Council to address ‘pension spiking’

LIHUE — A bill for an act for possible inclusion in the 2020 Hawaii State Association of Counties Legislative Package, proposed by councilmembers Mason Chock and Council Vice Chair Ross Kagawa, is attempting to address pension reform. The goal is to combat unsustainable past practices that are referred to as “pension spiking.” The bill aims to improve the short-term viability and long-term outlook for the Employees’ Retirement System of the State of Hawaii.

Pension spiking is when employees allegedly boost their pay intentionally through avenues, such as overtime, during their final three years of work in order to inflate their pension benefits.

A presentation made to the Kauai County Council by Thomas Williams, executive director of the state’s Employees’ Retirement System, showed that the county’s excess pension costs due to seven “spiking” retirees during fiscal year 2014 was around $213,000. That number was approximately ten times higher four years later when 21 spiking retirees cost some $2.4 million.

The bill essentially places a cap on allowable overtime and other supplementary payments, so that it “doesn’t get out of control,” Chock said.

This is a “huge problem,” Kagawa said.

“Nobody in the whole state wants to do anything about it,” Kagawa said. “But if you just look at the numbers … there’s abuse going on.”

The concern is that the cost will continue to escalate to a point where other services will be compromised.

“Our children are going to pay for all of this,” Kagawa said, adding that people are already upset that items like new roads aren’t getting addressed.

But Caroline Sluyter, communications officer for the Hawaii Government Employees Association, said there’s no evidence that employees are doing something intentional or wrong. She said that the word “spiking,” in and of itself, has a negative connotation.

“It implies something improper,” she said.

The HGEA, a union that represents government employees, is not supportive of the proposed legislation, “because it would be taking away what was promised to the employee in their contract,” Sluyter said.

“Employees who dedicate themselves to a career to serve the community; employees who struggle to make ends meet; employees who sacrifice much to reach retirement, are now being threatened with being part of a broken promise,” she said.

Chock said the bill is not meant as a punishment for employees but that there needs to be a conversation about the “real issues,” and taking proactive steps so that costs don’t keep exponentially rising.

“I’m not here to make this controversial,” he said during a recent council meeting.

He added that addressing the issue would upset some people, but more people would be upset if nothing is done, as a large portion of taxpayers will have to foot the bill.

Councilmember Luke Evslin said he’s grateful for the bill because it allowed for, “thinking out of the box.” But he was ultimately unable to support it because it’s a blunt instrument for a “specific problem,” he said.

Stable retirement and a benefits package are why people are attracted to government jobs and this could make it worse, he said.

“Spiking is a gigantic problem,” he said. “But a problem that’s perpetrated by only a few people and there are high numbers of people retiring right now.”

Councilmember Kipukai Kuali‘i and Council Chair Arryl Kaneshiro also weren’t ready to support the bill.

Kaneshiro said this was especially true because the problem is only exclusive to “certain departments.”

Felicia Cowden, however, said she supported the bill but with “great discomfort.”

“The hill that we have to climb is so big,” Chock said, adding that he’s open to other ideas to address the matter, “because we don’t have the time to just discuss it.”

When the bill for an act was discussed last month, Councilmember Arthur Brun was excused from the meeting, making it a split vote among the council. Therefore, the bill is up for discussion again at the next county council meeting at 8:30 a.m. on Wednesday at Council Chambers at the Historic County Building.