Double dipping retirees eyed by Gov. Jerry Brown
By Lewis Griswold The Fresno Bee Sunday, Dec. 25, 2011
Gov. Jerry Brown's plan for sweeping public pension reform would hit the pocketbooks of employees who hope to collect a pension check and paycheck at the same time.
It's a common practice statewide -- especially in law enforcement -- and the central San Joaquin Valley is no exception.
Visalia Police Chief Colleen Mestas, for example, gets an annual pension of about $55,000 based on her 20 years with the Fresno County Sheriff's Department and also collects $140,000 a year, including benefits, from her current job.
And in a well-publicized move this summer, Fresno Police Chief Jerry Dyer spent a few months working as a retiree, with an annual income (combining his pension and interim contract) estimated at about $300,000 -- well beyond the $169,700 a year he had been earning before he announced his retirement.
The practice, known as double dipping, would be banned under Brown's plan for all public employees in California.
Last month, Dyer, 52, gave up his pension perks to return to his job full-time.
The 46-year-old Mestas and other retirees who already are working a second public-sector job likely would be grandfathered in if Brown's plan goes into effect -- a Legislative Analyst's Office concludes that the government likely can't stop workers who already are double dipping.
A ban might sound fiscally responsible, but some officials argue it could keep experienced professionals from filling key jobs. Others say it doesn't really save money.
But reformers say public employee retirement systems can't afford years of pension payouts to those who stay on a government payroll, and that reforms would save money in an era of steep budget cuts.
The governor's plan was introduced in October and is supposed to get more legislative attention next year, but some groups are pushing ahead with pension reform initiatives for the November 2012 ballot.
The public favors pension reform. A Field Poll released this month shows bipartisan support for Brown's proposed reforms, with nearly two-thirds saying they support reduced retirement payments for public workers.
It's unclear how many public officials in Fresno, Tulare, Kings and Madera counties are double dippers. Experts say that no research has been done to calculate how many are working in government in California, or how much it's costing pension systems.
But at least 12 cases in the central San Joaquin Valley fit the profile -- and many hold senior positions.
Mestas said she left her job as a Fresno County sheriff's captain to advance her career; her pension gave her the financial security to gamble on taking a new job, she said. She became Visalia's assistant chief on July 7, 2008 -- only days after leaving the Sheriff's Department. She was promoted to Visalia chief in 2009.
"I can see where it'd be a perception problem with the public if you retire with 100% retirement and then went and got another salary," Mestas said.
For government managers who hire for key positions, retirees from another agency bring "experience and maturity" to their new job, said Jean Rousseau, chief administrative officer for Tulare County.
But Sen. Joe Simitian, D-Palo Alto, who has submitted bills banning double dipping by California Public Employees' Retirement System (CalPERS) retirees, said the practice is unfair to taxpayers.
CalPERS covers state employees, many cities and counties, judges, nonteacher public school employees and California State University employees, among others.
"Revolving-door double dippers, they aren't really retiring," Simitian said. "We've gotten away from the notion that a pension plan is designed to provide a secure retirement. Now it's a form of supplementary income."
Assembly Minority Leader Connie Conway, R-Tulare, called double dipping "inherently unfair" and too costly for a state government mired in budget woes.
"It's unsustainable," Conway said.
It's unknown how much money the state would save by banning the practice, state Department of Finance spokesman H.D. Palmer said.
But state spending on both CalPERS and the State Teachers' Retirement System is exploding -- $4.9 billion this year compared to $1.5 billion a decade ago, according to the Department of Finance.
Reformers say simply raising the retirement age to match private-sector workers would end double dipping.
"The problem with double dipping is that people can retire at too young an age," said Lanny Ebenstein, an economics lecturer at the University of California at Santa Barbara and director of the California Center for Public Policy, a nonpartisan think tank. "Public safety should be raised to 58, nonpublic safety the same as Social Security."
Retirement ages for government workers vary -- age 50 for public safety employees and 55 for everyone else is common, according to the governor's pension reform outline. Those who have stayed on the job at least 30 years can collect a retirement check that is nearly as much as their former paycheck.
It's legal to retire and go back to work part time -- 960 hours a year or 120 days -- for the same employer (or another employer using the same retirement system). Yet the same retiree can get a full-time job elsewhere if the new employer operates under a different retirement system.
By contrast, Social Security docks benefits payments for those who retire early and go back to work. Those who retire at 62 get smaller checks if they earn more than $14,160 a year. But once a worker qualifies for full retirement -- at age 65 or 67, depending on birth year -- there is no penalty for earning more.
Brown's pension reform plan does include a proposal for all new public employees to retire at 67, and all new public safety employees at "less than 67." The plan does not specify an age.
The governor's plan would limit all retired public employees to part-time work, regardless of which government job they take next.
There are dozens of public employee retirement systems in California, and the governor's proposed plan would apply to all of them, Palmer said. The city of Fresno has its own retirement plan, as do the counties of Fresno, Tulare and 18 others. Kings County, Visalia, Tulare, Clovis and several Valley cities use CalPERS.
Stan McDivitt, who runs the city of Fresno employee retirement system, said collecting a retirement check and paycheck simultaneously doesn't hurt the retirement system because funds are collected throughout the employee's working years to pay monthly benefits.
Double dippers say they're just doing what is allowed under the rules.
"It's a contract," said Fred Brusuelas, chief planner in the Tulare County Resource Management Agency.
Brusuelas, 63, was laid off three years ago as Visalia city planner, retired, then got a job at the county. Visalia and the county are on different retirement systems.
Some retirees, however, opt for altruism. Fresno County Superintendent of Schools Larry Powell volunteered to give up more than $800,000 in pay and benefits for the remainder of his term in office so the money could be redirected to education programs.
When Powell retired in August and was reappointed to his job, his annual pay from the Office of Education dropped to $31,020 -- the maximum by state law that can be paid to a retired education employee -- but he also started collecting a monthly pension of $18,614.
Government employees who worked faithfully for years should not be banned from making extra money in retirement, said Tony Oliveira of Lemoore, a former Kings County supervisor and former member of the CalPERS Board of Administration who represented local governments. But a compromise might be in order, such as lowering pension payments for retirees in high-salary jobs, he said.
Oliveira said it's wrong to view all money controlled by pension plans as taxpayer-subsidized, because the money includes employee contributions from paychecks, and investment gains can be substantial.
"We need to be careful," Oliveira said. "Does the check belong to taxpayers?"