Double-dipping pervasive in Hawaii’s public sector

Hundreds of people across Hawaii work in state and city government, while collecting a public-sector pension at the same time. It’s called “double-dipping” and it’s legal, but at what cost?

Retirement to most people should mean a permanent pau hana. But hundreds of state and county workers are retiring on paper only getting a pension but also collecting a new paycheck from the taxpayer.

House Speaker Joe Souki has been a state representative since 1982. And he’s retired. But there was no party, no lei, no koa bowl, because he didn’t actually leave the job.

“Is that right? Is double dipping ok?” KHON2 asked Rep. Souki.

“Well I maxed out, I can’t earn any more retirement,” Souki said, “So I’m merely collecting what I have contributed.

Even if they have a break from service or change jobs, elected officials don’t have to hand their pensions back when they come back, some with more than one retirement check.

“You’re saying double dip as if it’s a bad thing,” Gov. Neil Abercrombie responded when we asked him about the trend. “The fact that the cost of living being what it is, that people go back to work after they’ve retired from one profession, I don’t think is unusual anymore, especially with people living longer.”

“Me, I’m a good example,” the governor added. “When I retired from the Congress and retired from public service in Hawaii, I ran for office again, I collect a salary for that.”

Hundreds more retirees are also taking in two checks. But it’s not as open and easy as it is for elected officials. These folks work on temporary 89-day-or-less contracts.

It took an open records filing with the state for KHON2 to get their list, and here’s what we found: 100 retirees back on board, cashing pension checks in the tens of thousands plus salaries as much as $111,000.

They get fired every 90th day, and go back to work right away, over and over. For John Peiper, a Department of Hawaiian Homelands investigator, it’s been going on for 19 years.

“‘Uncle John Peiper is a trusted member of our department’s Enforcement Team that is responsible for investigations, complaints and on some occasions, evictions from Homestead lands. He possesses a wealth of experience, respectfulness and a calming demeanor that are a part of his unique skill set which we would not otherwise have on staff,” DHHL Deputy Director Darrell Young. “During the most difficult of our situations, evictions of families from delinquent homestead properties, he makes sure that our beneficiaries are treated with the utmost care, dignity and. His sensitive handling of these difficult situations with our native Hawaiian beneficiaries, is treasured and priceless to us.”

The state’s largest public-sector union agrees there are very special cases like Peiper’s, but overall they don’t like the practice.

“The 89-day process is abused,” said Randy Perreira, executive director of the Hawaii Government Employees Association, “and in too many instances you have people who are being allowed to double dip, who come in and take jobs that otherwise might be given to civil servants that want to advance, or even people outside who want to come into government employment.”

“I’ve heard departments threaten that if you don’t do these things, we’re going to lose some of these people, and if we lose these people, government is already incompetent enough let alone losing its best and brightest at the top just because it happens to be older people,” said Rep. Gene Ward, who gets a pension and a paycheck.

“I literally left public service, without knowing I’m going to be in the Peace Corps in East Timor,” Ward explained, “I’m going to be evacuated, I’m going to get brought back to Hawaii 8 years later and with an open seat, those are things you can’t plan.”

As a lawmaker, getting that pension along with the paycheck is much easier than if he weren’t a lawmaker, like over at the state Attorney General’s office here they’re cycling 46 temp-hire retirees every 3 months, mostly for investigator positions, one over and over for 11 years.

“This allows the department to hire experienced and qualified individuals for critical positions,” a spokesman told KHON2 in a statement. “Many individuals who are most qualified for these positions are retired police detectives who are already trained and experienced. These individuals are productive and are able to handle the complex, difficult cases the department investigates, without the need for extensive training.”

The department tells us they save $2.2 million a year compared to a regular hire because they’re not paying benefits to retirees.

But pensioners do get full health coverage from the billions-underfunded EUTF (Hawaii Employer-Union Health Benefits Trust Fund), versus a regular staffer who pays nearly half their own way.

“It shouldn’t be a permanent, sometimes you’ve got people years on 89 days for years, because it’s supposed to be temporary, if you really need that position you should go out and recruit them,” said state Senate President Donna Mercado Kim, who also gets a pension plus paycheck.

“It’s from the legislature and there was a break in service and under that I was allowed to take a retirement,” Kim explained of her choice to trigger retirement while still at the Capitol, “because you’re not sure if you’re going to be covered by medical and so forth, and because of the small pay I had, and my son was going to college, there was no way I could survive on that amount of pay.”

Paychecks atop pensions happen at the county level too.

There are six on the Big Island including their fire chief turned civil defense boss. Maui has 11, including their mayor. Kauai has nine of them. And Honolulu has more than 50, most of them with the Honolulu Police Department.

Budget hawk Ann Kobayashi is a double dipper, coming back to Honolulu City Council after retiring from the council once, running for mayor and losing that race.

“I donate my salary to nonprofits,” Kobayashi says of her second take-home check. “It’s about $30,000 that I donate every year to nonprofits, because I feel that I came back into office, but I already have a pension also, so I do that.”

Hawaii’s most visible double-dippers say they’re saving us all money.

“The flip side is, if I wasn’t collecting also, I would be now getting a better pension for the future yeah, with the pay raises coming up,” Souki said.

The boss of the billions-underfunded retirement fund, ERS Administrator Wes Machida, says the speaker’s right on that in many cases. He explained that the double-dippers can in some cases be cost-neutral to the pension fund (but almost always are more costly to the separate health-benefit entity EUTF).

Machida explains the financial stress on the billions-underfunded ERS can come from anyone who retires as early as possible — say, sooner than the average of 60 (55 for police and fire), and who outlives the expected lifespan of 82-83.

As for the 89-day matter, ERS says they say they don’t encourage the practice of repetitive temp gigs for retirees.

“Our objective is to ensure follow the Internal Revenue code and Treasury regulations that once people retire, there needs to be that proper separation, that real retirement and that they stay retired,” said ERS Administrator Wes Machida. He says ERS’ tax-exempt status could be jeopardized otherwise.

ERS can’t stop the departments from the 89-day hires, but they were instrumental in stemming the tide considerably with advocating for a law change a few years back requiring at least a 6-month gap between the retirement and the start of any post retirement job.

Many have come back to work outright, stopped their pensions and started paying back into the system. Machida said there have been 29 such returning public workers in the past two years, giving up as much as $58,000 a year in pensions. If there are dozens willing to do it that way, KHON2 asked what can be done about the hundreds caught up in the 89-day cycles and the other double-dipping costs, and whose responsibility is it?

“It’s really the responsibility of the human resources managers in both the state and the counties to make sure the process is not abused. It falls on them and it just goes to good management practice,” Perreira said. “The question is whether or not you develop rules that would limit the length of time they would come back in a post-retirement mode and stay in government and actually collect both sides.”

“There has to be a transition,” Perreira said. “It cannot be these people staying in these jobs 17, 19 years, that’s absurd.”

 

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