December 30, 2008

Retirees Back Again

Justin Katz

Rhode Isand commissioner of higher education Jack Warner has an op-ed in today's Providence Journal "Explaining college retirees' return." This is the only new, mitigating factor:

The Rhode Island Board of Governors for Higher Education, through its predecessor, the Board of Regents, was given the authority to establish its own retirement plan in 1967 (Rhode Island General Law 16-17.1).

Higher-education employees who participate solely in this plan are not members of the state retirement system.

Under the provisions of this plan (known as a 403(b) plan), the public institutions of higher education can legally bring back any member of the system at any time without any restrictions.

There are restrictions on members of the state retirement system, also known as ERS. While there are some ERS employees who work in higher education, the large majority of higher-education employees have 403(b) plans. The 403(b) plans are defined-contribution plans, which makes them very different from the defined-benefit state pension plan. A 403(b) is more like the private-sector 401(k) plan in that employees contribute a minimum of 5 percent of their salary and the state makes a contribution of 9 percent as an employee benefit (much the same way a private-sector employer contributes to an employee's 401(k) plan).

So, in essence, a higher-education employee who retires on a 403(b) plan is largely receiving a payout of his or her own money invested over the years of employment, not a continuous payment from the state under a state pension.

Well, his own money plus that 9% public contribution. In any case, the practice of rehiring employees immediately after they've retired still leaves a sour, contemptuous of the regular working stiff, taste in the mouth.

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“In any case, the practice still leaves a sour, contemptuous of the regular working stiff, taste in the mouth.”

What I guess you are also saying is that you take issue with the Rhode Island Board of Governors for Higher Education saving $11 million and that anyone working for State of Rhode Island should not receive a retirement benefit either taxpayer supported or individually supported.

Under your rules for retirement or department savings, I wouldn’t work for you, associate with you, move my business into your state or even conduct any business in your state and neither would I recommend people to partake of your educational system.

Posted by: Ken at December 30, 2008 4:23 PM

If you want to balance the budget, tax the churches and colleges, either property tax, or some other variant.

They've lived high off the hog for long enough in this state.

Posted by: Erik D. at December 30, 2008 4:30 PM

Boy, Ken, that may me a new Anchor Rising record for the rush to a ludicrous extreme. So some extent my quick-posting may deserve some blame, so I've added a clarifying phrase to the post.

Even so, I think it was clear what "practice" I meant: That these people took large retirement incentive checks, in some cases preserved retirement benefits that were soon to expire because they aren't affordable, and then returned immediately to work. Even if it's true that the university was able to hand out over $5 million and still save $11 million, something isn't right about the methods.

Posted by: Justin Katz at December 30, 2008 5:05 PM


The “practice” you refer to is a widely accepted incentive that is used in private business and government service both state and federal across the nation when implemented entices employees to retire early.

A friend on mine who took a similar incentive package retired early because after doing the math he discovered he was loosing $37 a day by going to work full time to reach normal retirement. The incentive is best for employees near regular retirement.

The RI Board of Governors voted to phase out that incentive program in September 2007 with a sunset date of June 2008. The program began in 1997 so this is not new or a one time deal.

I don’t believe there was anything under handed about what RI Board of Governors did and certainly no one abused the system or broke any laws.

Those retirees that returned to work as part time employees with no benefits did not break any laws and are providing continuity of services are a far lower rate than hiring someone full time with full benefits.

Are you saying those of us who retire should sit home become obese and medical drag on the society, community and children letting our industrial knowledge go to waste?

Ooops! We can’t retire because you have indicated you are against any type of private or government retirement plan! Work until you die ethics in RI and don’t forget to have your estate pay the RI death tax for you dying!

Posted by: Ken at December 30, 2008 5:56 PM

You were doing well right up until you returned to the falsehood that I'm against all retirement plans.

I'm also not against people's occupying themselves however they wish, after they retire, but when public institutions give the impression that they've worked with a group of retirees to get them in under the wire of an expiring benefits program, I say, yes, something immoral is going on, and immoral is not the same thing as illegal.

Posted by: Justin Katz at December 30, 2008 6:16 PM


Well what retirement plan do you support?

So far based on your posts you’re against private 403 (b) which is almost the same as a private 401(k). You’re against the State of RI retirement system even though employees and teachers pay some of the highest percentages into system in the nation with one of the lowest rates of returns.

Were you the fly on the wall listening and copying all the words down (first hand knowledge) when these as you allege immoral dealing were conjured up between the RI Board of Governors and each one of the returning retirees because if you were that fly then by your early silence are part of immoral dealings.

On the other hand, if you are grousing because of what was written in the PROJO newspaper with perceived irregularity and you decided to run with it to make a morality issue out of it, you are living in a glass house and throwing rocks.

Posted by: Ken at December 30, 2008 9:53 PM

I'm not against retirement plans at all. I'm against manipulation of public systems, which is something in which Rhode Island specializes.

Posted by: Justin Katz at December 30, 2008 10:07 PM


“I'm not against retirement plans at all. I'm against manipulation of public systems, which is something in which Rhode Island specializes.”

So by your answer you are implying, you were the fly on the wall with first hand knowledge!

Posted by: Ken at December 30, 2008 10:52 PM


I previously taught at a private college. They paid 9% of my income into my retirement fund (403b defined contribution, not defined benefit) if (and only if) I agreed to pay at least 5%.

Now, at a public college, they pay 9% of my income into a retirement fund if (and only if) I agree to pay 5%.

It was a smart program then (for me, and for society) when it was a private college. It's a smart program (for me, and for society) at a public college.

I don't get what your problem with this is.

Posted by: Thomas Schmeling at December 31, 2008 12:42 AM

Again: My problem is with the fact that they — meaning not just retired professors teaching a course or two, but regular staff — took special deals to retire and then, without missing a beat, eased back into their old positions.

Posted by: Justin Katz at December 31, 2008 5:31 AM

Justin, I'd like to clarify something, if I may. No one has "eased back into their old positions." The staff that retired and were brought back have returned on a part-time basis. No one is working 40 hours weeks. They are working fewer hours and being paid at an hourly rate. They are not on salary.
(Incidentally, of the 44 retirees who have returned on a part-time basis, 21 are staff and 23 are adjunct faculty being paid $3,000-$4,000 on a per course basis.)

For example, the director of institutional research at RI College returned after retiring and is now working part-time as a consultant. Institutional research was a one-professional department at RIC. (That is the case with many departments; our ranks are painfully thin.) Without the director's return, part-time, RIC would have no institutional research capacity at all. It made more sense to bring her back on a part-time basis than it did to hire a full-time IR professional and pay salary, benefits, contribution to retirement plan, etc. That would have cost upwards of $80k at a minimum.

Know, too, that what the institutions are trying to achieve here is being able to cope with $30 million in budget cuts over the last calendar year and still provide the necessary services for students who are paying tuition to attend their institutions.

Posted by: Steve at December 31, 2008 10:17 AM
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