More than four months have passed since the Baton Rouge retirement board made significant reductions in the city’s contentious retire-rehire program, claiming the cost to taxpayers might be in violation of the Internal Revenue Service.
But because some of its members worry that the changes would make it difficult to retain key personnel, Metro Council has not yet set a date for a vote on the modifications.
The “retire/rehire” arrangement enables workers to retire and start receiving benefits while still being compensated for up to 29 hours of work per week.
Because they are regarded as part-time employees, they are also no longer required to make contributions to the retirement system.
Big modifications were suggested in February by the parish retirement board of trustees.
There would be no exceptions for emergencies, and retirees would have to wait at least six months before going back to work.
It also suggested that employees be restricted to receiving no more than 25% of their pre-retirement earnings and that they be prohibited from working again for some time longer than a year, save in “special circumstances.”
The retire-rehire system’s high cost, according to the board’s actuary, might cause the system to violate the rules of the Eternal Revenue Service. This is why the board requested such adjustments.
The 50 or so workers who presently use the retire/rehire scheme would not be impacted by the modifications, should the Metro Council accept them.
They would nevertheless apply to any employee who intended to utilize the system in the future.
According to several council members, the parish would have more difficulty recruiting experienced, senior staff, a problem that currently exists.
Dwight Hudson and Rowdy Gaudet, members of the Metro Council, postponed a vote in the spring to soften some of the modifications.
For instance, they requested that the separation term be increased to 60 days from 6 months, that the salary cap is increased to more than 25%, and that employees be rehired for 10 years rather than just one.
According to Gaudet, a compromise can be struck between having proper succession planning and filling up some of the holes that the current economy will undoubtedly produce.
Some parish officials continue to work to stop or curtail the developments.
Robert D. Klausner, a tax lawyer, stated at the retirement board’s monthly meeting last month that the parish could make its 401(k) guidelines compliant with the IRS by just changing the verbiage, rather than by really reducing the retire-rehire system.
That meeting was attended by several Metro Council members. Gaudet claimed that it demonstrated the necessity for further debate before the system is changed.
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Everything that might be in a program, in my opinion, is currently on the table, said Gaudet.
Daniels expressed concern about utilizing Klausner’s idea as a panacea during the discussion because it would only actually help city-parish employees, where the majority of the retired/rehires work.
According to Daniels, the board has a fiduciary duty to the entire system, which also entails the police, fire, and parks and recreation systems for the city and parish.
To produce further recommendations for the board and the Metro Council to evaluate before the board’s July 28 meeting, Klausner, board attorney Robert E. Tarcza, and board legal counsel Denise Akers were requested to collaborate.
