By Charlie Baglan
As of June 27, retired Kentucky public employees will be able to take advantage of a new law passed during the 2019 General Assembly with little, if any, fanfare.
House Bill 419 allows those who have been retired for at least one year to accept new employment without fear of governmental interference or reprisal. But it’s difficult to determine which is the larger story — the relief of the newly adopted amendments or the possibly near-bankrupting penalties of the regulations as they were written prior. To talk about one means we can’t avoid the other, and to many, both will be news.
When considering reemployment after retirement, three issues arise — waiting out the bona fide separation from service; certifying that no prearranged agreement exists prior to return to state payroll; and obtaining clearance from the Kentucky Retirement Systems before accepting any position anywhere.
HB419 makes two landmark improvements. It requires members to certify at the time of retirement, rather than upon reemployment, that no pre-arranged agreement to return to work exists between the member and any agency participating in the Kentucky Retirement Systems. A second key component says retired members who return to work with a participating agency 12 months after their initial retirement date no longer must notify the KRS of their return to employment. In the past, the retiree was to notify the KRS at any point, even years later, if he or she chose to consider new employment, regardless of the position.
After the past two legislative sessions, as terms such as pensions, retirement and public employees appear in the news, so do negative connotations. HB419, however, is good news — indeed, welcomed news — and is evidence that the Kentucky General Assembly does have a heart.
House and Senate members voted nearly unanimously to pass this bill modifying Kentucky Regulatory Statutes 61.590 and 61.637 permitting CERS (County,) KERS (Kentucky,) or SPRS (State Police) retirees to return to work in the public or private sectors, to contract and to volunteer freely as they wish.
If there’s a funny taste in your mouth, there should be. Pursuing work seems like a basic individual right. Why would a law need to be amended to allow it? Better question, why was there ever a law to impede it? Either is hard to swallow.
Prior to the “Reemployment Relief” bill, KRS counselors strongly encouraged retirees to communicate in writing with the legal department providing details of the prospective job, then wait until KRS rendered a written opinion before accepting or rejecting the position. Members could meet further delays should KRS’ response request additional details. Decisions were made on a case-by-case basis and there were usually no quick answers. In many cases, weeks could pass, by which time job offers had closed and opportunities were lost.
This process applied to work anywhere, not just state jobs: returning to public service, private industry, establishing your own business, contracting or doing charity work. Prior to HB419, even volunteering such as for your child’s Scouting troop or as an usher at your church meant advance written approval was advised or face possible consequences. But looks can be deceiving; which jobs were off limits and which were not seemed lost in mystery with no accessible database for the members to reference.
Admittedly, for a law-abiding state retiree simply wanting to pick up some extra work, this process was a barrier, but nonetheless required. No wonder many retirees were tempted to roll the dice. Others weren’t aware of or ignored these rules and got nailed. The culprits were prearranged agreements or not observing the proper break in service. Bona fide separation of service is either one or three calendar months, depending on hazardous or non-hazardous duty. Other retired workers chose to overlook the rules presuming they didn’t apply to their situation — the “I put in my time, I’m drawing my money, and that’s that" defiance.
A point escaping these individuals is that violation could mean financial ruin. Returning to full time, part time or volunteering for work with a participating agency as little as one day too soon can void retirement. More distressing, returning to work years later only to have the obligatory KRS Form 6751 uncover a prearranged agreement could force a seismic repayment obligation.
The Kentucky Retirement website and applicant literature put it, “The possible consequence is your retirement will be voided and you will have to repay all retirement benefits you received, the health insurance premiums paid on your behalf, and any dependent child payments.”
“We used the phrase, ‘You must contact Kentucky Retirement before returning to employment’ because there is so much confusion on who was and was not a participating employer,” said Kathy Rupinen, general counsel-advocacy, who oversees the retired reemployed process for KRS.
While grocery stores and big box stores clearly don’t participate in state retirement, there are quasi-governmental agencies, she points out, whose names are somewhat confusing. “Judy’s Place is one such facility, a child advocacy center. The spouse abuse center called Oasis,” she added, “is another example with a private-sounding name. There are hundreds of such agencies and just out of absolute caution, we wanted everyone to check with us first because the consequences of a voided retirement were so high.”
“There was no prohibition on people going back to work for non-participating employers, but we asked retirees to check with us because it was so complicated,” said Rupinen. “If people were providing services for participating agencies through a third-party contractor position, we needed to do a legal analysis to determine who was actually in control — the agency or the contractor. And in some cases, it was confusing to both parties. If the participating agency was behaving as an employer, then the retired reemployed statutes had to be applied.”
In Kentucky, it is estimated that 7,000 people retire annually. Also, each year, approximately 8,500 reemployment requests are received, bound for the desks of only three KRS legal staff. Last year, there was a 27% increase in retired reemployed reviews. Crunching the numbers, the KRS would receive 40 per day.
Rep. Derrick Graham, D-Frankfort, calls it “an administrative nightmare.” He remarked that his colleagues were receiving complaints as well, so lawmakers in both chambers and on both sides of the aisle were aware that changes were needed.
How does this apply locally? Franklin County is home to the most retirees in the state per capita — nearly 13% of the population. No other county comes close.
In many cases, the local retirees recognize that their calling is public service and may naturally seek to continue. While double-dipping is legal, it can be frowned upon by other employees, affecting morale. In 2008, legislation was passed stipulating the reemployment would not increase monthly retirement benefits.
Democratic Sen. Julian Carroll, who represents Franklin, Anderson, Gallatin, Owen, Woodford counties, also voted in favor of the bill, saying: “We must protect our state employees. They are vastly underpaid and in retirement, this measure gives them protection as well (the chance) to seek the opportunities they desire.”
In 2018, KRS reported just over 67% of retirements are $20,000 or less annually, hence reemployment can be out of financial necessity.
Retiree concerns over the reemployment puzzle, alone, weren’t enough until several organizations stepped in to urge reemployment relief measures.
According to HB419 sponsor Rep. Bart Rowland, R-Tompkinsville, the Kentucky Police Chiefs Association, County Sheriffs, Kentucky Association of Counties and the Kentucky League of Cities also raised attention. They were having difficulties attracting experienced people for public safety.
“They came to me and explained how convoluted the process was. They referred to it as the ‘Mother, may I’ issue. They also helped develop a solution. As we presented it in committee, we got support from the full House and especially in the Senate. Many elected officials were aware of the problem and were appreciative of the opportunity to get a fix for it,” Rowland described.
The western Kentucky representative was unclear why laws with such severe repercussions were enacted to begin with.
“Perhaps it was a misinterpretation on the side of the retirement systems or perhaps it was done intentionally by a previous General Assembly; nonetheless, the amendments are now in place.”
Meanwhile, Rupinen pointed out, “It’s important to remember, Retirement didn’t write the statute but was obligated to comply with it.”
She apologized for the delays and hardships it may have caused and is thankful for the amendments which eliminates KRS members who have been retired for at least one year to no longer need to ask permission. "That will cut the volume and that, in turn, should speed up our response time," she added.
Again, the amendments apply to all members who have been retired for a minimum of one year. As for first-year members, they must still wait the break in service and address the pre-arranged agreement query upon retirement using the new Form 6000. After one year, retirees are free to choose.
More information on this and other legislation updates can be found by contacting the Kentucky Retirement Systems at kyret.ky.gov.
Charlie Baglan, of Frankfort, is a state retiree. He can be reached at email@example.com.