U.S. Markets closed

Audit: Wis. agencies rehired nearly 3K retirees

Todd Richmond, Associated Press

MADISON, Wis. (AP) -- Wisconsin's Department of Employee Trust Funds should improve procedures on how it investigates the rehiring of retired government employees after thousands returned to their jobs in recent years prompting complaints of inappropriate double dipping, according to a report released Friday.

The Legislative Audit Bureau's study, which recommends that the department develop written investigative procedures and collect more data, provides the most comprehensive picture yet of how widespread rehiring retirees has become across Wisconsin government.

According to the report, UW System and state agencies rehired 2,783 annuitants from the beginning of 2007 through early 2012. More than 1,000 school districts and local governments that responded to an LAB survey reported hiring 2,599 annuitants between January 2011 and March 2012. The vast majority of the rehires worked fewer hours for a year or less.

Wisconsin law allows returning retirees to collect their retirement pay-outs on top of their salaries as long as they were out of the job for at least 30 days and didn't reach rehire deals before they left. Managers say the practice makes sense because the returning workers already have experience and skills and the government doesn't have to pay their health insurance or make pension contributions. Opponents contend it amounts to inappropriate double dipping because rehires can collect their retirement benefits on top of their salaries.

Only 26 of the nearly 2,800 rehires on the state level chose to suspend their retirement benefits during their return stints, the study found.

In a letter responding to the audit bureau's report, ETF Secretary Robert Conlin said the agency educates employers and returning retirees on restrictions that apply in the rehiring process. He promised to develop written procedures for investigations.

Criticism of double dipping reached a peak late last year when word surfaced that UW-Green Bay Vice Chancellor for Finance and Business Tom Maki was negotiating a new contract shortly before he retired. He was rehired to the same position three weeks later, enabling him to collect tens of thousands of dollars in annuities as well as his six-figure salary. A state Department of Employee Trust Funds investigation concluded the re-hire didn't conform to state policy and Maki resigned.

The department opened 19 investigations into retiree rehires between August 2009 and June, the report said. It found four instances where there was enough evidence to conclude good-faith terminations hadn't occurred, including two UWGB employees, a Cooperative Educational Service Agencies employee and a UW-River Falls employee. The study does not name the employees, citing state statutes that prohibit ETF from releasing annuitants' personal information.

The report also found that it was difficult to conclude whether a rehire was proper or if agreements are enforceable; Employees might tell employers verbally before they leave that they would like to return to work or employers might simply leave the position open until the separation period ends.

For example, the agency determined no wrongdoing occurred in a case where an employer offered in writing to re-hire a retiring employee after the 30-day separation window but the retiree didn't sign the offer until after returning to the job.

In another case a retiree noted in a resignation letter a willingness to return to work. Two days into the separation period, the retiree and the employer signed a deal saying the retiree would return to work in a month. Since the deal wasn't signed before the retiree left the job, ETF decided there wasn't enough information to conclude anything improper went on.

But auditors also discovered some of the agency's investigation files lacked enough information. In one instance a file contained only written notification that an agency had hired the annuitant and an ETF staffer's email about the investigation.

The report suggested the Legislature could curb retiree rehiring by lengthening the 30-day separation window in hopes that employers wouldn't wait for annuitants to clear the period and would fill the positions sooner with someone else. Lawmakers also could limit how long rehired annuitants could work and obtain an actuarial opinion on how retiree rehires' fiscal effects, the report said.

Conlin, the ETF secretary, said in his letter that he believes extending the separation requirement will help the agency enforce state law.

State Rep. Samantha Kerkman, R-Randall, co-chair of the Legislature's audit committee, said the LAB's recommendations deserve "a really hard look." She believes an actuarial study is needed and ETF must develop formal investigative procedures.

"That would give certainty to everybody," Kerkman said. "There are some people who have really taken advantage of the system."