States expand lucrative pensions to more jobs

By Thomas Frank, USA TODAY

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Special retirement benefits once reserved for police, firefighters and others with dangerous jobs are now being given to tens of thousands of state workers employed as park rangers, foresters, dispatchers, coroners, even highway laborers, museum guards and lifeguards.

The trend will add heavily to the $70 billion that state taxpayers owe state retirement funds each year and is costing states such as Florida and Maryland $15 million to $30 million annually, a USA TODAY analysis shows.

Thirty-one states have passed laws since 2000 that expand the range of workers who can retire when they turn 50 or 55 or after working 20 or 25 years, then collect special pensions that will pay some an extra $1 million or more in retirement. The pensions are enhanced because they are usually based on a higher percentage of a worker's salary than pensions for ordinary state workers.

"There's been a massive increase in the scope of who qualifies for (early) retirement benefits," said William Eggers, public-sector research director at Deloitte consultants. "They're supposed to be for people who are getting shot at and running into buildings that are on fire."

In Illinois, where highway maintenance workers earn up to $148,000 a year with overtime, early enhanced retirement can pay a $75,000-a-year pension at age 50 after 25 years on the job. That adds up to $2.2 million if the retiree lives to age 80 — or $1.2 million more than if the person had been in the state's regular retirement plan. A 25-year Florida crime lab analyst can get a $60,000 pension at age 50 and collect $1.8 million by age 80, compared with $575,000 if the person was not in the state's "special-risk class."

People in dangerous public safety jobs have long had enhanced early retirement to encourage them to make way for younger workers as their physical abilities decline, and to compensate them for lasting physical and mental damage.

Over the years, other state workers have lobbied elected officials heavily to be included to those plans, or have won the benefits via labor negotiations, arguing that they have similar responsibilities and stress as police. The plans now include livestock inspectors, lottery agents, electricians, elevator repairmen, coroners, sewer workers, magistrates, motor-vehicle inspectors, airplane pilots and union executive directors. Wildlife officers have early retirement in 25 states and liquor-control agents have it in 15 states.

"Everybody wants to be in our special plan," said Christine Gianopoulos, deputy executive director of Maine's retirement system. The Maine "1998 Special Plan" provides early retirement for 15% of state workers, including fisheries and wildlife officers, airplane pilots, liquor inspectors, and oil and hazardous materials emergency response workers.

Taxpayers bear added cost

Early retirement is usually far more costly to taxpayers because retirees collect a pension for additional years and are not paying into the state pension system as full-time workers.

"You could easily end up spending more on public-safety workers while they're retired than when they're working," said North Carolina State University retirement expert Robert Clark, author of A History of Public Sector Pensions in the United States. "If these folks are starting work in their 20s, they are eligible to retire in their late 40s, early 50s and get a pension and health insurance for the rest of their life."

The growth of early retirement has helped fuel massive deficits in some of the nation's largest public pension plans, including the main California and Florida retirement systems.

The deficits led 36 states in the past two years to take cost-control steps such as requiring workers to pay more toward their pension or delaying when they can retire, said Ron Snell, a pension expert at the National Conference of State Legislatures. "This is unprecedented," he said.

Enhanced early retirements are "one of the biggest cost drivers" in state pension plans, Eggers of Deloitte said.

'A ticking time bomb'

Florida exemplifies the cost. Elected officials have expanded the state retirement system's "special risk class" five times since the 1990s, adding prison medical workers, paramedics and forensic specialists. "Special risk" workers retire five to seven years earlier than regular workers and get a lifetime pension after 20 years on the job equal to 60% of their salary. A regular worker retiring after 20 years gets a pension equal to 32% of his or her salary.

The additions helped boost the special-risk class to 75,135 workers from 48,188 in 1993, and spike taxpayers' bill for special-risk pensions to $903 million this year, state records show. That's more than double the $383 million cost in 1993. Meanwhile, the number of workers in the "regular" retirement plan has increased only slightly and the cost to taxpayers rose to $2.4 billion from $2.1 billion in 1993.

"Our workforce is shifting into special risk. That's a ticking time bomb," said former Florida state Rep. Juan Zapata, a Republican who sought to restrict entry into the special-risk class. "It has been morphed into something that was not its original intention — into this system that everybody tries to justify being in."

In 10 other states where lawmakers have expanded early retirement eligibility since 2000, the number of workers in those plans increased by twice as much as the increase in workers in regular retirement plans. The states are Arizona, California, Iowa, Maryland, Minnesota, Montana, New Mexico, South Carolina, Vermont and West Virginia.

In California, the number of workers eligible for enhanced or early retirement jumped to 77,394 from 59,685 in 2000, while the number of workers in regular retirement plans fell to 170,942 from 175,495, state records show. Enhanced early retirement plans cost taxpayers $1.5 billion this year, up from $385 million in 2000, state records show. That cost is only slightly lower than the $1.8 billion cost of regular retirement this year, even though the regular retirement plans have more than twice as many workers.

Florida state Sen. Mike Fasano co-sponsored a measure in 2005 that shifted 386 forensic specialists into the special-risk class after the specialists asked for his help. Their jobs seemed worthy of enhanced early retirement because the workers "show up to very horrific crime scenes at times" and must prepare evidence to help prosecutions, said Fasano, a Republican.

A 2005 legislative report on Fasano's bill reached a different conclusion, saying that unlike other special-risk workers whose physical skills deteriorate with age, forensic specialists "have their skills increase over time since forensic science is an academic discipline."

Special-interest group pressure

Florida addressed its pension shortfall with a law this year requiring all employees in the state pension system to pay 3% of their salary toward their retirement, the first time the workers have had to contribute. Zapata sought in 2010 to shift thousands of workers from the special-risk class to the regular class, but quickly withdrew his bill after getting threatening phone calls. "You try to explain, look, what's happening here is unsustainable," said Zapata, who retired last year due to term limits. "Unfortunately, the conversation didn't go too far because the (state-worker) unions did a great job of shutting everything down."

Many employee groups and unions have made enhanced early retirement a major goal, particularly as states have faced growing budget deficits that make salary increases unattainable. Unlike salary hikes, the added cost of enhanced early retirement is spread over decades, and can be ignored in some years if state officials simply decide to pay less into a retirement fund than their financial analysts urge.

"It's really a lovely way for states to give employees something they could pretend isn't costing anything," said Richard Greene, a New York City government-finance consultant. "There's a domino effect because one group may get included (in a public-safety pension plan) and that leads another group to want it as well. Politically once one group is included, it's then hard to say no to the second."

In Illinois, roughly 1,000 office workers at corrections department headquarters can get enhanced early retirement because of a state law that gives the benefit to any department worker "who has daily contact with inmates." The office workers successfully argued years ago that they had daily contact with inmates who did maintenance work at the headquarters building, said Tim Blair, executive secretary of the state retirement systems.

"It's mind-boggling to me now that they included all of them," Blair said. A 2005 law barred newly hired clerks from getting early retirement.

Maryland officials have enacted 14 laws since 1996 adding 1,500 state workers to early-retirement pension systems, including campus police, airport rescue workers and 650 laundry, dietary, maintenance and supply workers in state prisons. The laws will cost taxpayers roughly $16 million this year, according to estimates by the state legislature.

Maryland state Sen. James DeGrange, a Democrat, heard from prison laundry workers in 2008, two years after the Legislature moved prison dietary, maintenance and supply workers from a regular state pension system into a special early retirement system created for corrections officers. "They said they're having to do the same thing in many regards as corrections officers, supervising inmates," DeGrange said in a recent interview. His bill passed both legislative chambers with only one "no" vote.

Criteria vary by state

Like many states, Maryland has no standards or system for determining whether a worker should be eligible for early retirement.

DeGrange said Maryland's prison workers deserve early retirement "because of the stressfulness of the position." Maryland law says nothing about workers with stressful jobs being eligible for early retirement.

Some states list job conditions that make workers eligible for enhanced early retirement. Minnesota requires that prison workers spend 75% of their time in dealing with inmates to get enhanced early retirement, which has given priority pensions to hundreds of employees such as psychologists and cooks.

New Jersey law limits early retirement to state troopers and to state and local workers meeting a strict definition of "policeman" or "fireman." The state pension board has used the criteria to deny 60 job titles inclusion in the state Police and Fireman's Retirement System, including positions that are routinely eligible for early retirement in other states, such as prison administrators, fire marshals and arson investigators.

Without standards for determining who should get early retirement, state officials often make political decisions based on the ability of employee groups to persuade legislators and governors, said William Eggers, the Deloitte researcher. "This is the kind of thing that should be done in an objective way based on objective criteria," he said.

In 2007, the Virginia Sheriffs' Association decided that improving pensions for the state's deputy sheriffs was "our top priority," association executive director John Jones said recently. Before 2007, the Virginia Legislature had repeatedly defeated measures that would have made deputy sheriffs equal to state police, who can retire five years earlier than other state workers and get $12,000 added to their pension each year they are retired until they reach their mid-60s.

2007 was an election year for legislators, and the association intensified its lobbying. "The law-enforcement community got together and said, This is the one thing we want," said former senator Kenneth Stolle, who sponsored the 2007 measure and similar bills in earlier years. "Everybody wants the law-enforcement community to stand by them when they're running for election."

Stolle, a Republican and former police officer, was a sheriffs' association favorite, collecting $23,190 in gifts from 2004 to 2008, including five hunting trips (to Canada, Texas and South Carolina) and other trips to New York City and Key West, and 10 restaurant dinners, state records show. The gifts were irrelevant to his sponsorship, said Stolle, who left the state Legislature at the end of 2009 when he was elected sheriff of Virginia Beach, noting he had long supported law-enforcement on many issues.

Roughly 3,600 deputy sheriffs benefit from the new law, Jones said. "It's a tremendous benefit. It's an equality issue," Jones said. "Deputy sheriffs don't make a lot of money, so the only thing they could get is (better) retirement."

Deciding who qualifies

The expansion of enhanced early retirement reflects a growing sentiment that the benefit should be given to workers based on their responsibilities and qualifications, not on the danger and physical demands. South Dakota added conservation officers, park rangers and campus security officers in the 1990s.

"We saw public safety as being broader than just being a policeman, fireman or corrections officer," said South Dakota retirement system administrator Rob Wylie. "Many of the people that work in public safety aren't necessarily in the traditional spots you think of."

Some state officials acknowledge the difficulty deciding which workers deserve enhanced early retirement. When the Louisiana Legislature added six groups of workers to its "hazardous-duty" retirement plan last year, legislators set an unofficial requirement that a worker be a law-enforcement officer to qualify, said House Speaker Pro Tem Joel Robideaux, a Republican. "If you're requiring an employee to be able to handle a firearm and go through all that training, we felt like that was probably the best litmus test that there's a certain amount of danger in the job that doesn't exist in other jobs," he said.

But, Robideaux added, "We know that's not true. There are some places where teachers are more in harm's way than some university policemen. But we had to figure out a way to discern between hazardous duty and non-hazardous duty, and that seemed to be the most logical."