payroll effective Jan. 1, 2008.

According to documents released by the Contract Review Committee, Porter was paid $50 an hour with totals of up to $6,680 a month under a Paragon Source contract.

Over 10 months with Paragon Source, Porter received $54,976, according to documents Newton turned over to the Legislature's Contract Review Committee after it questioned Paragon Source's contract with the Finance Department.

During that 10-month period, Porter also received $25,430 in state retirement pay.

Hornsby said Porter was loaned to Paragon Source, which recently won a new $7 million no-bid contract extension from the Finance Department.

"It was an interim deal when Janet needed some assistance and she wanted Sandra to do some secretarial work," he said. "Sandra met her needs."

Hornsby said he couldn't remember exactly what type of work Porter performed, but he believed it was payroll-related in relation to Paragon Source's work.

But in information provided to the legislative committee by Lauderdale's lawyer, Porter was described as: "self employed, performed analysis, research, data collection and logistical coordination."

Lauderdale did not return phone calls seeking comment. Her company doesn't have a corporate headquarters, a telephone listing, a fax number, an e-mail address or a Web site.

Hornsby said Porter was paid under a Paragon Source contract that expired Sept. 30, 2008.

The Retirement Systems of Alabama said Porter suspended her state retirement one month after Hornsby's retirement in November 2008. Newton said Porter is now a full-time merit system employee in the Finance Department's Services Division with the title of administrative services officer I.

Schools Cut Back Pay for Retirees

April 19, 2010

Los Vegas Review-Journal - Special education teacher Sally Magnuson is one of hundreds who were allowed to return to teaching and get a salary and retirement pay.

After 28 years of teaching special education at Eldorado High School, Sally Magnuson saw her income almost double to about $115,000.

"I retired at 10 o'clock and they hired me back at 10:15 to the same job with my full salary and my full pension," she said.

Two years of earning an administrator-level income did not provoke much resentment from her peers, she said.

"Most of the teachers said, 'You're getting paid what we should have been paid all along.' They were like, 'You go, girl.'"

The Clark County School District has relied on "double dippers" such as Magnuson to fill "critical labor shortage" areas in math, science and special education, but now the 233 teachers are facing the prospect of going back to a single scoop.

If retirees continue to work next year, they might not be eligible to continue to draw their pension because of circumstances involving the bad economy and state budget cuts.

The term "double dippers" was popularized by an episode of the TV sitcom "Seinfeld" and carries the hoggish connotation of putting a potato chip back in the dip.

Rehiring retirees in Nevada has been premised on the scarcity of qualified personnel for available jobs. However, school district officials now think high unemployment might make it easier to recruit staff from around the country.

Keith Rheault, the state super­intendent of K-12 education, has said it does not make sense to rehire retired employees when younger and qualified teachers are available.

Since the Legislature in 2001 passed a law allowing "double dipping," the cost of paying retirement benefits to working retirees has been estimated at $55 million. While the law applies to all state and local government agencies, more than half, or 380, of all 661 rehired retirees have been employed by the Clark County School District since 2001.

The average rehired retiree works two additional years in retirement, according to state figures.

The retired employees can accumulate additional pension benefits by continuing to work. Dana Bilyeu, director of the Public Employees Retirement System, has said not having to pay pensions to retired workers would help the system control costs.

Clark County School District officials expect there might be some savings from hiring less experienced workers to replace the rehired retirees, but said they could not give an estimate because there are too many unknown factors.

Because of the current budget shortfall, projected at $140 million, the district might have to cut as many as 1,077 jobs. Displaced teachers and administrators could fill other teaching vacancies within the district.

By state law, the district is required to periodically re-evaluate its critical labor shortages. It has sent out 233 letters to the rehired retirees saying their positions might be no longer classified as "critical labor shortage" next year.

After the law was amended by the Legislature in 2009, the School Board, like all government agencies, was required to have public hearings before they could declare a critical labor shortage.

Government must justify a labor shortage with data that include the job turnover rate, the number of job openings compared to the number of qualified applicants, the length of time the job has been vacant, any special circumstances hampering hiring efforts, and a history on all efforts to recruit for the position.

Back in the population boom years, the district had trouble even filling elementary school jobs. It still has 26 elementary school teachers who retired and were rehired between 2002 and 2008, according to a list provided by the district. It was not immediately known how they were able keep their classroom jobs since their jobs are no longer classified as critical labor shortages.

The district has not rehired any new district retirees since 2008.

Because of the uncertainties concerning the budget and the economy, school officials are leaving open the possibility of having to declare critical labor shortages before the new school year starts in August.

"There are so many variables involved; you have to wait and see," said Michael Rodriguez, a district spokesman.

Magnuson is not counting on special education getting reclassified as a critical labor shortage.

"It sounds real strong that they're not going to," she said.

Magnuson said she had wanted to work a few more years.

"It's a great school. I really like my students, colleagues. I'm only 57. I got a lot of experience. I was mentoring a new teacher this year, but it's, 'Nice knowing you.' So I'm a little disappointed."

Magnuson said that because she would be forced to choose between her salary and pension, the difference of about $10,000 is not enough to keep her teaching.

Magnuson feels unfairly penalized, since she knows many teachers who have retired from the military or the private sector and who are drawing their retirement benefits as well.

The district's policy change only affects workers who have retired from the district and who are on the state pension plan, the Public Employees Retirement System. Clark County teachers who have retired from other states would not be affected.

Paula Patterson, a social studies and English teacher at Eldorado High School, thinks "double dippers" is a misnomer, since the retiree is not "double dipping" from the same source. One is the state retirement system. The other is a district salary.

"The real sad thing is that Sally Magnuson ... is one of the best teachers I have ever seen," Patterson said. "She's creative and enthusiastic. We talk about merit pay for teachers. A teacher who doesn't cost the district any more (money) is being put out to pasture. ... That to me is the real heartbreak of it all."