A loophole in state retirement law has allowed retired Western employees to come back to work and earn a salary while continuing to collect pensions.

Seven employees who earned salary in 2009 were able to collect pensions at the same time, according to records obtained from the Washington State Department of Retirement Systems.

Employees who have returned to work after retiring have been able to boost their incomes, in some cases up to 40 percent with the addition of pension benefits.

Western did not violate any state laws when rehiring retired former employees.

A June 26 article in the Seattle Times reported that about 2,000 public employees statewide collected both wages and pensions at the beginning of this year.

David Doughty, assistant director of public safety, is one of three retired employees who returned to Western full time.

He said the state and the university did not lose money by rehiring him while he collected pension. Since his benefits were guaranteed, he would be getting his pension whether he returned to Western or not. If another person had taken his job, the university would still have to pay them.

He said he is simply being paid for the work he has done. In addition, Western has been able to keep a highly experienced employee, he said. 

“I’m not getting paid twice for doing one job. I’m getting paid for the 30 years I put in, and I’m getting paid for the work I’m doing now,” Doughty said. “I benefited personally, no doubt about it, but the university benefited too.”

Human Resources Director Chyerl Wolfe-Lee said Western has its own retirement plan in addition to the state-run plan. Western employees are given a choice of which one to pay into, as long as they meet eligibility requirements.

Once employees retire under the university plan, they cannot be eligible for it later on. However, there is no system in place to track people who retire under the state plan, then come back to work and pay into the university plan, she said.

Specific Western cases

Doughty is one of the highest-paid Western employees who have retired and been rehired since 2001. The other two retirees who returned full time are James Tragesser, a database administrator in the administrative computing department, and Dennis Demorest, who also works in the computing department as a system analyst.

Demorest and Tragesser both retired on March 3, 2002 and were rehired on April 3, 2002.  Demorest receives a pension of $34,644.84, and Tragesser collects $41,197.32, according to the DRS. In 2009, Demorest’s salary was $72,905.04 while Tragesser earned $82,409.04.

Both Demorest and Tragesser declined to be interviewed for this article.

Doughty retired from his full-time position in September 2004. He began receiving an annual pension of $45,107.76 from the state on October 1, 2004. Six weeks after his retirement, Doughty was rehired to the same position. In 2009, his salary was $63,594.

Doughty said when he retired he had been paying into his state retirement plan since he first started working at the university in 1974. After 30 years of work, he was eligible to receive his pension. If he held off retirement he would be unable to continue paying into his pension at the same level as before because his benefits maxed out after 30 years of contributions.

“The smart thing for me personally, financially, would be to retire and then go to work [and] have two incomes,” Doughty said. “I’d be getting a paycheck and a retirement check. It’d be a pretty good move for me.”

So he retired from Western and began to look for a new job. He was offered a position as chief of police in the town of Union, Ore. University Police began accepting applicants to fill Doughty’s vacant spot.

The terms of his former position changed. Instead of working year round, the new assistant police chief would work just nine months out of the year and have the summer off. The required experience for the job was also reduced.

Doughty said he changed his mind about moving and applied for his former job. There were two other applicants for the position. He said he was given no guarantees by any of his superiors or human resources staff that he would be able to get his job back.

“They made it real clear to me,” Doughty said. “[Human Resources] was very good about making sure I understood that there was absolutely no guarantee, and I realized that.”

He was rehired to his current position on November 16, 2004. 

Retirement legislation history

In 2001, the state legislature decided to allow retirees to return to work in response to a teacher shortage. Public employers were not allowed to attract job applicants with salary increases, so pensions were used to provide financial incentives, according to a 2003 report by a state committee on pension policy.

Employees were able to return to work full time without a suspension of their retirement benefits.Retirees who were rehired could receive a full salary in addition to their retirement allowance.

The report found that the expansion of post-retirement work actually increased the cost to the state retirement system.

Dave Nelsen, legal and legislative services manager for the DRS, said the 2001 legislation was an attempt to keep teachers in state.

“Because of the rules in place it was difficult for these folks who were moving out of state,” Nelsen said. “The purpose of the change in 2001 was to allow folks to come back to work and work more hours before their pensions would be impacted.”

Lawmakers also added provisions in 2001 that forbid verbal agreements between employers and employees to return to work after retiring. Another measure, which was voted down, would have forbidden rehiring a retiree if there were four or more applicants for the job.

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