Golden goodbyes

Jenny Marder

Faced with a sluggish economy and a huge state deficit to backfill,

the city has used every possible means to trim fat from the budget --

including offering employees over the age of 50 a special invitation

to retire.

In 2002, the city granted 48 employees the option of early

retirement, also known as a “golden handshake.” Of these, 17

continued working part-time for the city while receiving inflated

retirement packages.

Last week, 30 more city employees took an early retirement.

The incentive: a retirement package that offers two extra years of

service for pension calculations, an offer that can boost benefits by

thousands of dollars. In other words, a 28-year employee will receive

the retirement benefits package of a 30-year employee.

How it works

Employees in Huntington Beach who retire at the age of 55 receive

a percentage of their salary as pension based on the number of years

that they’ve worked for the city. For most employees, the annual

amount received as pension is calculated by multiplying their ending

salary by 2% of the number of years worked. For public safety

employees, the annual pension is 3% of the number of years employed

by the city.

So a police officer who’s worked in the city for 30 years will

receive 90% of his ending salary as pension. Any other city employee,

such as an account technician, who’s worked the same time will

receive 60% of his salary.

To be eligible for the golden handshake, or two-year service

credit, an employee must be over the age of 50 and have worked

full-time for the city for at least five years. Once the city opens

the door, all employees who fit the bill, with the exception of sworn

public safety officers, can take the golden handshake.

“[The golden handshake] is an option when you’re having to

downsize an organization to save money over a period of time,”

Assistant City Administrator Bill Workman said. “The pension would be

a little better and the city would save payroll costs.”

Early retirement allows positions to be left vacant and perhaps

never filled to save money. It also creates more flexibility in the

budget, said Clay Martin, director of administrative services for the

city.

“In creating vacant positions, we can provide some short-term

savings, depending on the length of time that those remain unfilled,”

Martin said.

The numbers

Of the 81 employees who retired in 2002, 48 checked out with early

retirement incentives. Of the 47 who retired in 2003, 30 were

recipients of the golden handshake.

Public Works lost 12 employees in 2002 to early retirement, more

than in any other department. The 2002 recipients also included 10

from the Police Department, nine from Community Services, three from

the Fire Department, three from the library, three from

Administrative Services, two from the city administrator’s office and

two from the city treasurer’s office. Economic Development, Building

and Safety, the city attorney’s office and Information Systems each

lost one person to early retirement.

In 2003, 16 of the 30 employees who took the service credit were

from Public Works, again making it the hardest hit. There were also

four from both the Police Department and Community Services, two from

the Fire Department, one from Building and Safety, one from Planning,

one from the library and one from the city attorney’s office.

Not so fast

In 2002, nearly 35% of the employees who took the golden handshake

were hired back to work part-time for the city, while receiving

higher retirement pay.

The Police Department took four rehires, Community Services hired

back three, Public Works and the library each hired back two

retirees, and Economic Development, the city administrator’s office,

the city attorney’s office, the Fire Department, the city treasurer’s

office and Information Systems each rehired one. Officials say they

are unsure how many employees the city will be hiring back part-time

this year.

Rehired employees do not receive city health insurance or Public

Employees Retirement System retirement credits.

The practice does not sit well with many residents.

City government watchdog Chuck Scheid feels that the city should

be more selective in offering early retirement and cease offering the

option to employees whom it’s not ready to let go.

“It’s a bad situation that we have to let everybody that applies

[for the two-year service credit] do it, and then if we really want

that guy for four months to a year, well, we have to hire them back,”

Scheid said.

By law, employees receiving retirement benefits are restricted to

working 960 hours annually, which usually works out to about 20 hours

per week.

“As long as they don’t exceed 960 hours on an annual basis, most

people are here to maintain continuity until we recruit for a

full-time replacement,” Martin said, adding that 17 was a relatively

small number and that the rehires were only temporary.

“Obviously, the focus in that effort is to maintain some

continuity while we recruit for a replacement or complete a project.

A small number of them did it last year, and a larger number last

year came back than will this year.”

All of the part-timers will be gone soon, he added.

Jan Halvorsen, a former library specialist, fell into neither

category. Halvorsen retired in September 2002 and has been working

part-time with library finances, “paying bills and doing purchasing,”

she said.

The work she was brought back to do is very different from what

she did before, Halvorsen said.

Ron Hayden, the director of library services, said that Halverson

was hired back because of her understanding of the city and her

expertise in library finances.

“It wasn’t as if she was hired back on contract,” Hayden said.

“She doesn’t supervise anyone. It’s a very narrow activity that she

does and she gets about half the pay that she was getting with no

benefits.”

Halvorsen is now collecting her pension with a two-year service

credit for leaving early in addition to pay for the part-time work

she is doing.

Take it or leave

The golden handshake isn’t necessarily a golden alternative. Many

find they are faced with a lackluster choice; to take the service

credit or get fired.

“In some cases, but not in all cases and not in the majority,

employees are faced with a simple choice of whether to take the

two-year service credit or be laid off,” Martin said. “If they

qualified for the two-year service credit, they took it ... . Some of

them took it under the threat of layoff, and others took it as an

incentive to retire early.”

Hayden called it “a natural human instinct to fear for your job,

especially if you’re near retirement.”

For some, such as Halvorsen, the choice was a noble one.

“I wasn’t really planning on retiring,” Halvorsen said. “They were

able to save money for my position, and that saved laying off other

people. They could have laid off other people instead of me. It’s

better to have somebody go voluntarily than to have somebody go who

isn’t ready for retirement.”

City Councilman Dave Sullivan questioned the need to keep certain

employees on the payroll after retirement, especially high-paid

employees such as former Public Information Officer Rich Barnard and

former Director of Community Services Ron Hagan, who both retired on

Sept. 26, 2002.

Barnard continued to work for the city for one full year after he

retired, at last leaving a job with the city on Friday. Over the past

year, he has assisted in recruiting for his position and phasing out

the city’s television station, which was a casualty to the budget

cuts. He also worked on two city newsletters.

Hagan worked on special projects including the Surf City credit

card and the Huntington Harbor Water Committee. Both were projects

that required his expertise, said Laurie Payne, the city’s public

information officer. Hagan quit his part-time job on Aug. 29. Neither

job, however, was part of his responsibilities as director of

Community Services.

“Sometimes you wonder, if a position can be so easily eliminated,

how necessary was it in the first place,” Sullivan asked. “But then

again, there’s been significant belt tightening.”

* JENNY MARDER covers City Hall. She can be reached at (714)

965-7173 or by e-mail at [email protected].