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“Double-Dipping” Under Fire
posted by: Alix | June 07, 2011, 03:39 PM   

With states across the country facing budget shortfalls and underfunded pensions, the concept of "double-dipping," or collecting both a state pension and salary has come under fire from various states seeking to rein in spending. From California to New York, many employees have been accused of unethically boosting their incomes by also taking a state pension, pushing certain state legislators to back state pension reform legislation.

In Minnesota, for example, there are nearly 9,000 beneficiaries of Minnesota's public retirement funds back on a public payroll or "double-dipping." While the concept is being debated, it makes sense for some small school districts looking to hire quality educators.

Last June, the superintendent in Redwood Falls, Minnesota retired after twenty years of service. Despite his retirement, Superintendent Rick Ellingworth returned to the same job the following year, collecting both a salary and pension. While he didn't receive a raise, the district board was committed to his re-hire. "We didn't really want to lose him," Board Member Tom Hollatz commented. "We have a more difficult time in rural Minnesota finding quality people."

While re-hiring an indispensible staff member may seem practical, pension experts argue it is not a good practice for the taxpaying public. Pension fund expert Byron Schlomach of the Goldwater Institute questions double-dipping. "It's sold as something that saves the taxpayers money, but the reality is taxpayers cover the whole thing," he stressed. "It's a way of robbing the taxpayer by stealth."

According to experts, because of loopholes in teacher pension plans, returning to work with full pay and full pension benefits is a very real prospect for teachers in certain states. By doing so they can increase the money they take home by nearly 60%–for doing the same job. Left unchecked, it could ultimately jeopardize the pensions of other education retirees.

In other states, some have imposed restrictions on the practice. In Arizona for example, state law requires workers to take at least a year off before returning to work if they want to collect a pension while working in the future. In nearby Nevada, the law allows for re-employment only if districts can show a "critical labor shortage" for the job.

Just this week, New Jersey's Senate Budget and Appropriations Committee unanimously approved two bills to prevent double-dipping by elected officials. While the law is not aimed at teachers, the overall concept eroded public trust in government spending according to some experts. "The perception and appearance is what really matters," State Senator Steve Oroho said. "It's an issue of the public trust."

With public employee pensions in major financial jeopardy double-dipping may soon become one of the most critical pension reform initiatives.

What do you think of "double-dipping"? Is it fair to other teachers and taxpayers?

Comment below.

Comments (1)Add Comment
written by ejill, June 07, 2011

It needs to stop. I benefited from double-dipping (daughter of a school teacher), but it's not sustainable. If people want to keep doing their jobs, then retirement must be put on hold.

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