ST. PAUL (AP) — As school districts in Minnesota have allowed retirees to return to work in recent years, some say they are getting a deal on quality professionals, while others wonder if the educators are double-dipping — by collecting both a salary and a pension.
The St. Paul Pioneer Press reported Sunday that educators who draw both salaries and pensions have come under fire in many states. From California to New York, such employees have been accused of boosting their incomes by also taking a pension.
But experts say that in Minnesota, the number of retirees in public school jobs is very small. The vast majority earn modest incomes filling in part-time, and school districts are often desperate to put them in jobs that are hard to fill.
About 9,000 beneficiaries of Minnesota’s public retirement funds are back on the public payroll. This week, the Public Employees Retirement Association will present a report to its board on the impact that back-to-work retirees are having on the pension fund. A legislative pension committee plans to examine the issue this summer.
For some school districts, the retirees are a good solution. For example, last June, the superintendent, athletics director and high school principal in Redwood Falls all retired.
Superintendent Rick Ellingworth, who was 56 at the time, returned to work in the 1,180-student district in southwest Minnesota. He knew that with declining enrollment, budget issues and a freeze on teacher pay, his salary would remain stagnant, board member Tom Hollatz said.
But “we didn’t really want to lose him,” Hollatz said. “We have a more difficult time in rural Minnesota finding quality people.”
So in July, all three retiring administrators signed new contracts with the district. As retirees, neither they nor the district have to pay 6 percent contributions into the Teachers Retirement Association. They took salary cuts, including $5,400 a year for Ellingworth.
“That was a win-win for all of us,” Ellingworth said. The district is saving almost $85,000 a year with the new contracts.
And while Ellingworth now makes $113,900 annually, he also receives about $56,000 in pension benefits.
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Retirees in the Teachers Retirement Association system can keep their jobs or get a new one with a public school. But if they make more than an earning limit of $46,000 a year, a portion of their benefits goes into a savings account they can tap only after ending public service. Ellingworth’s $56,000 annual benefit does not include the money set aside in a savings account for him.
Districts have long used retired teachers to fill substitute roles. But they began rehiring more retirees for full-time and part-time jobs four or five years ago, said Bob Lowe of the Minnesota School Board Association.
Charlie Kyte, executive director of the Minnesota Association of School Administrators said rehiring newly retired workers is good for everyone. He said educators tap the pensions they have earned, while districts save on pension contributions and can often negotiate pay cuts or freezes.
Besides, Kyte said, “the districts are only rehiring people whom they really, really value.”
“Those are the best of our people in education,” he said.
Byron Schlomach, a pension fund expert with the conservative Arizona-based Goldwater Institute, said the practice is not good for taxpayers.
“It’s sold as something that saves the taxpayers money, but the reality is taxpayers cover the whole thing,” he said. “It’s a way of robbing the taxpayer by stealth.”
The practice is double-dipping, Schlomach said, and if more public workers stop contributing to state pension funds before they quit working, it can put a strain on the funds.
Working retirees have been under scrutiny in other states, and some have greater restrictions than Minnesota. Arizona requires workers to take at least a year off before returning to work if they want to collect a pension while working. Nevada allows re-employment only if employers can show a “critical labor shortage” for the job.