CHICAGO (AP) — A new state law barring government employees from drawing a pension while earning another public paycheck doesn’t apply to the vast majority of current workers, leaving thousands free to “double dip” after retirement and doing little
CHICAGO (AP) — A new state law barring government employees from drawing a pension while earning another public paycheck doesn’t apply to the vast majority of current workers, leaving thousands free to “double dip” after retirement and doing little or nothing to help salvage desperately underfunded pension systems.
Responding to high-profile examples of double dipping and a public eager for pension reform, legislators last year passed a law restricting the practice, though only for workers hired — not simply retired — after Jan. 1 of this year. That means most current employees would be permitted to double dip even if they retire decades from now.
Lawmakers said they had no choice because the state constitution doesn’t allow them to reduce retirement benefits for unionized public employees, meaning they could not stop pension payments regardless of an employee’s future job status.
But critics say that’s a matter of interpretation, especially because future double dippers already would be retired from their current jobs before they got another, and there is no specific vested right to employment in other government jobs.
“Some say … that anything (an employee) is forecast to earn from the date they’re hired means they’re entitled to it. That’s questionable logic,” said Laurence Msall, president of The Civic Federation.
Critics say double dipping is a violation of public trust and a potential drag on pension systems, especially when people retire early knowing they can supplement their income with another government job and draw pension annuities for many more years than they otherwise would have.
State pensioners already were banned from working within the same system; the new law extends to both state and municipal workers and any public pension system.
State Rep. Karen May, a member of a legislative pension committee, also introduced legislation signed by Gov. Pat Quinn this summer that forbids anyone hired after Jan. 1, 2012 from returning to work in a government job as a full-time contractor while drawing a pension.
“I think most people feel double dipping is an abuse,” May said. “I’m not trying to (take away pension benefits), I’m trying to stop the abuses and some of the games people play.”
Others say double dipping isn’t inherently bad, especially if it allows the state or municipalities to keep experienced workers. They say double dippers have become easy targets in states that have allowed pension funds to drop dangerously low through years of skipping or skimping on contributions. Illinois’ five state pension systems are underfunded by more than $80 billion.
“The real bottom line is that the pension crisis in Illinois is a funding crisis … that has nothing to do with benefits,” said Anders Lindall, spokesman for the American Federation of State, County and Municipal Employees. It was “entirely caused by politicians, mostly at the state level, failing for years to pay the employers’ share of pension contributions.”
The average annuity from the State Employees Retirement System is less than $30,000 a year and the average retirement age is 62, said Tim Blair, who manages three of Illinois’ five pension systems. But he said the appearance that some high-paid workers found a way to game the system on the public’s dime sends a bad message.
“My perception of what gets people upset is, even though you can (double dip), should you?” Blair said.
Glenn “Max” McGee said he understands opposition to double dipping but insists that, in his case, others also benefited.
He retired as superintendent of the Wilmette School District north of Chicago in 2007 and draws a $184,100 annual pension while earning $225,900 a year as president of the Illinois Mathematics and Science Academy, a public boarding school emphasizing math and science. But he says he took a $40,000 pay cut when he took the new job, accepted $10,000 less than he was offered and got one raise before freezing his own salary. “The way I look at this, if I’d (continued to work) full-time at Wilmette, the (academy) would be paying somebody more than me … and I would be getting a bigger pension,” said McGee, who said he “jumped at the chance to get back into state service” and lead the academy as well as a rewrite of the state educational report card.
His is just one notable example of double dipping in Illinois; there are plenty more, including a retired Kane County prosecutor who gets a $78,000-a-year pension while earning more than $174,000 as a state court judge; a retired Chicago police officer who drew a $115,500 pension while earning more than $157,000 in another city job.
Still, it is difficult to calculate the effect of double dipping on the pension system, partly because nobody is sure how many double dippers there are in Illinois.
State and municipal pension systems rarely share information because of privacy concerns, Blair said. Databases of government retirees and employees provided to The Associated Press did not include information specific enough to positively determine all double dippers.
The bottom line, watchdog groups say, is that banning double dipping is probably good public policy on principle, but will do little to stabilize pension systems.
“If they’re looking for solutions, they really need to look elsewhere,” said Ralph Martire, executive director of the Chicago-based Center for Tax and Budget Accountability, who favors higher income taxes on the wealthy and taxing consumer services.
Msall and Jim Farrell, chairman of the Civic Committee of the Commercial Club of Chicago, a business group that examines public policy issues, say the solution is changing benefits for current workers, even though it could lead to a constitutional challenge.
“In truth, while (double dipping is) obnoxious and reprehensible, at the end of the day, when you take a look at how much money the state is in arrears, it’s not that big of a deal financially,” Farrell said. Banning it for future employees, he adds, was “a way for lawmakers to … put things off and not face reality.”
Copyright 2011 The Associated Press.