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Sunday, January 26, 2003 - Page updated at 12:00 AM

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State's retire-rehire rules being stretched

Seattle Times Olympia bureau

OLYMPIA — When Dennis Cooper retired from the state in April after 33 years, his colleagues didn't throw a retirement party. His supervisors didn't post his job or start looking for a replacement.

That's because Cooper's retirement was just a formality.

A month later, without having to reapply or go through any interviews, Cooper was hired back to his job as head of the obscure state Code Reviser's Office.

The only change for Cooper? Lots more money.

On top of his $9,064-a-month salary, Cooper started collecting more in monthly pension payments. A month later, Cooper's top assistant, Gary Reid, went through the same process.

Cooper and Reid are among hundreds of longtime state employees, local government workers, teachers and school administrators taking advantage of changes in state law that make it lucrative for retired government employees to return to work.

The changes to the so-called retire-rehire law were intended primarily to help school districts combat teacher shortages and make it easier for state agencies to compete with the private sector for workers in high-demand fields.

School officials and government personnel managers say it's a valuable tool for recruiting and retaining skilled workers.

But others, including some legislators who voted for the changes, worry the law is being used too broadly and will be viewed as legalized "double dipping."

They are concerned that some retirees are rehired even when there are no shortages of qualified job applicants, or that some employees who otherwise wouldn't have retired are going through the process to grab a big boost in pay.

And it bothers them that in some cases, like Cooper's, retirees have not had to compete to get their jobs back.

Fearing legislators will clamp down if the retire-rehire rules are abused, some officials are calling on government employers to adopt self-imposed restraints.

"We don't want to lose it," said Randy Hathaway, director of the Washington School Personnel Association. "We want to make sure that it's conducted in a proper manner, that is respectable and ethical."

Road to rehire

During the past 20 years, the state has eased restrictions that once prevented government retirees from returning to the public payroll. The biggest change came two years ago, when the Legislature sharply increased the number of hours many government retirees can work and still collect retirement checks.

Gov. Gary Locke and state schools Superintendent Terry Bergeson asked for the changes.

"The state is facing a critical shortage of experienced teachers and other employees with skills that are in high demand," Locke wrote in a message to legislators after he signed the bill into law. "To meet this shortage, we need to attract retirees back to work."

In arguing for the changes, supporters pointed out that teachers and government employees could already retire and then go back to work in another state or in the private sector. The new law went into effect July 1, 2001.

The new retire-rehire law is especially enticing for the nearly 40,000 members of PERS 1 and TERS 1, the state's oldest pension plans. The plans include government employees and teachers who were hired before October 1977. Members can retire after 30 years of service, no matter their age.

To qualify as "retired," a government employee has to leave his or her job for a month before being rehired.

Designed largely for teachers, the changed law allows retirees from those plans to work up to nine months — twice the previous limit — before their pension payments are suspended for a given year. The maximum pension, based on 30 years of service, is 60 percent of an employee's highest two-year average salary.

In other words, a retired teacher whose top two-year pay was $5,000 a month can return to work and make $8,000 a month ($5,000 salary plus $3,000 in retirement payments) for the full nine-month school year. State and local government retirees can go back to work full time, but can collect both paycheck and pension for only nine months out of each year.

During the first year under the changed law, more than 1,000 employees from the TERS 1 and PERS 1 systems retired and then were rehired. That total is expected to rise during the second year.

More than three-fourths of the retirees who returned to work during the first year under the new law were school employees, including dozens of principals and superintendents. Nearly 50 retirees were rehired in the Seattle School District, the most for any district statewide.

In state government, many of the retirees who have been rehired are working in temporary jobs.

For the most part, the retire-rehire trend has gone unnoticed. But a few cases have made headlines.

Last summer, for instance, Harry Carthum was rehired less than two months after retiring as superintendent of the Griffin School District, just north of Olympia. Though three other people applied for the job, the School Board didn't interview them before cutting a new contract with Carthum.

And during last fall's election, Clark County auditor candidate Linda Franklin caught flak over the circumstances of her rehire. She retired as deputy county assessor early last winter, then returned to the job on a part-time basis a month later. The county never advertised the job opening.

'Didn't like the look'

When Cooper first told his supervisors he wanted to take advantage of the new retire-rehire law, they were uneasy and knew it might spark a controversy.

"I didn't like the look of the thing," said John Strait, a law professor at Seattle University and member of the Statute Law Committee, a 12-member nonpartisan panel of attorneys, legislators and judges that oversees Cooper's office.

A quasi-legislative agency, the Code Reviser's Office drafts bills for the Legislature and codifies into law all the legislation passed each year.

Cooper, 58, was first hired by the state in 1969, has run the office for 25 years and oversees a staff of nearly 50 people.

Strait and three other committee members interviewed recently all speak highly of Cooper and said he would have been hard to replace. But all said they had doubts at first about whether Cooper's use of the new retire-rehire law was proper.

"I was concerned that it was being used to obtain a de facto pay raise," Strait said.

"It's something none of us had any experience with," said state Supreme Court Chief Justice Gerry Alexander, a committee member. "Is this what the Legislature was trying to accomplish?"

Democratic Rep. Pat Lantz of Gig Harbor, one of the legislators on the committee, said she didn't believe Cooper would have been interested in retiring if it weren't for the new law.

But after she checked with the House's policy staff, Lantz said she and the rest of the committee were convinced Cooper's retire-rehire would be within the law.

"If a valued employee asks for something that the law allows, can you say no?" said Strait.

Under the retire-rehire law, agencies cannot make any written agreements promising to rehire employees who retire. Cooper and committee members say they had no written agreement, but it's unclear what sort of understanding they had beyond that.

Cooper said he had no guarantee the committee would rehire him.

"It was beyond my control how they would decide to proceed," Cooper said. "I was clearly in limbo, not knowing whether they would say, 'Sorry, we're going with someone else.' "

But committee members said they had agreed among themselves in advance they would rehire Cooper. Lantz and Strait, meanwhile, said the committee had assurances from Cooper that he would come back.

"That was clearly the understanding," said Strait, who added that he is certain Cooper believed he would be rehired.

When Cooper left last April, he didn't bother cleaning out his office. During the month Cooper was gone, the committee didn't advertise the opening. Posting the job wasn't required since the code-reviser position, like all jobs in the legislative branch, is nonunion and exempt from such rules.

Cooper's top two-year average salary before he retired was nearly $8,700 a month. He would not reveal how much he is collecting in pension, but said it is less than the full 60 percent because of options he took. Neither he nor the state contributes to his pension any longer.

Soon after Cooper returned, Gary Reid, second in command at the Code Reviser's Office, went through the same routine: retire, leave for a month, come back. Only in this case, it wasn't the committee's decision whether to rehire Reid. It was Cooper's.

Reid, first hired by the state in 1971, now earns more than $8,100 a month and collects his pension on top of that.

More changes a ways off

Despite their misgivings, Cooper's supervisors on the Statute Law Committee said they went out of their way to follow the law.

"There's no scandal here," Strait said. "It's just a classic example of legislation that was broader than it needed to be."

Some lawmakers are coming to the same conclusion.

Sen. Don Carlson, chairman of the Legislature's Joint Committee on Pension Policy, said he might propose increasing the amount of time retirees have to be gone before returning to work — perhaps as much as six months for state and local government employees. He also said he would favor a ban on verbal — not just written — rehire agreements, and a requirement that all jobs be advertised before a retiree is hired back.

"As I understand the bill, we wanted to be able to fill a shortage of needed positions with the best available person," Carlson said at a recent legislative hearing. "Well, how do we know if it's the best available person if it's never posted?"

But Carlson said he wants to wait until next year before proposing any changes. He said the only complaints have been anecdotal; he wants to give school districts and government agencies more time to adjust to the new law. He's also waiting for a study, due out this summer, on the law and its impact on state pension funds.

Hoping to head off any overhauls of the new law, several school groups last week began drafting guidelines for using the retire-rehire process.

Hathaway, with the Washington School Personnel Association, said the guidelines will urge school districts to advertise all openings and require retirees to compete for jobs. He said the guidelines will also stress there should be no rehire agreements, either written or verbal.

"There can be no promises, no deals, no expectations," Hathaway said. "The law was intended to help us fill positions that are difficult to fill. It was not intended to give people a pay raise."

Ralph Thomas: 360-943-9882 or rthomas@seattletimes.com.

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