What is it about “double-dipping” that rubs us the wrong way?
By David H. Landon
Let’s face it. There are a lot of people who are public employees who are “double-dipping.” You know some. I know some. Everyone knows someone who is managing to nail down what is the equivalent of two paychecks. And if we’re honest, we will admit that there’s something about it, during these difficult financial times when so many people are out of work and can’t even find one job, which just doesn’t sit right.
If you were a public employee, and had a chance to almost double your income by simply working out an agreement with your employer that you would retire and then be re-hired at a slightly lower salary, who wouldn’t take that deal? In Ohio it’s perfectly legal and according to a recent study, nearly 32,000 state and local employees are cashing in on the practice of double-dipping. For example, nearly 25 percent of public school superintendents are double-dipping. In all, public employees have collected more than $1 billion in pension payouts in addition to their government paychecks. Most of these public workers have retired and then have been immediately re-hired to perform the same job that they previously were being paid to perform. After waiting the prerequisite time period, (90 days in most cases), they can apply for and receive their monthly government pension along with their paycheck.
The argument by the double-dippers is that they are saving taxpayers’ money in the long run. By them retiring and then being re-hired at a lower salary, the public entity -whether it concerns a school district or some other job held by a city, county or state employee- is saving money on the new lower salary. And in these days of government budget shortfalls, shouldn’t we support anything that saves taxpayer dollars?
There are plenty of local examples of double-dippers. Last year, the Kettering School District made a decision to allow the interim superintendent, James Schoenlein, to retire and be re-hired. Shortly after Schoenlein was selected as the interim superintendent, a plan was floated to allow him to retire and then be re-hired at a lower salary. The Kettering School Board, which had just experienced the defeat of a school levy, went along with the plan. Schoenlein retired and was immediately re-hired. His salary was reduced from $155,000 to $130,000. Between the cut in salary and requiring Schoenlein to pay his own 10 percent STRS contribution, the net savings for the school district was calculated at $40,000 according to the school treasurer. Schoenlein’s 36 years of experience will make him eligible to collect close to 90 percent of the average of his highest three years’ salary in retirement pay from the State Teachers’ Retirement System. That gives him an income from both sources totaling nearly $250,000. According to the parties, it was a win-win situation. I’m not picking on Mr. Schoenlein. There are plenty of other public officials doing the same thing.
So it’s legal and the practice is evidently pretty widespread. I’ve tried to follow the math to verify that the taxpayers are saving money in these retire/re-hire deals. If the money that the employee receives as a result of the short retirement is the same amount of money that would have been paid out to them if they had stayed retired, then where’s the harm to the taxpayer? It’s more complicated than that. Part of the calculations involves rates of payment into the retirement system and those rates vary widely from public employee to employee, sector to sector. For example, police employees pay at different rates than teachers. It’s really hard to tell if taxpayers are saving money without knowing at what rate the employee was paying into their retirement. It is possible that while a local school district might save money by the re-hiring of the retiring employee, Ohio taxpayers overall might not.
Ohio State Representative Rex Damschroder feels that there is something unfair about the “double-dipping” phenomenon. He has introduced legislation to end the practice. The legislation, H.B. 388, would prevent someone from collecting a pension check and a salary at the same time. Upon returning to the government payroll, the government pension of the short-time retiree would be set aside in a separate account. When the employee leaves government employment for good, the payment would begin again.
Ohio isn’t the only state to attempt to deal with the retire/re-hire revolving door. In Illinois, the governor has just signed into law a new bill, which attempts to end the practice of double-dipping. In Illinois there was a public outcry when it was learned that scores of workers, mostly teachers, were retiring at early ages and receiving annual retirement salaries in excess of $100,000.
We want to compensate government workers for their service. Today it would be hard to argue that government salaries have not at least reached parity with the private sector. In many instances they are compensated at levels far exceeding the private sector. The purpose of government is to provide for the common good at a level and for a cost agreed to by the voters and taxpayers. It’s very difficult to see what common good is provided by a government that gives away billions of dollars to young retiring public employees who then are allowed to be rehired by the same government.
If you are one of the many recent college graduates who is unable to find a job in today’s recession-scarred job market, it is unfair to observe a public employee receiving not only their retirement check, but also holding onto a job that could be yours. There may not be anything illegal about “double-dipping,” but there is something distasteful about the practice.
David H. Landon is the former Chairman of the Montgomery County Republican Party Central Committee. He can be reached at