Joint Finance Committee to Discuss Rehired Annuitants

The Joint Finance Committee will meet Tuesday, May 21 to discuss the Departments of Employee Trust Funds, Children and Families, and Public Instruction; the Office of State Employment Relations; the State Building Commission; and the Public Finance Authority. Budget papers for Tuesday are here.

The committee will consider Governor Scott Walker’s proposed changes for rehired annuitants in the Wisconsin Retirement System (WRS). Under current law, WRS annuitants are allowed return to state employment after a 30-day break-in-service and continue to receive his/her annuity. Those annuitants are not eligible for group insurance benefits and cannot add time to their years of service.

The governor favors increasing the break between retirement and rehiring from 30 to 75 days. Walker also recommends that rehired annuitants who work more than two-thirds full-time be ineligible to receive annuity payments. Those employees must rejoin the Wisconsin Retirement System and add to their years of service.

State Representative Duey Stroebel (R-Cedarburg) introduced legislation this session with more restrictions than the governor’s proposal. Stroebel’s bill, AB 170, requires retired annuitants who work at least half-time to forgo their annuity payments. His bill also includes a 75-day break-in-service requirement, but does not allow the participant to accumulate additional years of service.

The Legislative Fiscal Bureau (LFB) prepared an analysis of the issue for the Joint Finance Committee in advance of next week’s hearing (Budget Paper #259). The budget paper includes data from a 2012 Legislative Audit Bureau (LAB) report, Wisconsin Retirement System (WRS) Annuitants Hired by Employers Participating in WRS.

The LAB report found that almost 79 percent of rehired annuitants had a separation period of 60 days or more, despite claims that many employees return to work almost immediately after retirement. More than half of rehired annuitants work for less than one year after being hired, and just 1.5 percent were employed for more than 4 years after retirement. The Audit Bureau also found that almost 80 percent of employees work fewer hours per week than they did before retirement, and more than 90 percent earned the same or less than they did before retirement.

Rehired annuitants are common on UW System campuses, making up almost 68 percent of the total of rehired annuitants between 2007 and 2011. At UW-Madison, many retired faculty return to work to complete research on grants. Changes to the way annuitants are rehired could have a serious impact on campus, and PROFS has met with many key legislative leaders to inform them how the bill could adversely affect UW-Madison.

The Fiscal Bureau has suggested five alternatives for the Joint Finance Committee to consider on Tuesday:

  • Approve the governor’s recommendation.
  • Modify the governor’s recommendation.
  • Approve the provisions of Representative Stroebel’s bill.
  • Delete the provision and maintain current law.
  • Delete the provision and make additional changes.

The committee may choose one of the options above or introduce a different motion altogether.