MEMORANDUM 05-54

TO: Mayor Hornaday and Homer City Council

THRU: Walt Wrede, City Manager

FROM: Sheri Hobbs, Personnel

DATE: March 22, 2005

RE: PERS Retiree Reemployment Option

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When an employee retires from the city or state they can begin collecting their PERS pension and can work full-time with any employer as long as it is not a PERS employer. If they return to work for a PERS employer their pension stops while they are working. Due to a state wide shortage of qualified experienced workers HB 242 was proposed.

The Alaska Legislature enacted HB242 in 2001 which amended the statutes to allow certain Public Employees (PERS) and Teacher’s Retirement System (TRS) members who retired with a normal retirement to return to work, continue to receive normal retirement benefits, and waive further participation in the retirement systems. This legislation is scheduled to sunset on July 1, 2005. When originally enacted PERS was under the assumption if you returned to work and applied for a waiver you could continue to work indefinitely. In a written opinion issued September 14, 2004 the State of Alaska Attorney General’s office explained that, once the legislation sunsets on July 1, 2005, members enrolled in the program will no longer be permitted to participate. Several cities and school districts have employees in this program and have requested the sunset provision be extended or eliminated. Two bills are being reviewed by the Alaska Legislature. SB24 would extend the sunset date to July 1, 2009 and SB31 which would eliminate the sunset provision of July 1, 2005.

The City currently has three police officers and one jail officer participating in this program. During the last few years it has become increasing difficult to fill police officer positions, not just in Homer but around the state. We have increased salaries and benefits to make positions competitive with other cities. In 1996 we received 87 applications for advertised positions in 2004 we received 15 applications. The City has been required to hire applicants, send them to the academy and provide field training. This involves a minimum of one year of training and over $20,000 in training costs.

With HB242 we have the option of hiring or rehiring a 20 year police veteran who requires little or no training. The employee waives PERS participation which provides the city a savings in 2005 of 10.42% of their salary. If HB242 sunsets on July 1, 2005 we will most likely lose all four employees in the police department.

The city spends thousands of dollars over a 20 year career to train and certify employees in specific fields. The program is a beneficial and cost saving tool in hiring and retaining experienced workers for positions that are difficult to fill.