Double-Dipping or Talent Retention? A Look at HB 77.

A bill proposed for the 2015 Utah Legislature will reallow public employees to return to state employment after retirement and continue to draw  retirement check in addition to a new salary or wage, a practice that was ended by the 2010 Utah Legislature. The bill’s sponsor says it is an effort to keep talent in the hiring pool, but others see it as a return to pre-2010 double-dipping practices.

Dan Liljenquist has built his political reputation on saving Utah’s pension systems during 2009 and 2010.

In the wake of the housing market’s collapse of 2008, the national economy tanked, dragging down public employee pension funds nationwide. Utah was no different, with the market crash creating a $6.5 billion pension liability for Utah taxpayers. As the Utah Legislature evaluated how to mitigate the damage, double-dipping by some public employees came under heightened scrutiny.

The End of Double-Dipping

Former Utah State Senator Dan Liljenquist is credited with leading the effort to reform Utah's pensions to maintain viability in 2009 and 2010.
Former Utah State Senator Dan Liljenquist is credited with leading the effort to reform Utah’s pensions to maintain viability in 2009 and 2010.

Double-dipping, the practice by which a public employee would retire and then come back to their job and receive both their retirement income as well as the income from state employment, drew the ire of both the public and from other state employees. A Salt Lake Tribune article in 2005 said that the Department of Corrections had reemployed 40 persons after their retirement and found similar practices in Utah Departments of Public Safety, Transportation, and Human Services. Managers argued that the practice saved money, keeping around state employees who were already skilled, experienced, and well-trained.

Rank-and-file workers disagreed. According to the same article:

[R]ank-and-file workers complain the state policy has created a morale-lowering environment of cronyism. And they dispute the managers’ claims that it saves money, noting that some top administrators collect a hefty paycheck, a retirement check and a generous 401(k) contribution from the state.

According to Liljenquist, an audit by the Utah Legislature found “4,000 or so public employees who opted to “retire” prematurely so they could “double dip” cost Utah taxpayers nearly $200 million between 2000 and 2008 and it was projected to cost over $400 million over the subsequent 10 years.”

Cronyism, double-dipping, and taxpayer funds were a toxic combination, and in 2010, the Utah Legislature ended the practice.

Talent Stop Loss or Back to Double-Dipping?

With the recession in our rear view mirror and several years of growth behind us, some have started to wonder if Utah is losing out on the skills of former public employees who have retired, but are still willing and able to work. Training new employees is expensive, and building the experience the comes with a career is priceless. Efforts should be made to accommodate their skills.

A bill put forward for the 2015 Utah Legislative Session–labeled HB 77–makes revisions to the law passed by the Utah Legislature in 2010. Among the changes to the law, HB 77 will:

  • Allow retired employees to come back after 60 days, rather than forcing them to wait a year. This requirement had been inserted by the Utah Legislature in 2010 to ensure that favoritism did not give the job to the retiring employee, allowing younger applicants to get a shot at the job.
  • Still prohibit “retiring in place,” or to staying in the same job upon retirement. To get a job with the state, the public employees will need to go to a different department.
  • Be a return to double-dipping. The employee will still be able to draw their retirement check, in addition to the salary or wages from the new job.
Utah State Representative Rich Cunningham (R) is running a bill that would change the 2010 double-dipping law in order to retain state employee talent.
Utah State Representative Rich Cunningham (R) is running a bill that would change the 2010 double-dipping law in order to retain state employee talent.

Rep. Rich Cunningham, the bill’s sponsor, believes his bill addresses a talent loss problem: Utah can’t fill the jobs vacated by retiring public employees, nor can it rehire those retirees into different positions for which they are qualified.

On Thursday of last week, Liljenquist laid out his case against double-dipping, warning against the fiscal costs of re-allowing double-dipping. He also tells me that double-dipping isn’t allowed by any other states in the region.

On the other hand, Cunningham is working to keep public employee talent in the state’s hiring pool, but still prevent the favoritism that preceded the 2010 law.

As yet, the Cunningham bill does not have a fiscal bill. In a year when the Healthy Utah Medicaid expansion and a potential gas tax are before the Utah Legislature, the effect of a fiscal note on a bill like this cannot be underestimated. If the bill returns with a fiscal note of any size, you can bet it’ll be a difficult pill to swallow by the 2015 Utah Legislature.

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