News Section: Opinion
"DROP" Retired Employees from the Labor Pool
Programs like DROP were designed to provide a path for younger, and presumably cheaper, public employees to move up, while those who had become eligible for a retirement pension were given a sweetener in order to clear the way. In theory, there are multiple benefits to such policies in an economy that suffers from overcapacity and the high unemployment it helps to promote. But in Florida, it has too often been used to pad paychecks for the well-connected at the expense of the taxpayer. Cash-strapped governments should think long and hard about spending extra taxpayer money to keep retirement-eligible employees on the public payroll.
I find it hard to believe that DROP is saving Florida taxpayer's money. First off, the state has refused to close the ridiculous "double-dip" loophole that allows participants to come back to public employment after six months of "retirement" without giving up their monthly pension benefit. Too often, high-ranking and highly-paid FRS retirees have gone back to their very same position after such a leave, earning six or seven grand in monthly retirement payments on top of their six-figure salaries. This, we are to believe, is because there simply was no one else qualified to perform the tasks – so much so, that it's a bargain to pay them twice.
On Tuesday, the Manatee County Commission will almost definitely approve a proposed renegotiation of county administrator Ed Hunzeker's contract that will cost taxpayers several hundred thousand dollars. As Hunzeker's close ally, board chair Larry Bustle put it, "this is not the time to lose Ed." There is still nearly two years remaining on Hunzeker's contract, which runs into November of 2014. Hunzeker, 65, was scheduled to retire a couple of months prior, at the end of his 5-years in DROP, during which he's already technically "retired." He would have received a $337,000 payout and over six grand a month, because DROP holds what you would have earned in retirement benefits over those five years in a trust and gives you 6.5 percent interest on it.
Like I said, that perk is there to lure eligible employees into retirement by letting them earn their benefit for the last five years they're working – provided they leave. So if you don't go into full retirement at that point, you don't get the money. Hunzeker's choice was his current $185,000 a year package to work, or over three hundred grand in cash and more than six thousand a month to golf. Originally, he liked the second deal. Bustle is framing current developments as the county needing to entice Hunzeker away from his planned retirement, and therefore in no position to expect him to go on earning his current deal, considering what he'd be giving up. So the contract Bustle "negotiated" calls for more than $60,000 in upfront increases to Hunzeker's compensation package, plus a lot of unknown variables like the potential for considerable payouts involving accrued leave time that will likely go unused.
Hunzeker will get 182 hours of vacation, 120 hours of sick time and another 120 hours of "compensatory leave" for any work he has to do "in excess of normal work hours," which I'm sure will leave other county management-level employees who are routinely expected to do such work merely as part of their salaried employment less than thrilled. Each class of leave has its own rules on how much can be rolled over and cashed out, but the potential cost for payouts is significant, especially considering he's got about 10 1/2 weeks each year all told.
The county will also be on the hook for the difference between the contributions paid to FRS while he was in DROP, and all of the retirement contributions owed on his salary for that period (both employer and employee) as an active member, plus 6.5 percent interest compounded annually – another considerable expense that has not been discussed. All of this is to keep a 65 year-old administrator on the job – one that Bustle claims is underpaid.
I find it very hard to believe that in this economy, the county couldn't find a highly-qualified administrator for Hunzeker's current cost. But for some reason, the board is dead set on making sure Hunzeker sticks around some 19 months before he's even scheduled to leave, seemingly at whatever premium that requires. My hunch is that Mr. Hunzeker simply decided he wanted to stay on the job and both he and the board members he is closely aligned with realized there was an opportunity to make a case for a big raise.
Meanwhile, the school board is awash with Superintendent candidates who will likely be paid closer to Hunzeker's current salary, which was on par with former Manatee Schools Superintendent Tim McGonegal's. Not surprisingly, many of the candidates in the school board's current search for McGonegal's replacement are also in DROP, and the board would be well served to consider the leverage such a hire might have were they to come on and then the board desired to keep them beyond that DROP date.
Let me go out of my way to say that this commentary is not a knock on FRS, which provides a fair and equitable retirement for many Floridians, and it should be noted that the average recipient receives only about $1,600 in monthly benefits. However, it's the more egregious minority of examples that tend to engender bad will toward public sector pensions. The state would be well-served to close the double-dip loophole and prevent DROP participants from staying in public service once they've entered the program. One could argue that local governments should be free to pay the freight when they feel they need an employee to stay on, but too often it's the interconnected boards and bureaucrats pushing through sweetheart deals like Hunzeker's with no public input.
In the bigger picture, retirement eligible employees forced to stay in the work force to either supplement meager retirement savings or pay for health care until they are Medicare eligible, puts excess competition into the labor pool, lowering wages and increasing unemployment. In a depressed economy, little can be done to change that. But when a retiree can already bring home twice the area's median household income in pension benefit, in addition to a mid-six figure cash payout, going out of your way to keep them in the labor pool at a significantly increased cost would seem to require more justification than has been offered in this case, where testing the market for less costly replacements was never even considered. A bunch of so-called "conservatives" showing so little regard for the public purse doesn't pass the mustard. Manatee County citizens should demand more.
Dennis Maley's column appears every Thursday and Sunday in The Bradenton Times. He can be reached at firstname.lastname@example.org. Click here to visit his column archive. You can also follow Dennis on Facebook. Sign up for a free email subscription and get The Bradenton Times' Thursday Weekly Recap and Sunday Edition delivered to your email box each week at no cost.
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