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WI: Transparency problems in tracking public pension double-dipping

By   /   December 20, 2012  /   1 Comment

By Ryan Ekvall | Wisconsin Reporter

MADISON – A recent audit that found thousands of cases of public sector double-dipping says the practice is a state and local concern.

The bigger issue may be the lack of transparency in the Wisconsin Retirement System.

According to data from the nonpartisan Legislative Audit Bureau, the number of state public employees who retired only to go back to work and simultaneously collect a paycheck and a pension check increased dramatically leading up to Act 10, the law that curbed collective bargaining for most public employees and required them to contribute to their pensions.

It appears the trend carried over to local governments – including school districts – which hired 2,599 retirees from January 2011 to March 2012.

DOUBLE-DIPPING:Audit questions unanswered raise transparency questions in Wisconsin’s pension system.

The audit bureau, which conducted the audit, relied exclusively on self-reported surveys for local government results. As a result, the number of “double dippers” at the local level may be much higher than reported. About 82 percent of local governments responded to the bureau’s two-page survey, leaving 255 non-responding local governments.

The lack of response arguably signals problems with transparency and accountability of potential pension abuse in the WRS. Potential pension abusers are protected by a closed records law that keeps the data private.

One of the public entities that did not respond was the Madison Metropolitan School District – the second largest school district in the state.

“I don’t remember getting it,” Bob Nadler, executive director of human resources for the district, said of the annuitant rehire survey sent by the audit bureau earlier in the year. “Sometimes things get lost.”

Nadler estimates the school district retains a dozen or so double-dippers, excluding substitute teachers, out of a workforce of 5,000.

“We don’t subscribe to retire and rehire to the same job,” he said. “Some do it to save money on WRS costs. We feel when someone retires, they retire. The only reason we do it is when there’s a difficult position to fill.”

Nadler went on to explain he’d have no problem filling out the survey and emphasized the school district doesn’t “do a lot of that kind of hiring.”

Wisconsin Reporter’s sister bureau in Virginia recently asked similar questions about pension censors in the state.

“In California, in New York, in New Jersey where these databases have been put together, suddenly it comes to life that there is a cluster of employees who has been double-dipping, or they’ve been bumping up their salaries and earning exorbitant amounts, which is out of sync with what other workers are getting,” Eileen Norcross, economist the Mercatus Center at George Mason University, told VA Watchdog. “So, it allows people to sort of see those anomalies, and I think that’s very valuable.”

Instances of double-dipping — collecting a pension from one government job while simultaneously earning a salary from another public position — and salary spiking — a public employee earning significantly more than usual in their last year of work to boost pension benefits — are the kinds of anomalies discovered in New Jersey with the help of such a database.

New Jersey Watchdog, also affiliated with Wisconsin Reporter, reported that 1,244 state retirees collected more than $100,000 in pensions in 2011, among other anomalies. And to put icing on the proverbial pension cake, New Jersey Watchdog revealed a scandal in which New Jersey comptroller Matthew Boxer — the supposed state watchdog — was among those double-dipping from the public coffers.

In Wisconsin, recent audits beg the question: If the state-commissioned pension watchers really are watching, what are they watching? The state Department of Employee Trust Fund conducted 19 audits in roughly three years. Only four cases ended in the conclusion that “good faith terminations” had not occurred.

Pension laws state that public employees may be rehired with the same agency or another public employer after a 30-day separation period and receive their pensions in addition to paychecks. Abuses of “good faith terminations” are difficult to prove.

“For example, individuals may indicate in their resignation letters that they desire to return to work, and their employers may subsequently hire them after the 30-day separation period,” the auditors find.

“In these situations involving unenforceable agreements, ETF determines there is insufficient information to conclude that good-faith terminations did not occur.”

Double dippers-take from the retirement fund without replenishing it with contributions other workers and their employees (taxpayers) would otherwise make. Due to the WRS structure, the wave of retirees and rehires leading up to Act 10’s implementation meant these workers took pension payments while older retirees took pension cuts.

ETF was closed Thursday’s due to the winter storm, although agency officials failed to respond to multiple requests for comment from Wisconsin Reporter throughout the week.

In October 2011, Wisconsin Reporter reported that between January 2005 and December 2010, “Wisconsin’s public school system makes up the largest share (of double-dippers), counting 2,843 rehired annuitants, or about half (of all public employees), during the five-year period.”

Public schools rehired 1,681 annuitants between January 2011 and March 2012, 59.1 percent of the total in the previous six years. How many of those boomerang public employees are considered “good-faith terminations” is not clear.

Contact Ryan Ekvall at rekvall@wisconsinreporter.com

— Edited by John Trump at jtrump@watchdog.org

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M.D. Kittle

  • http://www.facebook.com/woforange William Oforange

    There is a HUGE difference between spiking and “double dipping”. Spiking is wrong and you see it most often at the lower levels where OT is possible and at the higher levels where legislators take 18 month cabinet secretary appointments. Double dipping is a political red herring. If I retire from CUNA with my pension and then go to work in the finance department of the DNR I still get to collect my CUNA pension. However if I retire from the UW and then go to work at DNR as an LTE, I don’t actually accrue any more pension benefits, no sick leave, no nothin’. I am a much cheaper employee. And that’s actually BETTER for the taxpayer. But, as with all these sorts of partisan discussions, leave your logic at the door.