Double Dippers Causing Strain and Grief in Budget Battles

Jason Hetherington | Getty Images Double-dipping has become a hot topic for lawmakers around the country during these times of severely strained budgets and increased focus on the benefits provided to government employees.

At a state agency in Texas, the executive director is receiving a $123,000-a-year salary even as he is drawing a government pension, as he has for the past eight years. In a struggling Michigan school district, 10 administrators retired, started drawing pension checks and returned immediately as contract employees. A school administrator in Illinois makes a combined $409,000 a year in pension payments and salary for overseeing a public boarding school.

Double-dipping—the well-established practice of public workers collecting government pensions and salaries at the same time—has become a hot topic for lawmakers around the country during these times of severely strained budgets and increased focus on the benefits provided to government employees.

Yet even as some states have begun curbing the practice, a review by The Associated Press found tens of thousands of state and public school employees across the country drawing government salaries along with their pensions. In five states alone — California, New York, Texas, Florida and Michigan — at least 66,000 government retirees also receive taxpayer-funded paychecks.

The practice has come under fire not just because of the cost of paying both a pension and a salary to the same person. It also can strain public pension funds because the rehired retirees draw from them but do not contribute while taking the place of workers who otherwise would be paying into the system.

Of particular concern are people who retire early, only to take another government job and draw pension annuities for many more years than they otherwise would.

State governments already have a combined $690 billion in unfunded pension liabilities, meaning they do not have enough money coming in to meet their future obligations.

"I don't see any private entity that would allow this to happen, and I don't see why government should allow it to happen," said Kenneth Sheets, a state representative in Texas who tried unsuccessfully to end the practice in his state earlier this year.

Some states have dealt with the issue by imposing lengthy waiting periods on retired public employees seeking to return to their positions, in hopes the jobs will get filled before retirees get a chance to re-occupy them. Others have placed limits on how much of their pensions retired employees can receive if they come back to work.

No single agency collects data on government retirees who also are receiving public paychecks, and many states do not provide the information publicly.

To get a snapshot of how widespread the practice is, the AP reviewed a sampling of states of varying sizes, including several in which double-dipping has generated a public backlash.

Available data showed nearly 71,000 double-dippers in California, New York, Texas, Florida, Michigan, Georgia, North Carolina, Pennsylvania and Arkansas. In Illinois and Ohio, populous states with a strong union presence, there appears to be no reliable way to determine double-dipping figures for government retirees.

Aside from data not being available everywhere, the methods used by states to assess the practice vary widely, making comparisons difficult.

In Michigan, for example, data was available for double-dipping educators but not for other state employees. Texas provided data for state employees but not teachers. States that did provide figures typically had data for state government workers or teachers but not for city and county employees.

Defenders of the practice say double-dippers have become easy targets, particularly in states that have allowed pension funds to drop dangerously low.

One of them is Maury Roos, who retired in 2000 after 43 years as an engineer with the California Department of Water Resources. Within weeks of his retirement, he was asked to return part-time. According to the California Public Employees Retirement System, his annual pension is more than $113,000.

Roos said the additional income allows him to travel to engineering conferences. In exchange, he said, the state gets an experienced engineer at a bargain price.

"It actually saves them quite a bit of money as opposed to hiring someone new because there's no overhead," he said.

California had more than 6,000 government retirees back on the payroll as of last December, at pay rates ranging from as little as $8 an hour to as much as $8,437 a month.

Most government retirees collect relatively modest sums when they return to work. Yet critics cite examples of retirees who collect pensions and government paychecks well into six figures and say double-dipping of any kind sends the wrong message in tough economic times.

In Michigan, for example, more than 11,100 school retirees drew both annuities and paychecks in 2010. They received pension payments totaling $227 million in addition to salaries totaling $71 million, according to data compiled for the AP by the state Office of Retirement Services.

Most of the retirees, some 7,700, already were double-dipping before a law limiting the practice took effect in July 2010. Among them were 10 administrators from a suburban Detroit school district who retired and immediately returned to their jobs as contract employees.

Superintendent Victor Mayo of the Hazel Park school district defended the decision to rehire them, saying it can save the financially strapped district $400,000 a year, or about $5 million over the life of the administrators' contracts. He said that's because the district doesn't have to pay health care or retirement benefits to the rehired administrators.

One, assistant high school principal Ronald Mermuys, draws an annual pension annuity of $53,231, according to district records. Officials did not immediately respond to requests for his salary as assistant principal, and employee salaries were not posted on the district website, as required by state law.

Mermuys, 57, said his decision to retire early and return as a contract employee saved money that was used to retain administrative positions that otherwise would have been eliminated. It was "the best thing for the kids and the district at the time," he said, while also acknowledging the potential pitfalls of double-dipping.