N.H. Bill Would Reduce ‘Double-Dipping’

Concord Monitor
Thursday, January 11, 2018

For many New Hampshire towns, the practice is common: Hire a full-time police chief, and when that chief reaches retirement, hire him again on a part-time, 32-hour basis.

It’s a legal workaround that allows the town to keep its experienced chief without violating the prohibition on public employees’ collecting a full-time salary on top of their retirement benefits, often known as “double-dipping.”

Now, a new bill is looking to reduce double-dipping, adding new restrictions on the number of hours a retiree can return to work in the public sector.

The restrictions are meant to mitigate double-dippers’ financial strain on the state retirement system, but it’s facing strong resistance from local government entities, which say the change will create unworkable financial burdens for them.

The proposal stems from one of the unfortunate financial side effects of hiring retirees part time: Retired public employees — now working part time — no longer pay into the same benefit system they now collect from.

The retirement system, meanwhile, takes a hit.

The New Hampshire Retirement System currently has $5.04 billion in unfunded liability, a spokesman said on Wednesday, putting the program on precarious footing.

The latest amendment to the bill winding its way through the State House, House Bill 561, would change the allowed amount of time a retired worker can be re-employed in the public sector — currently 32 hours a week — to 1,300 hours per calendar year. That amounts to about 25 hours a week — an increase from the House-passed version, which created an effective cap of 20 hours a week.

At a hearing in the Executive Departments and Administration committee, Sen. Sharon Carson, the amendment’s author, presented the bill as a direct solution to a mounting problem. Towns that employ retirees at 32-hour workweeks are effectively employing full-time employees but evading the need to pay into the retirement system, the Londonderry Republican argued; the bill, she said, would discourage the practice.

But during a hearing on Wednesday, scores of county and police representatives said the present system is necessary to keep their departments afloat.

Some cited fear of the cost of adapting to the new rule. Ray Bower, Strafford County administrator, said that with the number of retirees currently serving the county’s sheriff department at 32 hours a week, imposing the new cap could cost the county $700,000 in additional workforce expenses.

“It seems ironic to me that we’re working on making sure that the system is adequately funded, but we’re doing it at millions of dollars’ expense of local taxpayers’ money,” Bower said.

Others brought up a potential loss of experience. Strafford County Sheriff David Dubois said because the federal government contracts with the Department of Immigration and Customs Enforcement to transport undocumented detainees to the Strafford County jail, seasoned hands are needed.

Grafton County Attorney Lara Saffo said that the county’s Child Advocacy Center, which helps investigate and interview victims of alleged child sexual abuse, often employs retired police detectives to help with sensitive work.

“The reality is we need expertise to investigate these types of cases,” she said.

Throughout the day, the hearing room was packed; small crowds, many in uniform, gathered outside the doorway waiting to squeeze in. But not all who testified opposed the legislation.

Richard Gustafson, chairman of the New Hampshire Retirement System board of trustees, said the bill, which was approved by the Decennial Retirement Commission last year, would clamp down on a financially harmful practice.

New Hampshire is one of only 14 states that allow retirees to re-enter the public workforce to begin with, and lowering the weekly cap to 25 hours would still make it the most liberal of those 14 states, Gustafson said.

And the number of retirees the bill would affect is relatively small, Gustafson noted; of the 28,222 total retirees in the New Hampshire Retirement System, only 490 currently work 25 hours a week or more, according to system data from September 2017.

William McQuillen, president of the Professional Fire Fighters of New Hampshire, called the bill a boon for public workers; the present system stifles wage growth and hampers the ability of younger workers to ascend the career ladder, he said.

Not putting in costs to fix the system, he added, would lead to financial headaches down the road.

“These cities and towns want to say they’re saving money but they’re being penny-wise and pound foolish,” he said. “They’re saving money in the short term, but that’s coming out of the retirement system.”

Within the Senate, some voiced skepticism.

Sen. Bill Gannon, R-Sandown, said the changes would cost his district “millions,” and characterized the bill as a systemic fix that does more harm than good.

Sen. John Reagan, R-Deerfield, called the bill an “attack on retirees” and said it would create a “tremendous burden” on towns and counties.

“I was elected from my 11 towns to protect the towns from the state,” he said. “And now we’re in a position of having to protect our towns from the retirement system.”

To fix the retirement system’s fiscal shortfall, Reagan said, the system should be scrapped entirely and built anew, with fewer fixed benefits.

But Carson dismissed the criticism and called the bill a matter of responsibility.

“The more people that are paying into the system, the sooner we will pay off the (unfunded liability),” she said.