Retirement cleanup: Loophole? | Arkansas Blog

Wednesday, February 23, 2011

Retirement cleanup: Loophole?

Posted By on Wed, Feb 23, 2011 at 8:57 AM

Rep. Allen Kerr has been lauded for his aggressive campaign against state employee double-dipping. Much of what he highlighted was inexcusable and needed repair, though some steps had already been taken legislatively before he undertook his publicity onslaught. In every branch of government — judiciary, executive, legislative, higher ed — employees have fake-retired for brief periods and immediately returned to the same jobs (no meaningful job search held), drawing paychecks and pension. So legislation has been introduced to make sure that doesn't happen again, primarily by saying those who return to work must forfeit retirement payments when they are back on payroll.

So what aboutHB 1040 by Kerr and several other Republican legislators? Is it perfect? Not if you think it's OK to exempt certain employees. George Hopkins, director of the Arkansas Teacher Retirement System, opposes the legislation as written. He's been calling the bill out on Twitter this morning, in response to a letter to the editor in support of the bill and its prohibition on a return to covered employment by members of the teachers retirement system. Among Hopkins' points:

* HB1040 exempts a select group of members "chosen" by the sponsor from the application of the prohibition. Always look at an exemption.

* Who is exempted: all colleges, some state agencies, and ANYONE who retires between January and July, 2011. Policy justification for this?

* Another problem is the bill waters down the STRICT ATRS enforcement of the termination separation. The bills encourages violations.

* HB1040 suspends future benefits when a violation is discovered. ATRS requires repayment of all benefits and applies interest on the benefits,

* The weak enforcement is insufficient to comply with IRS requirements of correction of the violation. This puts ATRS at risk with the IRS!

I've asked Kerr to respond.

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