Faced with what city officials called the “most severe economic recession since the Great Depression,” the Rocklin City Council approved a complicated plan last year that encouraged several top city officials to retire early and then return to work in their old jobs on a part-time basis.
The practice, common in state and local governments, is known as double dipping. In the right situations, it can save money while retaining experienced workers.
But Rocklin didn’t just retire workers and bring them back at a lower cost. It boosted retirement pay for those same workers – or a bonus on top of a bonus on top of a bonus, a kind of triple dip.
In the short run, the city of Rocklin saves $700,000 by having its city manager, police chief and other top officials retire early and then come back to work part time the very next day. Not only will the city pay less in salary to the part-timers, because they are “retired’ the city doesn’t have to pay their health and retirement benefits.
But over the long run, the city will end up paying out fatter pensions over a longer period of time for those same workers. That’s because Rocklin granted them enhanced pensions in exchange for early retirement, specifically credit for two years of extra service they never actually worked.
To pay for those extra two years, the city will have to fork over an additional $758,698 to the state retirement fund over the next 20 years. In the case of City Manager Carlos Urrutia, the extra two years will cost the city $134,984. Police Chief Mark Siemens’ extra two years will cost even more, $178,277.
Besides fatter pensions, Urrutia, Siemens and the handful of other Rocklin retirees who’ve returned to work part time will earn substantially more this year than they did their last full year on the job. Urrutia, a primary beneficiary of the scheme, sold it to the Rocklin City Council. Under it, he will collect $309,000 in salary and pension this year, almost $80,000 more than the $230,000 in base pay he earned in 2009.
Faced with a drastic drop in revenue, Rocklin City Council members say they voted for the pension scheme to save money and avoid layoffs this year. But in a year or two when the part-timers are replaced by a new full-time city manager and a new full-time police chief, the temporary salary savings will evaporate while the extra pension payouts continue to flow.
In the long run, the city does not save money. It merely pushes higher retirement costs out into the future, when other City Council members will have to deal with the consequences. By spreading the cost of the enhanced benefits over 20 years, the city has assured that those costs will be borne by future taxpayers who derive no benefit.
That’s unfair. It’s worse than that. With so many government and private sector workers facing layoffs and furloughs, some top officials are using their power, influence and knowledge of arcane pension rules to take advantage of troubled times.