Plain Dealer on Retire/Rehire

WHO PAYS? PUBLIC PENSIONS

Double-dippers retire, rehired

Some draw a pension along with a salary

Cleveland Plain Dealer, April 2, 2007
John Caniglia and Joan Mazzolini
Plain Dealer Reporters

If you pay taxes in Ohio, 35,000 teachers, cops and other public-sector workers owe you a big thanks. You have already paid once for their salaries, benefits and pensions, and now you are paying again.

These lawmakers, school superintendents, janitors, bus drivers and others who had jobs in the public sector have retired from those jobs, begun collecting their pensions and hired on in new public-sector positions. They are receiving a pension from their first jobs, a salary from their latest jobs and, in some cases, accruing money in a savings account for when they retire for good -- and you are helping to pay for it all.

The employees include U.S. Sen. George Voinovich, earning more than $50,000 a year from his pension on top of his $168,000 federal salary, and Solon schools Superintendent Joseph Regano, earning more than $200,000 in pay and pension benefits after he retired and returned to work in 2004.

Opponents call the practice double-dipping and say it's unfair. They say it forces taxpayers to contribute to government workers' pensions that, in many cases, are much more lucrative than their own. The opponents say the practice stifles younger job candidates -- forcing many to look out of state for work -- and isn't the cost-saving device it's touted as.

"The average guy in a private office can't do it. Why should a government employee do it?" said Dusty Rhodes, Hamilton County auditor and a staunch critic of the practice. "The retirement system wasn't set up as an income supplement. It was set up to provide retirement benefits for people who needed them."

State legislators prompted a rush on the program in 2000, when they feared a teacher shortage would leave the state's classrooms without enough instructors. They allowed teachers to retire and return to work in two months, as opposed to the 18 months they had to wait in the past.

Today, so many retired educators have returned to the schools that scores of young teachers from Ohio flock to the South for jobs.

The double-dipping breaks down two ways: Those who retire from their jobs and return to the same position or a similar one, such as police officers and principals, and those elected officials who retire from a city or county office and move to the Statehouse or Washington.

Critics like Rhodes call both practices unfair.

Retired workers who go back to teach, run cities and chase drug dealers say they offer taxpayers an experienced work force, cheap. They also say that about two-thirds of workers who take advantage of the option are middle-class employees, earning less than $20,000 a year.

Proponents also note that just 5 percent of about 700,000 Ohio government workers double-dip. That includes about 15,000 in the Ohio Public Employees Retirement Fund, 13,000 in the State Teacher Retirement System and 7,000 in the School Employees Retirement System.

All of Ohio's public pension systems work in similar ways, requiring workers to contribute about 10 percent of their salaries toward their pensions. The employers - meaning taxpayers - contribute roughly between 14 percent and 25 percent. Employees typically collect pension benefits equal to two-thirds of what they were paid in their three best years.

Some start getting their pension checks while they are still relatively young because of rules that allow retirement at an earlier age than some people in the private sector. Police officers can retire at age 48 with 25 years of service. Most others can retire with their full pension at any age after 30 years on the job.

Private pensions, which many companies have done away with, vary about how much employers contribute. Some contribute as much as 7 percent. Others offer nothing, leaving employees to save for themselves.

Private-sector workers and their employers contribute an equal amount - 6.2 percent of a salary - toward Social Security, which does not kick in until 65 at the earliest, though a person can retire at 62 with reduced benefits.

Public employees in Ohio do not contribute to Social Security.

Richard Bonde retired three years ago from Willowick City Council after 37 years in a series of tax-paid jobs - a teenage summer worker, city recreation director and part-time council member. Bonde, 56, also retired three years ago as the principal at Lakeside High School in Ashtabula County. He worked 16 of his 31 years in public education as a principal.

All told, he gets a pension of about $60,000. Although he was in two pension plans, he is eligible to collect from just one - the Ohio Public Employees Retirement System for his work in Willowick, because he had the most service there.

After retiring from Willowick council, he was elected mayor in 2005 and makes $27,000 annually for his part-time job, on top of his pension.

Although Bonde defended hiring retired workers, he noted that Ashtabula schools restrict the pay of rehired teachers, giving them the wages of a teacher with much less experience.

The number of educators who retired and went back to public schools jumped 44 percent - to 13,000-plus - in the past five years, according to the State Teachers Retirement System.

School districts save some money in hiring retired teachers and administrators because the pension plan often picks up the health-care costs.

Regano, 59, said the Solon district saves about $12,000 in medical costs with him in the job. But that has been eaten up by other perks, such as $17,100 in annual longevity pay.

And the rising health-care costs might force the State Teachers Retirement System to compel school districts to pick up the bills starting in 2009.

Many of the people who double-dip are lawmakers. Voinovich, the Republican from Northeast Ohio, and U.S. Rep. Stephanie Tubbs Jones, the Democrat from Cleveland, earn $168,500 each in congressional salary.

Each also earns more than $50,000 a year in retirement benefits for their past public-sector work, according to their financial disclosure forms. Voinovich, 70, served as mayor of Cleveland and governor of Ohio, and Tubbs Jones, 57, as a Cuyahoga County prosecutor and judge.

In Columbus, some state legislators, including 64-year-old Rep. William Batchelder, a Medina Republican and a longtime legislator and judge, earn tens of thousands of dollars from the Public Employees Retirement System on top of their base salaries of $58,933.

Batchelder said he gets about $100,000 in public pension and military retirement benefits. He said he retired as an appellate judge, and voters elected him to the Ohio House in November.

"It's not like somebody hired me," he said. "I was elected by the people. I think there's a distinction."

Supporters say someone like Batchelder, with experience in courtrooms and government, helps taxpayers. He and other lawmakers would never reach Columbus or Washington, D.C., without the years spent working in local government, learning the needs of their constituents.

Many public officials, upon leaving elected office, seek appointments to salaried boards and authorities, such as planning commissioners or transportation authorities, to increase their time in the pension systems. In February, the Montgomery County commissioners urged 12 boards to prohibit double-dipping, saying it leads to an improper perception and a drop in public confidence.

"Although we recognize retire/rehire is a widespread practice throughout the State of Ohio, we believe it is not the right thing to do," the commissioners wrote in a Feb. 26 letter to county boards. "At a time of serious fiscal stress on the part of many local governments and agencies, this practice raises questions in the public's mind as to the prudent financial management of the organization."

Pauline Gordon, a retired Akron teacher of more than 30 years, agrees. She said double-dipping also blocks others from reaching for top jobs, such as superintendent.

"It's elitist to think that no one else can do these jobs," Gordon said. "It's all about greed."

More than 200 double-dipping Ohio educators earned more than $100,000 last year, according to the State Teachers Retirement System's records. That's a major jump from five years ago, when just 19 retired officials had returned to work at such salaries.

Regano earns about $176,000 a year from the Solon school district and takes home at least $75,000 in pension money.

"I wanted to continue to work, and I wanted to stay with this district to keep what we had going," he said. "This option was a great incentive to stay. If I couldn't have stayed here, I would have gone elsewhere."

Rhodes, the Hamilton County auditor, cringes when public officials say it is cheaper for taxpayers for people to go back to work after retirement. He calls it an attempt to veer taxpayers away from the ugly practice.

"It would be cheaper if I simply stole money from my neighbor, but that doesn't make it right," he said. "This is an abuse of the system. You can put all the lipstick you want on the pig. But at the end of the day, it's still a pig."

To reach these Plain Dealer reporters: jcaniglia@plaind.com, 440-324-3775; jmazzolini@plaind.com, 216-999-4563