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Senate approves Bailey bill to close retire-rehire
loophole
Measure sent to governor would finally fix 2001
law
An unintended loophole in
the state's 2001 retire-rehire law may soon be closed by a bill sent to
the governor after it was unanimously approved Tuesday in the Washington
State Senate, said its sponsor,
Rep.
Barbara Bailey. The loophole has allowed teachers in the
Teachers Retirement System Plan 1 (TRS-1) pension plan to retire in name
only and immediately return to their old jobs while collecting
retirement checks.
"When the Legislature
acted in 2001 to ease the decades-old retirement restrictions for some
teachers and state and local government workers, it never intended to
create an opportunity for someone to retire and then step right back
into their old job, collecting full-time pay and their retirement checks
simultaneously," said Bailey, R-Oak Harbor.
For years, a retiree's
pension check would stop if he or she returned to public employment in
Washington for more than five months a year. Bailey said the 2001 law
was in response to a labor shortage during a booming economy. It allowed
state employees in the Public Employees Retirement System Plan 1
(PERS-1) and retired teachers in the TRS-1 pension plan to return to
work full-time, losing only three months of retirement checks instead of
seven months. Within 15 months after the law took effect, nearly 1,900
public employees had retired and been rehired. Nearly 700 went back to
work at half-time or more. Some even received salary increases after
returning to work.
"Unfortunately, the
loophole allowed this law to be abused. Many people were retiring in
name only without really retiring," said Bailey. "With a wink and a nod,
a person was returning to the same job, the same desk, at the same
salary while receiving retirement checks, and not giving an opportunity
for others to be considered for that job."
In 2003, Bailey attempted
to close the loophole. The Legislature approved Bailey's legislation,
which increased the time of separation, required agencies to document
shortages before they could rehire a retiree, and banned verbal
agreements that a worker could come back. The changes were to apply to
teachers and state workers. However, then-Gov. Gary Locke vetoed the
section applying to teachers.
"This set up a disparity
between the Public Employees Retirement System and the Teachers'
Retirement System that I've been trying to correct ever since," said
Bailey, a member of the Joint Select Committee on Pension Policy.
House Bill 1262, approved Tuesday in the Senate, defines separation
from service in TRS as excluding circumstances where an employee and
his/her employer have an oral or written agreement to return to work
following termination. It requires that PERS and TRS Plan 1 retirees
only be rehired pursuant to a written employer policy on hiring
retirees. It also increases the length of break in service in TRS from
one to one-and-a-half months for eligibility for 1,500 hour years
without suspension of retirement benefits. In addition, it imposes a
prospective cumulative lifetime cap in TRS of 1,900 hours worked beyond
an annual 867 hour threshold.
"This restores the
original intent of the law -- to allow retirees to be rehired only on a
limited basis when shortages exist -- and to make it fair and equal to
everyone," said Bailey. "My legislation will correct the disparity that
has existed since the Locke veto in 2003. It will make sure that a
retiree can be rehired if there are no qualified applicants to fill that
void. However, it will not allow the parties to agree in advance to
return to work without really retiring."
In February, the measure
passed the House, 93-2. The Senate vote was 48-0 in favor of the bill.
"Closing this loophole
will save taxpayers millions of dollars," added Bailey. "I'm very
pleased that after four years of working this bill, it's finally on its
way to the governor."
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For more information, contact:
John
Sattgast, Public Information Officer: (360) 786-7257
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