Council to address ‘pension spiking’
LIHUE — A bill for an act for possible inclusion in the 2020 Hawaii State Association of Counties Legislative Package, proposed by councilmembers Mason Chock and Council Vice Chair Ross Kagawa, is attempting to address pension reform. The goal is to combat unsustainable past practices that are referred to as “pension spiking.” The bill aims to improve the short-term viability and long-term outlook for the Employees’ Retirement System of the State of Hawaii.
Pension spiking is when employees allegedly boost their pay intentionally through avenues, such as overtime, during their final three years of work in order to inflate their pension benefits.
A presentation made to the Kauai County Council by Thomas Williams, executive director of the state’s Employees’ Retirement System, showed that the county’s excess pension costs due to seven “spiking” retirees during fiscal year 2014 was around $213,000. That number was approximately ten times higher four years later when 21 spiking retirees cost some $2.4 million.
The bill essentially places a cap on allowable overtime and other supplementary payments, so that it “doesn’t get out of control,” Chock said.
This is a “huge problem,” Kagawa said.
“Nobody in the whole state wants to do anything about it,” Kagawa said. “But if you just look at the numbers … there’s abuse going on.”
The concern is that the cost will continue to escalate to a point where other services will be compromised.
“Our children are going to pay for all of this,” Kagawa said, adding that people are already upset that items like new roads aren’t getting addressed.
But Caroline Sluyter, communications officer for the Hawaii Government Employees Association, said there’s no evidence that employees are doing something intentional or wrong. She said that the word “spiking,” in and of itself, has a negative connotation.
“It implies something improper,” she said.
The HGEA, a union that represents government employees, is not supportive of the proposed legislation, “because it would be taking away what was promised to the employee in their contract,” Sluyter said.
“Employees who dedicate themselves to a career to serve the community; employees who struggle to make ends meet; employees who sacrifice much to reach retirement, are now being threatened with being part of a broken promise,” she said.
Chock said the bill is not meant as a punishment for employees but that there needs to be a conversation about the “real issues,” and taking proactive steps so that costs don’t keep exponentially rising.
“I’m not here to make this controversial,” he said during a recent council meeting.
He added that addressing the issue would upset some people, but more people would be upset if nothing is done, as a large portion of taxpayers will have to foot the bill.
Councilmember Luke Evslin said he’s grateful for the bill because it allowed for, “thinking out of the box.” But he was ultimately unable to support it because it’s a blunt instrument for a “specific problem,” he said.
Stable retirement and a benefits package are why people are attracted to government jobs and this could make it worse, he said.
“Spiking is a gigantic problem,” he said. “But a problem that’s perpetrated by only a few people and there are high numbers of people retiring right now.”
Councilmember Kipukai Kuali‘i and Council Chair Arryl Kaneshiro also weren’t ready to support the bill.
Kaneshiro said this was especially true because the problem is only exclusive to “certain departments.”
Felicia Cowden, however, said she supported the bill but with “great discomfort.”
“The hill that we have to climb is so big,” Chock said, adding that he’s open to other ideas to address the matter, “because we don’t have the time to just discuss it.”
When the bill for an act was discussed last month, Councilmember Arthur Brun was excused from the meeting, making it a split vote among the council. Therefore, the bill is up for discussion again at the next county council meeting at 8:30 a.m. on Wednesday at Council Chambers at the Historic County Building.
Would it work to simply put a reasonable cap on the pension amount deriving from overtime worked in the last three years–and make the bill apply to all departments?
To clarify my earlier post: A “reasonable cap” might be a certain percentage of a person’s base salary. Or maybe a flat dollar amount, which would enable lower-paid employees to catch up a little bit with the higher-paid ones?
Yep. That’s how social security works. In this case Unions would need to approve as it would be part of the collective bargaining and those non union participants would be going along for the ride.
Why is it so hard for these people to make good choices? So what, we’re going to preserve the right to rip off the taxpayers? Arthur Brun was “excused”? Excused from his duty? Why do we let the council play these games? Vote Arthur! Do you support it or not? Or are we going to drag this out like so many things? Drag it out until the original point is lost. Try this instead: make some rules – only X amount of overtime in your last 3 years. Is that so devastating? If you don’t like it, work somewhere else. Nobody makes you work for the county – people choose to do it because they know there’s such lack of supervision that they can goof off or take crazy overtime and pension benefits. Close these loopholes or the county is going to go broke paying pensions.
Well said. It is not that hard.
Where’s the AUDIT? THE KAUAI COUNTY CHARTER REQUIRES IT! OUR TAX DOLLARS AND OTHER FUNDS PAYING FOR COUNTY EMPLOYEES ARE BEING PLUNDERED in broad daylight without accountability.
Theft by definition is against county and state laws. This is also against union rules.
The despicable act of spiking for retirement benefits is against the law. This is theft but the county has proven that they actually promote theft of tax payers monies through 4 audits that produced these findings.
The county of Kauai and state of Hawaii is in shambles because of nepotism. Theft is an acceptable act in county government not only during the Carvalho theft years but all those before and after him.
Sure the Union is against a bill to prevent pension spiking, they base union dues on amount each union member makes. So the more overtime he/she makes, the more union dues they pay. Then, to keep those politicians in their pockets, the Union gives top dollars to those cronies who consistently vote in their favor, of course and union promises member votes. Its all in a corrupt “scratch my back” process.
Union dues are a set amount per month. They are not based on the amount you make
Eliminate lifetime Government pensions for 401K, with matching, after being vested 10 years. It is not that hard.
Get the taxpayers out of the welfare retirement system…aka Government Pensions. SMH.
I AGREE with ALL the comments and I AGREE with the passing of this bill. We all know it’s happening. We all have a pretty good idea what departments it’s happening in. Union leaders, supervisors and managers all know it’s happening and turn a blind eye. Council members not supporting this bill… WTH is wrong with you? What are your solutions…? Ignore until next year? Then the year after that…? Twenty one people costing over 2 million dollars is a significant problem Mr. Evslin!! More than enough to require using “blunt objects”. For those that aren’t abusing the system, the “blunt object” won’t harm them. County council, DO SOMETHING ABOUT THIS NOW.
I don’t think this bill would carry even a drop of water anyway. It still has to be passed as State Legislation. What our council says or does has little to no effect the legislature. Not even to our own Kauai representatives.