Friday, April 30, 2010

The Wall Street Journal Criticizes Receiving Pensions and Salaries (a.k.a "Double Dipping")

This excerpt is taken from The Wall St. Journal, Thursday, April 29, 2010 in a column entitled "How to Tackle Government Labor Costs" by A. Gary Shilling. It causes one to reflect on the strategy by local school boards, such as the Kids First majority of the Hoboken Board of Education, to hire retired administrators to fill high paying district leadership positions within governmental organizations (such as public school districts) while these retirees receive pensions, salaries, and in some cases like Hoboken, vacation days.

Usually touted as "cost saving measures" to trusting, overburdened taxpayers, this tactic is actually adding significantly to the cost of governmental labor according to The Wall Street Journal. As the article further explains, this maneuver is used commonly in the State of New Jersey. The practice has strong allies (such as the Kids First majority of the Hoboken Board of Education) as well as a growing number of critics such as The Wall Street Journal, CBS News, and USA Today.

"Public-sector retirement costs also are high because many can retire at age 55 after 30 years of employment with pensions equal to 60% or more of final salary, which is often jacked up by lots of overtime in final working years. In some states, employees can "double dip" by retiring early and then resuming their previous jobs or taking other government positions. So they get salaries and pensions at the same time."

Here is a December 2009 article by CBS News on the topic as well. The article points to a USA Today news story indicating that the states of Utah, New Mexico, South Dakota, Florida and Arkansas are all looking to curb the practice through legislation.

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