By Mike Baker Associated Press
SEATTLE — A couple years after retiring as Lakewood fire chief at age 58, Paul Webb returned to the profession and his former job title — this time at Orting Valley Fire and Rescue.
Hired under a contract without some of the typical employee benefits, Webb’s arrangement at the end of 2009 allowed him to draw more than $100,000 in annual pension payments while also earning up to $90,000 in yearly pay. It was an interim position, according to his contracts. He stayed in the job for three years.
It wasn’t long before six of Webb’s past colleagues followed similar paths, retiring and taking jobs in various contract positions, according to records.
In recent years, Washington lawmakers changed laws to crack down on retire-rehire arrangements, seeking to prevent pensioners from double-dipping when they return to similar government jobs.
But The Associated Press found that gaps in the special rules created for law enforcement officers and firefighters have allowed them to draw salaries alongside their pension. And those retirees generally retire much younger and with much larger retirement plans than teachers or other government workers.
According to local and state records obtained by AP under public records law, dozens of public safety retirees around the state became contractors. Some took part-time jobs such as polygraph consultants or pilots or instructors, while others returned to prominent managerial positions.
Other retirees in those two retirement systems reserved for law enforcement officers and firefighters — called LEOFF-1 and LEOFF-2 — took jobs that had them work slightly less than full time or with slightly less benefits, also allowing them to bypass rules that would have halted pension payments.
Local governments gain from the arrangements because officials can hire someone with experience at either a discounted pay rate or without having to cover some typical benefits.
DuPont Mayor Michael Grayum recently worked closely with the Department of Retirement Systems to ensure the city was following the rules in the hiring a of a police chief who had retired from a different department. The city didn’t seek out pensioners, but three of the top candidates for the job were retirees.
“We were able to hire more experienced leadership for a lower cost than we have historically,” he said. The new chief is able to keep his pension because his job is only 35 hours a week instead of 40.
The Legislature established retire-rehire rules for many government workers in 2003 due to concerns about the frequency and cost of those arrangements. In 2011, lawmakers placed even tighter controls on those deals, closing what some political leaders derided as “loopholes.”
Rules for members of the newer LEOFF system were established in 2005 with the intent of preventing retire-rehire arrangements in similar jobs but designed to allow transition to less-demanding occupations in government.
Steve Nelsen, executive director of the LEOFF-2 Retirement Board, said the rules weren’t meant to allow retirees to return to work in similar LEOFF jobs. “This was not the intent of the bill,” Nelsen said. He said several board members have expressed concern about the DuPont case that surfaced in the wake of a previous AP story and that the board is now exploring the issue.
LEOFF rehire rules revolve around the issue of eligibility. Workers are eligible for the LEOFF system if they are fully compensated in full-time positions as a law enforcement officer, firefighter or supervisor. A retiree who gets rehired into a similar LEOFF-eligible position would have their pensions benefits halted.
But if a LEOFF retiree returns to a position that’s less than full-time or not fully compensated, they technically would not qualify for the system and can avoid disruption of their benefits, according to the state.
Some have seized on that potential.
— In Maple Valley, in King County, Larry Rude was hired in 2007 to a contract position as assistant fire chief. He started in the new position the same day he retired from the state system, according to records.
For three years, Rude earned more than $100,000 a year in salary — plus other benefits — along with a similar amount in retirement payments. Rude said he was allowed to draw pension and salary because he was only working in a part-time position, saying it “wasn’t very many” hours a week.
Rude said he didn’t have a specific number of hours that he typically worked, although the final contract he signed said Rude could work up to 159 hours a month — an average of about 37 hours a week.
— In Soap Lake, in central Washington, officials chose Glenn Quantz as an interim police chief last year, bringing him on as a contractor. Quantz had retired in 2009 at age 53 from the Thurston County Sheriff’s Office.
Mayor Raymond Gravelle told state officials in a letter obtained by AP that Quantz was working 32 hours a week — making it a part-time job that wouldn’t disrupt his benefits. However, Quantz is earning the full salary of the police chief and the same amount as the previous chief, according to records provided by the city’s finance director.
Quantz declined to comment about his situation. Gravelle said the city is small enough that Quantz doesn’t need to work full-time, but he said officials will be going back to review records to ensure they are compliant.
— In the Orting Valley case, documents show Webb consulted with the state about his rehire transition because he didn’t want it to disrupt his retirement benefits. While Webb was working in a full-time post, a state official told him that there would be no impact because he didn’t qualify for sick leave cash-outs and some other benefits.
“It was definitely full-time, but it wasn’t fully compensated,” Webb said in an interview.
Dave Nelsen, the legal and legislative services manager at the Department of Retirement Systems, said it’s not clear what the review entailed at the time but said the issue of what qualifies as “fully compensated” is subjective and could be interpreted differently by other officials.
— At North Highline Fire District in the Seattle area, Steve Marstrom was hired to a contract as the administrative chief. Marstrom had retired from the Lakewood Fire District more than a decade before at age 50.
Marstrom’s contract said he did not have set hours but would be paid $8,000 a month. He could also get $1,500 a month for housing. Marstrom said his role at North Highline was strictly an administrative one, since he was supervising personnel and not participating in any firefighting activities.
Because he wasn’t personally involved in firefighting, Marstrom said the role didn’t qualify for the LEOFF system so it wouldn’t disrupt is LEOFF benefits.
Other LEOFF retirees in the system managed to get hired in similar roles that are technically in other pension systems. Some fire officials transitioned to become fire inspector or deputy fire marshal. Police officials transitioned to work as a “violence prevention” leader or agency security manager.
Depending on the circumstances, state officials could decide that workers hired as contractors should have been reported to the state as actual employees, potentially leading to a halting of pension payments. By hiring as contractors, however, the employees are more difficult for state pension managers to track.
One worker in the larger group of Lakewood retirees who became contractors had a part-time salary of $90 per hour, while another was hired back as the department’s full-time “emergency preparedness coordinator.” Nelsen, the retirement system manager, said the agency was further examining the cases of Rude, Marstrom and Webb.
Earlier this year, after an AP report that described the case of former Lakewood official Greg Hull as part of a larger story about how some workers boosted their pensions with pre-retirement raises, the state audited files related to Hull and determined that he had been improperly classified as a contractor in his newer job at DuPont.
Retirement system managers are now seeking to recover more than $550,000 in excess pension payments from that city.
Retirees in the two systems dedicated for law enforcement officers and firefighters have different rules than most other retirees. Many retired teachers, for example, would be unable to work more than 867 hours a year in a government job without having their benefits disrupted, but law enforcement and firefighter retirees could conceivably work more than 1,800 hours a year.
Law enforcement and firefighters also get more leeway even though their pay and benefits are typically much greater than other government workers. The median worker who retired over the last 10 years into a LEOFF system currently gets about $45,000 per year in pension payments. By comparison, the median retiree into the teacher pension systems has a benefit about half that size — $24,000.
Despite the much larger pension values, the median LEOFF retiree departed the job at age 56 while the median teacher retiree worked until age 61.