CHEYENNE – As an employee representative for the Wyoming Public Employees Association, Bob Kuchera’s job is to hear the complaints of state and local government workers.
One complaint he hears a lot is from current employees who see co-workers and supervisors retire from their jobs, start collecting retirement pay, then return to the same or a similar job after the required 30-day break in service.
These employees contend the so-called retiree rehire policy keeps them from moving up the salary and position ladders in an agency.
In about 80 percent of these cases, Kuchera said, the unhappy employee has been on the job long enough to be qualified for the position being taken back by the rehired retired employee.
A lot of these complaints, he said, involve prime positions that many employees would like to have.
“The objections we hear from our members are, ‘We would have liked to try for that job, but it’s kind of a sweetheart deal where I can’t even apply or it’s not even open,’” he said.
“I think the design and the intent was good,” Kuchera said of the policy. “But It seems like people are gaming the system somewhat.”
In 2011 a total of 269 retirees out of more than 46,000 covered by the Wyoming Retirement System were working for a participating entity, a WRS report said.
Of the total, 247 were in the big public employee plan and 22 were in the plan for law enforcement officers.
Of the 247 rehired retirees, 65 percent, or 160, were school district employees.
The figures represent rehired retirees in full-time positions who are drawing retirement benefits. Their employers are paying an equivalent of 14.12 percent of the retiree’s salary into the retirement plan.
The numbers don’t include employees who return to work part time. Their employers are not required to pay a portion of their salaries into the retirement system.
Only three retirement groups are eligible for rehire after retirement — the big public plan that includes state government employees and the plans for law enforcement officers and Wyoming Air National Guard firefighters.
Kuchera is a rehired retiree himself. He worked for 29 years for the Wyoming Department of Family Services.
Nearing retirement, he was asked to take a position with the Wyoming Public Employees Association by executive director Betty Jo Beardsley.
The WPEA, which has only three employees, is one of 196 entities designated as affiliates in the WRS. Among the others in that category are the Coalition on Domestic Violence, airports, airport boards and Wyoming State Bar employees.
Kuchera had to sit out the 30 days required by state law before he could start working with the WPEA.
He said he isn’t holding anyone back by working past retirement because Beardsley couldn’t find anyone else who would take the job.
The Wyoming Retirement System was started in 1943 for teachers. Although it has expanded to include employees in state and local government, firefighters, law enforcement officers and even employees in weed and pest and irrigation districts, school district employees still make up the majority of WRS members.
For the past 20 years, state and local government employees have been allowed to retire when their years of service and age total 85.
The retiree rehire arrangement was authorized by the Wyoming Legislature more than 10 years ago and was updated in 2007.
The push for the law to allow retirees to return to their old job or another member group in the WRS came from school districts that were having difficulty replacing qualified teachers and administrators.
The practice has been labeled double-dipping because the retiree is collecting both retirement benefits and a salary from a government entity.
Supporters say the policy helps managers by giving them needed flexibility to keep an experienced employee on staff while seeking a qualified replacement.
The arrangement also benefits the retirement fund because the employer must pay the required contribution for the employer and the retiree.
Yet retired employees who return to work can’t receive any additional benefits from the retirement system.
Opponents say the policy is prone to manipulation and can be unfair to other long-term employees who would like to move into better-paying jobs. It can also discourage new employees from taking or staying in government jobs.
The policy can also financially curtail the rehired retirees who are locked into their retirement benefits and can’t increase them even if they get salary raises in their post-retirement jobs.
Despite the complaints, policymakers appear to see little need to change the system at this time.
Board members differ
Steve Sommers is chairman of the Wyoming Retirement Board. He said board members are neutral on the retiree rehire plan because it doesn’t hurt the fund actuarially.
“It’s 100 percent a local control or an employer-controlled system,” Sommers said.
“Philosophically, there are differences on the board. My personal take is I don’t think it ought to be allowed,” he said.
State Treasurer Joe Meyer, a member of the retirement board, said some employees use the system to get a heftier salary. They hit the pay ceiling for their jobs so they retire and are rehired in a different position for more money, he said.
Meyer said that after he left his job at the University of Wyoming, he took early retirement for four months because it was the only way he could afford to campaign successfully for secretary of state in 1998.
Kathy Vetter, the new president of the Wyoming Education Association, said educators turned to retirees when they were unable to fill some teaching positions, particularly in rural areas.
“I know that in the teacher world, they don’t earn any more. They earn the same or less, because they come back for part-time work,” Vetter said.
Not an urgent issue
The rehired retiree policy tends to rub current employees the wrong way in particular because when a retired worker returns to his or her job, that position is closed, said Thom Williams, WRS director.
“Younger employees don’t like this policy because the position could be filled by someone else,” he said.
Williams said the decision to let an employee retire and be rehired is between the employer and the employee.
There is no way the retirement system can know whether there was a beforehand arrangement to rehire the retired worker, nor is it a concern of the WRS, Williams said, because the policy doesn’t hurt the retirement fund.
“This is more a political and public relations issue than a legal issue,” Williams said.
The WRS board, he added, may want to look at the policy when officials review the agency’s administrative rules.
Some states, Williams noted, require a one-year break in service before a retiree can be rehired.
The Internal Revenue Service, he said, has no rule against retiree rehires but “infers” that it should be a “legitimate retirement.”
So does the WRS handbook for employees.
“It is not an urgent issue,” Williams said.
This summer’s prearranged retirement and rehiring of Wyoming High School Activities Association Commissioner Ron Laird drew attention to the WRS policy.
The association’s board of directors approved Laird’s one-month retirement for July and rehired him as commissioner on Aug. 1 at a minimum salary of $100,000. Laird will also draw estimated retirement benefits of $74,000 per year. His employer will pay the required contribution to the pension plan.
WHSAA Vice President Shon Hocker said Laird’s salary has been established by the board and is not scheduled to increase in future years, as agreed upon by contract.
“This salary lock will save the association thousands of dollars over the remaining years of his employment with the WHSAA,” Hocker wrote in an email to the Star-Tribune. Hocker also said that rehiring Laird did not keep another employee from moving up in the organization.
“Mr. Laird’s performance reviews have been exemplary. Had the WHSAA and Mr. Laird not come to mutual terms regarding his retire/rehire, Mr. Laird would have remained the director of the association, thus no vacancy would have occurred,” Hocker wrote.
The Legislature’s Joint Appropriations Committee has struggled with the retiree rehire arrangement, said Sen. Phil Nicholas, R-Laramie, a committee co-chairman.
Nicholas said he was “outraged” when he first learned about the retiree rehire plan. Then they learned that school districts in Wheatland and Lusk needed to rehire retiring educators because they couldn’t replace them.
The committee, he said, conducted a fiscal analysis that said the retirement plan benefits from rehiring retirees.
“But then when we learned the facts. There’s no fiscal impact and the employee may be making a huge sacrifice,” he said.
“We are not aware of anyone trying to game the system,” Nicholas added.
“If we find out there is fiscal impact to the plan, I think we’ll shut it down or if we find out these people are depriving younger, qualified people of jobs,” Nicholas continued.
Right now, however, “We’re told it’s not a big deal and the plan benefits.”