Nineteen part-time retired public employees were quickly eliminated last week after a CalPERS law was amended and the city realized the retired CalPERS employees’ pensions could be on the line if they continued to go to work.
Employees from the library, Parks and Recreation, Public Works, the City Manager’s office and the Police Department were affected.
In an email from the City Manager’s office, Bill Workman wrote “New PERS rules with tough penalties will highly restrict the use of retirees in part-time City positions. If you are a PERS retiree working for the City, please discuss the situation with your Department Head because continued employment with the City may jeopardize your current retirement payments.”
Employees were shocked to be asked to turn in their keys, most within 24 hours of talking to their supervisor.
“We were called in last Friday afternoon and told ‘it’s over’,” said one employee who wished to remain anonymous. “I didn’t see it coming. I was allowed to work one more day, but it was a wasted gift – it was an uncomfortable day.”
Some employees were simply asked to finish their shift and go home for good.
The reason for the quick eliminations was due to an ambiguous CalPERS (California Public Employees’ Retirement System) “housekeeping” bill that was clarified to the Redondo Beach city manager and cities across the state; resulting in quick action and confused retirees. AB 1028, which was designed to “clean up” various provisions of the Public Employees’ Retirement law, is intended to change the way in which an agency appoints CalPERS retirees under Sections 21221(h) and 21224.
“I don’t think you’ll find a city that’s a big supporter of CalPERS reform – this hurts employees that had a lot of value to our city and gave us a lot of flexibility as to how to staff things,” said Assistant City Manager Pete Grant. “It’s a shame to see them swept up in a bill.”
The new amendments clarify that an appointment under this section is only temporary and that the retiree fulfilling that position must possess a specialized skill. The amendment also underlines the fact that the employee may not work more than 960 hours a year, about 20 hours a week, and that the position cannot exceed one year. The law was originally used to fill high level vacancies for positions such as City Manager, Police Chief, or other governing positions with a retiree who is willing to work for in interim while a full-time employee is sought.
“Most of us weren’t making more than a few thousand dollars a year,” said another anonymous employee. “It saved the city a lot of money; most of us are very experienced and the library does need the manpower.”
In the past, the temporary time limit and the restrictions regarding specialized skills were not specified, leaving the retirees’ part-time positions up for interpretation.
“Historically if [the employee is] retired and receiving PERS [pension] they can come back and work for no more than 960 hours a year,” said Grant. “Outside of that [they] haven’t really enforced any restrictions, although [the] law has always put rigid rules as to who qualifies and who comes back to work.”
The new law clarified those restrictions and warned cities that their pensioned part-time employees could potentially be forced to re-enroll in the system and may no longer be eligible to qualify for their benefits, including their pension and health insurance. The employees could also be required to pay back previous pension payments they received, with interest. A person with a $4,000 a month pension could be forced to forfeit their pension for a 20-hour-a-week, $15 part-time position.
“It’s a crazy mean law in that regard,” Grant said.
As soon as the city understood the risk it presented to retirees, management had to act quickly because of the severity of the consequences. According to Grant, the real challenge with keeping the employees working based on the exceptions is the risk the retiree runs even if the city decides they have a specialized skill and could continue working. CalPERS could potentially disagree and force them to re-enroll in the program, and repayment to PERS can be retroactive up to three years.
“[The employee] could work for awhile, not have any issues, then have CalPERS spit them out and then have to pay back three years of retirement benefits because [they are] a working 20-hour-a-week, $15 an hour job,” Grant said.
The law, which was amended in December 2011 and became effective on January 1, 2012, has only recently come to the attention of cities across the state. When faced with the consequences of their employment, some of the Redondo Beach part-time employees voluntarily resigned while, according to Grant, the city is working with two employees to make sure they qualify under the CalPERS exceptions.
“[The clarification was] aimed at fat-cat double-dippers; folks who have retired and get big pension benefits and come back and get about $100,000 a year,” said Grant. “It wasn’t aimed at part-time librarians. But because the law was written so quickly, it was a reactionary bill [that] didn’t contemplate [the] unintended consequences. It’s just poorly written.”
According to Grant, the city will manage replacing the positions without impacting service to the community, but they will have to make sure they don’t hire anyone whose benefits would be jeopardized by the part-time position.
“The people who were terminated did not have big, fat pensions,” said an employee in an email. “Many were in their 70s, supplementing their modest pensions… Many of these employees had worked part-time for the city for many years.”
The employees who were let go understood who the bill was originally aimed at, but felt that there could have been a better way to go about targeting pension abuse.
“They used a tank when they could have used a sling shot,” one anonymous employee said.
According to one employee, the little amount of money the part-time position brought in was able to keep some of the pensioners afloat in the difficult economy.
“We all really loved and appreciated our jobs,” said one employee. “I loved helping the public.”
Grant knows that other cities are expressing the same frustrations with the amendment and hopes that there will soon be legislature to fix the bill and make it more flexible to put retired government employees back to work.
“The legislature has gotten in the habit of doing this,” said Grant. “Like with the Redevelopment Agency bill, now [with] the CalPERS bill. [They] do it in the dark of night without consulting local government; at the last minute. In that event we get legislation that is unclear and in this case unfair to the retiree.”
For now, there are about nineteen less people enjoying retirement while giving back to the city.
“If this is my last job, I feel lucky,” said one employee. “The people were professional and kind and it was a great place to work. That’s what saddens me.”
