Rehired retirees keep state’s agencies stable

One-third of the 3,000 state employees who retired last year immediately returned to their jobs temporarily — usually for six months or less — to help their agencies cope with the sudden turnover.

Most are longtime employees who felt forced to retire early to avoid cuts in their pension checks after last year’s overhaul of the Public Employee Retirement System. An analysis by The Oregonian shows the state’s rehiring of retirees quadrupled in 2003 to more than 1,000 workers as record numbers of public employees retired.

The rehired workers continue to receive similar salaries plus their pension checks, but most get no health, vacation or sick-leave benefits. State officials say they save money and time by hiring back workers who already know the job and can train their replacements — a new generation of employees locked into lower pension benefits.

But critics say rehiring retirees looks bad to taxpayers already exasperated by what they call generous pensions. In 2002, public employees retiring after 30 years of work received an average of 79 percent of their working salary. PERS members hired before 1996 can retire with full benefits at age 58 or at any age after 30 years of service.

“It’s inexcusable someone leaves their job and retires, but not really retires, and they come back the next day to the same job, and they’re essentially pulling two paychecks,” said Russ Walker, director of the Oregon chapter of Citizens for a Sound Economy. “One in the form of a retirement and one in the form of a consultant.”

Another critic, Richard Burke, executive director of the Libertarian Party of Oregon, said rehiring retirees “hurts public employees because whenever they game the system like this, which is what they’re doing, it builds resentment among average people against public employees in general.”

Public employees, however, say the PERS pensions help make up for state salaries that, in most cases, lag below private-sector pay for similar jobs. Some pension increases, they note, were negotiated in lieu of raises.

The rehirings, which continue this year, range from prison guards to workers who determine unemployment benefits to the No. 2 transportation official who is overseeing much of the state’s massive $2.5 billion bridge and road repair effort.

Duane Ackerson, 61, an economist who retired five years earlier than he planned, continued to work for a month and a half last year at the state Employment Department. About 90 percent of the rehired workers stay on for six months or less. Ackerson says the temporary rehiring of retirees is good for employees as well as for the state, which gets the services of experienced employees without costly benefits.

“There were some things they needed me to help out on,” he said. “I don’t really see any downside.”

Retirements surge

At the Employment Department, 10 percent of the staff has retired in the last two years while the workload has doubled because of the state’s high unemployment.

“What we had to do was bring back people in key positions in order to perform at the standards required by the federal government,” said Tom Fuller, Employment Department spokesman. “They don’t get holidays, they don’t get benefits, nothing. They just get the money for part-time.”

The state lifted its year-old hiring freeze last summer, although there still are restrictions on the salaries and promotions agency officials can offer.

Last year, the Legislature and Gov. Ted Kulongoski, trying to slash the increasing costs of the Public Employees Retirement System, settled on changes that will reduce future pension checks. The changes, which are being challenged in court, prompted more than 12,000 school and local and state government workers to retire in 2003, more than in the two previous years combined.

Some of the rehires are managers; a handful are division heads.

John Rosenberger, the state’s highway division director, oversees a massive staff reorganization as well as the $2.5 billion project to fix roads and replace hundreds of cracked bridges. His boss, transportation Director Bruce Warner, says the pension reforms upended the long-range plans they set when he hired Rosenberger from Washington County in late 2001.

Rosenberger, 55, retired Feb. 29, returned to his job the next day and will work through mid-2005 on a part-time schedule. Like most PERS retirees, he can’t work more than 1,039 hours for a PERS employer in a calendar year or he risks his pension.

“There will be times when he’s not in the office,” Warner said. ” . . . We’ll have other people acting and learning in his position.”

Before he retired, Rosenberger started the reorganization, which will shift most of the department’s bridge engineering work to private contractors. “It’s critical he be around to finish it,” Warner said.

Rosenberger declined to comment on his retirement. His $10,198 monthly salary and benefits will be prorated to reflect the amount of hours he works. Unlike most of the rehired workers, Rosenberger receives sick leave, vacation and health benefits totaling about $850 for a full month worked.

Rehirings to continue

Rep. Tim Knopp, R-Bend, who led the PERS overhaul last year, said he and other lawmakers expected agencies would have to temporarily rehire some of the people who retired to protect their pensions.

“On a limited time frame, I don’t have any problem with the state continuing to hire experienced people while they’re available to them,” Knopp said.

According to agency officials, the state saves hundreds of thousands of dollars a month because they don’t pay benefits for most of the rehired retirees. Benefits, coupled with Social Security and workers’ compensation, typically add 40 percent to a full-time employee’s salary. Health benefits alone average $700 a month.

Those costs for temporary employees, on the other hand, are less than 8 percent of salary, said Susan Wilson, human resources administrator for the state. That includes most of the rehired retirees.

State officials say they don’t expect the rehiring of retirees to end soon. More than half of state employees are age 45 or older, including more than 70 percent of executives, according to a 2003 study.

Other factors also could lead to more rehiring of retirees, including future layoffs and the Oregon Supreme Court’s ruling on last year’s PERS changes, said Cindy Becker, deputy director of the Department of Administrative Services until this month, when she moved to the Department of Human Services.

“It’s going to be with us for a while,” Becker said. “The question is how much it’s going to be magnified by other factors.”

Dave Hogan: 503-221-8531, Janie Har: 503-221-8213,