Maybe why college costs so much


Greg Royer ranks among the state's top-paid employees, with a salary of $304,000. But that's just part of his income. For nearly seven years, he's also collected an annual pension of $105,000.</p>

<p>Royer, the vice president for business and finance at Washington State University, tops a long list of college administrative staff members who've been able to boost their incomes by up to 60 percent by exploiting a loophole in state retirement laws....</p>

<p>At WSU, Royer, 61, has collected about $700,000 in retirement benefits while continuing to draw his salary. In recent years, he's been responsible for overseeing some of the deepest budget cuts in the university's history. Last year, for instance, WSU announced it was cutting about 360 jobs, axing its theater and dance program and hiking tuition by 14 percent.


Local</a> News | Retired, then rehired: How college workers use loophole to boost pay | Seattle Times Newspaper</p>

<p>Yikes! It's thievery. What an almost unbelievable story and example of lack of morals.</p>

<p>Why don't they close the loophole?</p>

Those rules were temporarily lifted in 2001 to encourage more teachers to return to work to relieve a shortage. That led to a flood of state employees retiring and getting rehired, prompting lawmakers to again clamp down on the practice in 2003. Olympia has been trying to plug loopholes since.</p>

<p>As a result, most state employees can return to work for only up to 40 percent of the hours they worked as full-timers — or lose some of their pension benefits. But thanks to a glaring loophole, many higher-education employees have been able to skirt the rules.</p>

<p>It's because colleges and universities typically have two parallel retirement systems — the state system and a separate system administered by the institution. Administrative employees can often retire under the state system and return to work under the university plan.</p>

<p>By switching plans, the workers put themselves beyond the reach of state limitations on double dipping. In the eyes of the state, it's as if the workers returned to a job in the private sector. In reality, the only thing that has changed is some paperwork.</p>

<p>The returning workers are also able to benefit from a second retirement plan, typically receiving a generous state match of up to 10 percent of their wages.</p>

<p>"Under current law, an individual who opts into one of the higher-education retirement plans has no restriction on the hours they can work," said Dave Nelsen, the legal-services manager for the state Department of Retirement Systems.</p>

<p>Nelsen said it may be hard to find a legislative fix that would withstand a court challenge.


<p>sounds like they have been trying.</p>

<p>I know this has been an issue in our local state education system (HS). There really is no difference at the bottom line for the state. Let's say an administrator, Greg, retired and was rehired at something less than his current wage (that tends to be the trend). Even if the state did not hire Greg but someone with equal experience, they would hire the replacement at a rate equal or more than the current wage and the state would still be paying Greg retirement wages. So this actually saves some small amount of funding.</p>

There really is no difference at the bottom line for the state.


<p>But hiring someone new would provide a job for another state resident. That is certainly worth something.</p>

<p>And the salary is just the start. Health benefits add a huge chunk to costs of running college. A lot of the other benefits (retirement fund contributions, cars, etc) aren't widely publicized.</p>

<p>Not to mention that there is just something wrong about being able to go back to work with the same company AND collect retirement. I could almost stomach a loophole where one was returning to work part time less than 20 hours and collecting a partial pro-rated retirement, but more than 20 hours and full retirement benefits is wrong on so many levels. But remember this is the ME generation that is finding these loopholes.</p>

<p>This double dipping is truly destroying so many state budgets. Police, firemen, and railroad workers all boost their overtime hours by double or triple the year before they retire, because their retirement pay is based on their last year's salary. NY State is such dire straits because of double dipping and because of the union "rules" that NYS was going bankrupt. They were going to furlough all state workers, but because of union rules this was disallowed, so more deficits and higher taxes will be needed instead. It seems that, "if they can do it, they will" but ultimately this selfish mentality will hurt our kids in the end.</p>

<p>The former mayor of Baltimore got a really nice deal after she was found guilty of stealing gift cards intended for poor city kids but before she was sentenced. She had been on the city council part-time for some twenty years and mayor for about three. She cut some kind of deal and was allowed to keep her retirement based on her less than tree years as mayor. She'll collect $80K+ a year and that will only go up.</p>

<p>Limabeans--" NY State is such dire straits because of double dipping and because of the union "rules" that NYS was going bankrupt." Not that I doubt this post at all, but when I worked for the state of New York, my retirement was not managed by the state. There are probably thousadns of different options in a state as large a NY></p>

<p>maybe we should put a salary cap on state employee positions?</p>

<p>Pierre, state employees usually have lower salaries than their counterparts in private industry. They accept this and the benefits such as retirement compensate for the lower salary. If they were lower, nobody would work for the state.
A better solution is to close the loopholes that allow a select few take advantage of the system. Most government employees are not even close to getting this kind of retirement.</p>

<p>I see it both ways- first a bit of outrage like others, but then after some thought, not. </p>

<p>It is 'rational' from their perspective and has nothing to do with morals. Who voluntarily gives up a pension they are entitled to? What if the state needed you, you still loved your job AND your retirement funds kick in at a set period (per your contract?). Would you pass on 100k a year you were legally entitled to? Really? </p>

<p>Most are entitled to the retirement fund after having worked for say 30 years (or whatever their contract was), regardless of what they do afterwards. And they entitled to keep working if they are valued contributors to the organization (if not this one, another). The cost is the same to the institution or state since they have to a) pay the pension and b) pay someone to do a job. So the only issue is should they be allowed to keep working after X years? Yes, since we collective agreed to get rid of mandatory retirement a long time ago, didn't we? </p>

<p>The point is defined benefit plans are VERY expensive. If you ask me, that is the travesty here. No one should have them. Whole companies go bankrupt trying to fund these monsters, especially when the economy tanks.</p>

<p>Same problem in our area with city employees and school superintendents. </p>

<p>I think the pension should go on hold if you get rehired by the city or school system.</p>

<p>It's a poorly written contract (from the taxpayers' perspective) and should be changed.</p>

<p>While it may have been true several decades ago that government employes made less than the private sector, that is now longer the case.</p>

<p>It made quite a bit of news a few weeks ago when the Bureau of Labvor Statistics reported that government employes now make significantly more than priveate sector employes, in no small part due to their benefits:</p>

<p>Government</a> Workers Earn $12 MORE Per Hour Than Their Private Counterparts</p>

<p>Employees who are 'double-dipping' at public institutions is a problem, but it pales next to the budget cuts that those institutions are experiencing across the country. That is the primary reason why tuition at state schools is skyrocketing nationwide. Of course, the most expensive schools are not public, so none of their high tuition cost is a result of double-dipping employees.</p>

<p>I didn't read all the comments to that Huffpo story, but the story itself glaringly made no sense. If we are to believe the story, government workers' CASH compensation is $6.50 per hour higher than private sector workers' cash compensation, and within a dollar or so of private sector workers' OVERALL compensation. No way.</p>

<p>I stand corrected.</p>

<p>It appears that if you adjust for education, experience, actual job responsibilities, etc. a different conclusion is reached:</p>

<p><a href=""&gt;;/a&gt;&lt;/p>

<p>University employees that have pensions aren't eligible for, nor do they pay into Social Security, and in most cases, they pay via deduction from 8-11% into that pension. The state, as the employer, doesn't pay into Social Security either, and here's the reason why there's a pension crisis now, while the state does have the obligation to pay into the pension fund of its employees, IT decides whether or not to do so. For many years, many states have decided that money could be better spent elsewhere. Thus, the unfunded liability that we are faced with now.</p>

<p>If a defined benefit plan goes away, the state will need to make that employer payment to Social Security that they have been diverting to pay for state programs. They will also need to make those matching payments to 401K state equivalents that state employees will demand in order to attract and retain those employees. That's about 11% of total wages and benefits. Those funds now go to pay for other state programs. Where do you think the state will get that 11% from? I'm not seeing a savings here. They certainly won't just cut the programs. They never do.</p>