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The Honolulu Advertiser
Posted on: Monday, December 8, 2003

Payroll 'double-dipping' not uncommon

By Gordon Y.K. Pang
Advertiser Capitol Bureau

Honolulu Fire Chief Attilio Leonardi's decision to officially retire yet continue in his job under a special temporary appointment illustrates the perplexing outcomes that can occur under the state's complicated retirement laws.

Leonardi, 58, a Honolulu Fire Department employee for 33 years and fire chief for the past five, is retiring from the $112,206 post at the end of the month because he says he would lose pension benefits under the retirement laws if he did not start taking his pension.

"Taking everything into consideration, this is my peak year," he said.

The situation is not unique. Other longtime government employees have retired only to be asked to return on a contractual basis, collecting their pensions and their old salaries.

The Advertiser asked for a current list of temporary hires who previously were permanent employees, but city spokeswoman Carol Costa said such a list would likely take several weeks to compile.

Statistics provided by the city in August 2002 showed 83 retired municipal workers who went back on the city payroll, some as well-paid employees who returned to their old jobs on short-term contracts while collecting their pensions. That practice has drawn criticism from some public officials and taxpayers who say it amounts to "double-dipping" and runs counter to the intent behind pension laws aimed at encouraging longtime workers to retire.

In fact, the fire chief's situation is complicated by the retirement incentives built into the system for Hawai'i firefighters and police officers. The system was designed to discourage firefighters and police officers, whose jobs are by nature physically demanding, from jeopardizing their health by working into old age to boost their pension benefits.

Leonardi said he does not believe he is "double-dipping" by receiving his retirement benefits and getting full pay for his contractual post.

Not only did he earn the retirement benefits through 33 years of service, he said, he has contributed 12.2 percent of his gross pay into the retirement system as mandated by the post-retirement laws.

"So we contribute a big chunk of money," Leonardi said. "It's not the city giving me this money, it's the state retirement system."

The chief said he doesn't think he or other administrators should be penalized for wanting to stay on the job and agrees with those who have suggested that retirement laws be changed to allow for administrators, or others in less physically demanding positions, to continue working without such a concern.

Hawai'i Fire Fighters Association business manager Guy Tajiri testified before the city Fire Commission in support of bringing the chief back temporarily.

Tajiri said there may be some who are not be happy with Leonardi's situation, but he doesn't feel the chief should be blamed. If anything, he said, Leonardi's situation highlights the plight of other firefighters who don't want to retire.

A bill in next year's Legislature would allow firefighters and police officers to continue working and not be penalized financially for it, Tajiri said.

"It's a problem that needs to be addressed," he said. "I think it's long overdue."

Sandra Au Fong, chairwoman of the Fire Commission, said she and colleagues want Leonardi to complete five various projects before he leaves, most notably the construction of a new headquarters in Kaka'ako and a national accreditation of the department.

Fong said that Leonardi did not tell the commission what he believes he would lose in pension benefits if he continued working, and no one asked.

Cynthia Bond, another member of the commission who was recovering from surgery when the decision was made to hire Leonardi back, said she has some concerns about the action.

Bond, who was at one time city human services director when Leonardi was chief, said she has high regard for him but "would have preferred a different solution to the problem."

The Fire Commission will meet later this month to approve Leonardi's first 89-day appointment, which would begin Jan. 1.

The chief has declined to say exactly how much he would lose if he stayed on a permanent basis. He also refused to say how he would lose that money, other than that the choices he made among the various options available to employees would leave him at a disadvantage if he stayed on.

Retirement benefits are not public information. But the chief's salary, like the pay of others in city government, is public.

A raise that took effect July 1 gives the fire chief the annual salary of $112,206. A pension would pay him a base of 80 percent of the average pay of his three highest grossing years of service.

Firefighters and police officers can receive base pension benefits of up to 80 percent of "high three" salary, based on 2.5 percent for every year of service. So a person, such as Leonardi, who has worked 32 years has "maxed out" on his base benefits.

Another factor Leonardi likely contemplated was the "post-retirement benefit" given to all state and city employees when they retire.

David Shimabukuro, administrator of the state Employees Retirement System, said he could not talk about individual cases, but said that all police and fire retirees receive on July 1 of each year a 2.5 percent cost of living increase that is calculated off the original pension amount.

In Leonardi's case, it appears that obtaining the 2.5 percent increase in July 2004 could give him a larger benefit in the long run than staying on for another year as chief. That's assuming the fire chief gets no further salary increases during his employment.

Reach Gordon Y.K. Pang at gpang@honoluluadvertiser.com or at 525-8070.