Retired, Rehired

No snowbirds here.

A mounting number of state employees are retiring from work then getting rehired to the same jobs, padding — and in some cases nearly doubling — their state salaries with pension checks.

Since lawmakers loosened restrictions on the practice a decade ago, the number of retirees returning to state jobs has grown by more than 1,300 percent, from 400 in 1999 to 6,200 this year. 

The tactic is used, albeit quietly, for employee retention. It helps agencies keep and reward experienced but underpaid workers like prison guards and nurses’ aides, who might otherwise leave when they reach retirement age.  

And while it’s mostly employees in low-paying jobs benefitting from the practice, retirement-eligible state employees making more than a hundred thousand dollars a year are also quitting and coming right back to work. Sometimes they return to other jobs; often they're rehired for the same post they left. 

“Some people feel like they’re double dippers, that they’re taking up a position somebody else could advance to. Others think it’s a great opportunity,” said Mike Gross, coordinator with the Texas State Employees Union, which has not taken a stance on return-to-work retirement. “While it’s a good deal for the agencies, it’s clearly a negative for the [Employees Retirement System] fund.”

Under Texas’ return to work policy, a state employee who retires can be rehired after a 90-day hiatus. In addition to their salary, they receive pension pay-outs averaging $2,000 a month, and continue to get health benefits. 

Employees Retirement System (ERS) rules say retiring employees can’t be given a “promise of employment” when they leave — and must certify that they don’t have another job with the state lined up. But state workers say these rules are rarely followed, and that gentlemen’s agreements abound.

Advocates of the practice say it’s a good deal for the state. Rehiring retired employees avoids costly training. It saves the state from paying a new employee’s insurance premium. And it allows agencies already struggling with recruitment to keep their tenured employees in place, without losing them to higher paying private sector jobs.

But watchdogs say employees with low pay shouldn’t be forced to “retire” in order to work at a livable wage.  Seventy percent of return-to-work employees make under $50,000 a year.

And they say the tactic is increasingly being used to give raises to already well-paid agency executives. Right now, 120 return-to-work retirees make more than $100,000 in base pay alone; one makes more than $200,000.

 “It looks like a Mickey Mouse accounting scheme,” said Andrew Wheat, a researcher with Texans for Public Justice, an organization that tracks money in state government. “It’s just another way for agencies to hide the real cost of their employees’ salaries, at the expense of actual state retirees.”

Lawmakers have gone back and forth on “return to work” since they first instituted it in 1951. At that time, retirees who wanted their jobs back had to have their pension payments suspended first. 

By 1981, retirees who returned to work received partial payments. And in 2001, the restrictions were lifted all together. In the last legislative session, lawmakers backtracked slightly, forcing retirees to take 90 days off before returning to work, and requiring the hiring agency to contribute to the ERS on behalf of the returning employee.

The changes have helped agencies struggling with retention. Currently, about 5 percent of workers at the Department of Public Safety, the Department of State Health Services and the Department of Assistive and Rehabilitative Services are state retirees.

But it’s also been a boon for higher paid employees. At the Health and Human Services Commission, the agency’s chief of staff and deputy executive director — both of whom make about $150,000 a year — are “return-to-work.”

In general, rehiring retired employees “is a negative experience for the actuarial soundness of the retirement fund,” said Rep. Vicki Truitt, R-Southlake.  “But all sorts of things have been done over the years to adjust for the health of the fund, or how critical the need is to retain employees.”