Senate moves to restrict retire-rehire
Posted Wednesday, January 27, 2010
The Senate endorsed changes Wednesday that will make is much
more difficult for school districts to hire employees who have ever retired
from a public employer.
The body approved the measure on a 24-10 vote, giving it the two-thirds
majority required for passage.
The legislation, filed as SB 18,
creates a mandatory three-month "clean break" between retirement and
employment and levees financial penalties against individuals who retire and
return to work in the public sector.
Sen. Tom Nelson, R-Lead, introduced the legislation, calling it "necessary
legislation" to provide for the stability of the state retirement system.
The practice costs the fund $5.2 million annually and, as currently permitted
in state law, risks IRS intervention and sanction, he said.
Not all lawmakers were willing to accept the recommendations
of the South Dakota
retirement system.
Sen. Gene Abdullah, R-Brandon, challenged the IRS’s interest
in sanctioning the system, and made repeated calls for documentation to support
Sen. Nelson’s claim.
Other lawmakers, led by Sen. Julie Bartling, D-Burke, tried
to remove the waiting period and individual penalties. She urged her lawmakers
to keep return-to-work provisions in place, arguing that the restrictions would
rob school districts and other local government entities of qualified
employees. Her amendment failed, gaining support from just 11 lawmakers.
The legislation now moves onto the House.
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Committee moves to nix retire-rehire
Posted Thursday, January 21, 2010
Lawmakers have given initial approval to sweeping changes to South Dakota law that allows public employees to return to work after being retired.
Members of the Senate Retirement Laws Committee voted 3-2 Thursday evening to pass SB 18, legislation that will likely dramatically reduce a practice referred to “retire-rehire” by deterring public employers from hiring retirees and penalizing individuals who return to work following retirement.
Rob Wylie, executive director of the South Dakota Retirement System, asked lawmakers to adopt the changes. He told lawmakers that the proposal is designed to compensate for the costs associated with current return to work laws – a sum he estimated at $5 million annually. The changes are designed to prevent possible investigation by the IRS, Wylie said.
If the legislation passes, there would be a mandatory three-month waiting period before a retired employee can return to work. Individuals returning to work after three months would lose 15 percent of their anticipated benefit and future employer contributions – both would be paid to the South Dakota Retirement System.
ASBSD Chief Financial Officer Bill Lynch testified in opposition to the measure, arguing that the proposal infringes on a local school boards' ability to make hiring decisions. Lynch told lawmakers that current and future teacher shortages will challenge school districts, adding that school boards need all the tools available to keep qualified educators.
Joining in opposition were Jim Holbeck and Wayne Semmler, two superintendents who questioned the motives of the legislation. Both administrators argued that the changes were brought about under false pretenses and would drive educators out of state.
Two members of the committee – Gene Abdullah, R-Brandon, and Sandy Jerstad, D-Sioux Falls – were swayed by opponent testimony. But Tom Nelson, R-Spearfish Lead, Corey Brown, R-Gettysburg, and Kathy Miles, D-Sioux Falls, jointed to move the measure along. No legislators took time to explain their position on the vote.
The bill moves next to the Senate.
EDITORS NOTE: An observant reader corrected the citation on Sen. Tom Nelson. The Mayor of Lead likely doesn't live in Spearfish. Right. Thanks for reading, and for keeping us honest.
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Committee to consider retirement system changes next week
Posted Friday, January 15, 2010
The Senate Retirement Laws Committee has scheduled a hearing for Jan. 21 to consider a collection of legislative proposals that will reshape return-to-work rules, limit the cost-of-living adjustments for retirees and eliminate the optional spouse protection provision.
The package – found in SB 18, SB 19 and SB 20 – was endorsed last November by the South Dakota Retirement System (SDRS) Board of Directors. According to SDRS, the changes are necessary to improve the long-term stability of the system.
Changes to the return-to-work provisions, also known as retire-rehire, are certain to draw the most attention.
The return-to-work changes (SB 18), create a mandatory three-month break in service for anyone who retires and then is rehired into any employer that pays into SDRS. The bill also contains several punitive provisions related to retire-rehire, including an SDRS surcharge to employers for allowing a retire-rehire.
SDRS officials have said the limitations to retire-rehire will make the system IRS audit-proof and save money. ASBSD supports the employment decisions of local school boards and opposes the changes to retire-rehire policies.
The package (SB 20) also includes revisions to the cost-of-living adjustment for retirees. Currently, benefit payments increase at 3.1 percent annually due to the adjustment, also referred to as COLA. If the legislation passes, COLA increases will be 2.1 to 3.1 percent each year, depending on CPI-W.
The final piece (SB 19) prohibits new enrollments in a program that allows SDRS members to purchase an optional spouse protection plan. For individuals who currently buy into the program, the contribution will increase to 1.5 percent.
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