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Retire-Rehire Costly Way to Keep K-12 Workforce: Let SDRS Focus on Real Retirement Income

Bob Mercer reports that the South Dakota Retirement System that the 2010 decision to scale back the retire-rehire option may be saving the state pension system millions of dollars:

The SDRS analysis looked at the 123 retire-rehires from 2009. Ninety came back within three months; the average break for those 90 was 13 days. There were 42 of those 90 still re-employed as of June 30.

Based on the data for those 90, the additional cost to SDRS of retire-rehire was $5.3 million, according to the analysis presented to the trustees.

If the 2010 changes had been in place, the extra cost would be about $300,000, the analysis said [Bob Mercer, “Retire-Rehire Cost State Millions,” Aberdeen American News, 2015.09.04].

So why did South Dakota buy into reture-rehire in the first place?

Retire-rehire was a common practice in other places such as California, so law enforcement personnel could retire and change careers to civilian positions.

School districts began to use it in South Dakota more than a decade ago as a way to keep superintendents. From there, the practice spread.

The School Administrators of South Dakota group is interested in restoring the practice in some fashion to help address personnel shortages.

Rob Monson, the organization’s executive director, recently sent a letter to SDRS trustees. Monson spoke to the SDRS board Wednesday. He didn’t find support [Mercer, 2015.09.04].

Uh oh—I feel Grudznick’s “fat-cat administrator” critique coming on.

South Dakota needs to look for ways to raise pay to fight the shortage of teachers. If we’re short on school administrators, that’s all the more reason to find the tax dollars necessary to support competitive wages. But retire-rehire doesn’t seem the best way to cover necessary wages for employees in the K-12 system. SDRS is not a workforce program; it is a retirement program, meant to ensure financial security for South Dakota’s public servants once they’ve stopped working. If they are still able and willing to work, they don’t yet need the pension system’s support.

 

7 Comments

  1. Nick Nemec 2015-09-04

    But they need to buy that boat with twin 200hp outboards and a 35hp trolling motor.

  2. Rorschach 2015-09-04

    If someone retires from government employment and they qualify for retirement benefits they will get those benefits even if they go to work somewhere else. So if that same person, fully trained and experienced, comes back to work for state government why shouldn’t they get the retirement benefits they have already earned and would receive if they were working for someone else? Retire-rehire is a pro-employee program. Why are Democrats against it?

  3. Spencer 2015-09-04

    Yes, it helps those who are interested in scamming the retirement system by double dipping. In practice those involved never actually quit or even change a staffing position. They simply turn a year older. It is a great deal for the few it applies to. Meanwhile, every year I get a retirement projection, it gets a little lower, a little lower, and a little lower because we have silly things like this including early retirement that steadily bleeds it dry. The scariest point in all of this is that our retirement system really is one of the best in the county. Most of the others are just promises on paper. If we started encouraging retire and rehire, our retirement system would be depleted relatively quickly. If they are going to make this change, they need to at least get rid of early retirement in order to keep the system solvent. Even then, it will cause a lot of damage.

  4. leslie 2015-09-04

    spencer-solvency, eh? valid concern. ever been injured on or off the job (temporary or permanent)? oh, and someone here indeed has a neighborhood where he/she is worried about all those boater-cheaters (if they are in fact that) drive by.

  5. grudznick 2015-09-04

    Don’t drag me into this mess. I cannot begin to comprehend the math that must go on here. But obviously, if the fat-cat administrators union is behind this it can be up to no good. No good at all.

  6. SuperSweet 2015-09-04

    Just rehire in another state and avoid all the brouhaha.

  7. mhs 2015-09-05

    R/R is a pro CURRENT employee process. It puts long-term retirement benefits at risk by artificially messing with retirement dates vs. the still-employed contributors to the retirement fund. As we’ve found with the social security (imaginary) trust fund and a host of failing public pention funds, messing with the actuarial assumptions just a little bit makes for a huge potential risk down the road.

    SDRS is for retirement savings: keep it that way.

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