Workers have eyes on exits

Last modified: 5/8/2011 12:00:00 AM
With their state pension benefits at risk, public employees are rushing to retire before the Legislature can act.

The number of public employees who plan to retire this June is five times higher than the number of employees who retired last June. The number of police officers and firefighters set to retire this year is more than double the number who retired in any of the last three years.

"It is because of the Legislature," said Diana Lacey, president of the State Employees' Association. "They can't trust what's going on right now."

Lawmakers in the House and Senate are considering two versions of a comprehensive retirement reform bill, and several smaller bills. The bills have been through numerous iterations and would all diminish pension benefits for public employees. Lawmakers have been taking steps to prevent a mass exodus of workers - including pushing back the effective date of the changes. But workers and union representatives say the uncertainty is forcing employees to retire prematurely. Any major exodus could significantly affect cities and towns, which would lose their most experienced employees.

"It's not like we have a pool of applicants to fill 30 or 40 positions in either police or fire," said Manchester Mayor Ted Gatsas.

According to data provided by the New Hampshire Retirement System, 500 public employees - police officers, firefighters, teachers, and state and municipal employees - filed papers to retire June 1. Since 2008, the number of employees retiring in June has ranged from 90 to 130. With the exception of July - when most teachers retire - no other single month in the past three years saw more than 130 people filing for retirement. The numbers of June retirees could still change, since employees can withdraw their filing up to their retirement date.

Marty Karlon, public information officer for the retirement system, said some retirements could be attributed to people waiting until the economy improved to leave. But many people have said they are retiring because of legislative actions.

"We are hearing it's legislative uncertainty over what benefits will be," Karlon said.

While the total number of retirees this year is comparable to 2008 and 2009 (and higher than last year), there is a big jump in police and firefighter retirements. There are 410 public safety workers who have filed to retire this year, about half of them on June 1, compared with fewer than 200 each of the past three years.

David Lang, president of the Professional Fire Fighters of New Hampshire, said the retirement reform bills appear to "have had a laser target placed on police and fire." For example, provisions limiting the use of special detail pay or overtime pay in calculating retirement benefits would only affect police and firefighters. The Senate proposal would raise the retirement age only for public safety workers; the House version would raise the retirement age for teachers and other employees as well.

 Pressing concern

 

This is not the first time legislative changes have created a rush to the door. In July 2009, teachers rushed to retire before the Legislature cut off their eligibility for a medical subsidy.

Unions that oppose many of the proposed reforms point to employees like Battalion Chief Ken Folsom of the Concord Fire Department. Folsom is 52 years old, with 27 years of firefighting experience. He is healthy and enjoys his job. He filed papers to retire June 1.

"I don't want to retire," Folsom said. "However, I don't trust the Legislature to do the right thing with the pension reform bills. I'm worried about that they're going to take away the benefits I have."

Folsom's biggest worry is that his unused vacation and sick time would no longer be used to calculate his retirement benefits; that could amount to $7,000 a year for the rest of his life. (The House's most recent version of the retirement bill would only exclude vacation and sick time for those retiring after July 1, 2016. The final bill has not yet been negotiated.)

Folsom said he is angry that legislators are considering making changes affecting people who have worked for many years. "How would you feel if you looked at your financial future, you worked someplace for 27 years, and all of a sudden you had the rug pulled out of your feet?" Folsom said.

Concord Fire Chief Dan Andrus said the department has 14 people eligible to retire, though he does not know if anyone other than Folsom intends to leave. "Each person who leaves takes with them a lot of institutional memory and a lot of skill," Andrus said.

Anecdotally, union officials say their members are scared of losing benefits. "My phone rings daily, starting at 8 a.m., for police officers asking me for retirement advice," said Steve Arnold, legislative director of the New England Police Benevolent Association. "Our people are scared. They're angry. They feel they've been betrayed."

Unions say the biggest issue for employees is the uncertainty, as bills and amendments get proposed and rejected. "They're losing good people every day because for these people it's a crapshoot," said Sunapee Police Chief David Cahill, president of the New Hampshire Association of Chiefs of Police. "You don't know what it's going look like come July 1."

Union officials talk about a brain drain as the most experienced workers leave. "You lose institutional knowledge, relationships in communities," Cahill said. "When you rely on younger, less seasoned officers, they just don't have the experience, and there's nothing you can do to give them experience other than time."

Lang said it could cost a fire department $18,000 to train a new employee, including protective clothing and 16 weeks of training.

In a large city like Manchester, the impact could be enormous. Gatsas said about 75 firefighters and 35 police officers are eligible to retire, though he does not know how many will do so. Gatsas said the average amount of money paid out when an employee leaves, including unused vacation and sick time, is about $30,000.

Franklin City Manager Elizabeth Dragon said she has heard of five or six people - including department heads and long-term employees - considering retiring. "If I started to have leadership and employees exiting at the same time because of retirement changes, it would be a huge strain on the city to replace them," Dragon said, noting that it takes years for people to become familiar with the community.

At the same time, cities and towns would benefit from paying lower pension costs if the reforms go through.

Judy Silva, government affairs counsel at the New Hampshire Municipal Association, said municipalities are facing their own budget cuts, and more retirements may mean fewer layoffs. Cities and towns may also replace more expensive, experienced employees with those earning lower salaries.

"We are very cognizant of the issue of the brain drain, but in the big picture, our members said it's not a reason not to go forward with responsible retirement reform," Silva said.

 Picture will get clearer

 

Lawmakers have taken steps to address the problem of mass retirements. Sen. Jeb Bradley, a Wolfeboro Republican who sponsored the Senate retirement reform bill, said the Senate bill made changes almost exclusively to employees who are not yet vested, those who have less than 10 years of experience. (The House bill does affect vested employees.)

If the Senate version is passed, Bradley said there would be no reason for vested employees to retire earlier than they planned. In addition, the Senate chose to make any changes effective Jan. 1 - so employees would have until Nov. 1 to understand the new laws and decide whether to retire. "People would realistically have a chance to see how it affects them, so they don't jump and maybe make a decision they regret," Bradley said.

Bradley said he anticipates that some of the 450 people who filed for retirement in June will withdraw their papers once the bill becomes law. "Right now, people are making decisions in their lives and their careers based on speculation as to what might happen," Bradley said.

Union members and city officials say the House bill has scared more workers than the Senate bill because it could affect current vested employees. Until last week, the House had proposed making some changes - including an increased retirement age - effective July 1. That means public employees would have to retire by June 1, and file papers by May 1, in order to avoid those changes. On Wednesday, the House changed the effective date to Dec. 1. (Increased employee contribution rates would still go into effect July 1.)

Rep. Ken Hawkins, a Bedford Republican and chairman on the Special Committee on Pension Reform, said the prospect of employees rushing to retire June 1 is raising concerns for communities. Hawkins said the delay will give public workers the opportunity to plan for retirement.

"Now they're going to know what the changes that actually come out of committee of conference are and not speculation and rumors about what's going to happen," Hawkins said. He said the House had another reason to delay implementation - the Retirement System has said it will take six months to update its software.

Rep. Neal Kurk, a Weare Republican who sponsored the House reform bill, said he understands why employees are retiring - and he would do the same thing. "In order to make sure that whatever changes the Legislature proposed would not affect me, I'd want to lock in my benefit at this point," Kurk said.

But Kurk said the retirements are premature. Kurk said he believes a committee of conference could finish its work by May 20 and have a bill signed into law by June 1, so employees could withdraw their retirement papers once they see the final bill."The idea is to take away some of the concern people have, to allow them to make a more considered decision once the final version of the bill is adopted."

Kurk said he does still anticipate a larger-than-usual number of retirements as a result of the legislation. He anticipated that as cities and towns reduce their workforces, a number of those retirees would not be replaced.




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