You Paid For It: Double Dipping

Published 02/26 2014 07:13PM

Updated 07/15 2015 01:14PM

MONTPELIER, Vt. - Most state employees in Vermont get a fixed compensation once they retire from public work. It’s called a pension.

State employees and teachers make contributions from their salaries to the system. In return they get a regular payment when they’ve stopped working.

“I think retirement is part of compensation,” Vermont state treasurer Beth Pearce said.

“It's been part of the commitment that we made to those employees and in Vermont we keep our word and I think that that's important.”

Pearce manages both the Vermont State Employees’ Retirement System (VSERS) and the State Teachers’ Retirement System (VSTRS). Make your annual contributions and stay employed in the system long enough and most employees will receive a size able pension once they’ve retired.

But some state employees and teachers are getting their pension while working.

Right now 87 state employees are receiving both a pension and a paycheck. 66 teachers are doing the same thing. There’s nothing illegal about it as Pearce, other state officials and union representatives are quick to point out.

“Teachers, once they retire can collect the pension they've earned. Simple as that,” Vermont NEA communications director Darren Allen said.

Allen represents Vermont’s teacher’s union. He says teachers are mostly going back work to fill niche rolls, not full time jobs.

“They're for one period, they're for art class, they're for something, some need that the school has that it can't fill with another teacher,” Allen said.

Those specialized roles that retired teachers and state employees work come with a temporary hourly rate that, in most cases, is a little less than what they earned as a full time employee. The majority of these employees are also taking new jobs with the state as opposed to filling the same roll they had before.

$1,589,865 in pension funds is being paid to retired teachers who are back in the classroom. $2,003,652 in pension funds is being paid to state employees who still have a job with a state agency.

“There are either specialized areas or the fact is that it's not something where there's a lot of people applying for the jobs,” Senate President Pro-Tem John Campbell said.

Campbell says he’s seen no evidence of state employees abusing the system for personal financial gain. He says there are no legislative efforts underway to change rules that apply to returning to work while receiving a pension.

If there is something that we do find some type of corruption if you will,” Campbell said.

“There's something that should be changed. We will be doing it. It's not a question of whether we will. We will be doing it.

Treasurer Pearce says the number of state employees and teachers who are receiving a pension while working is so small it doesn't have a big impact on the overall health of the pension system. There are 66 teachers who are receiving a pension while working out of a total of

“I'm confident that these numbers are not having an adverse impact,” Pearce said.

But both the teachers and state employee systems are severely underfunded. VSERS is 76.8 percent funded. VSTRS is worse off at 60.5 percent funded.

Both funds suffered during the great recession. VSTRS was 90.7 percent funded in 2005. VSERS was 100.8 percent funded in 2007.

The majority of the funding for both systems comes from market investments which didn’t fare so well following the recession. In the meantime the state fills the gap needed to fund the pension system by borrowing money from bonders.

Every dollar borrowed to fill the pension system gap now accrues interest. Eventually Vermont taxpayers will pay back three times what they borrowed for the pension system today.

“That is not sustainable. We need to change the way we fund that system,” Pearce said.

Pearce notes there are state statutes to prevent abuse in the pension system. Teachers and state employees can only work part time if they are also receiving their pension. If they go over a certain number of hours worked or dollars earned their pensions are frozen.

The restrictions are similar in neighboring states.

In New Hampshire state employees with a pension can also only work part time.

In New York, public employees can receive a pension and a state salary, but that new salary is capped at $30,000 per year. Employees older than 65 have no earnings restrictions.

Some U.S. states don't allow employees back to work from anywhere from thirty days to a year after retiring.

 In Vermont, the pension system for many municipalities is in line with the state. A majority of cities and towns are part of the Vermont Municipal Employees Retirement System, a system run by the state treasurer’s office.

But some cities, like Burlington, write their own rules. Restrictions are looser, with no waiting period to return to work after retiring and no limits on hours worked.

“I think it's appropriate that we review these policies and look at them,” Mayor Miro Weinberger said.

Weinberger says a city committee on pensions plans to look into this issue. Right now Burlington has nine city employees receiving a pension and working, only three are full time.

“I get the idea that this can be seen as double dipping at the same time these are for the most part most of the people that are employees that worked in public safety met the terms of their agreement to be eligible for their pension the rest of their lives no matter what they did with their time thereafter.

The problems might not be widespread for Pearce or Weinberger but both agree the current underfunding for the pension systems isn't helping taxpayers now and hurting the ones down the road even more.

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