Council votes ‘no’ to pension overtime cap

LIHUE — A bill that would have placed a cap on the amount of overtime considered to be “compensation” for pension retirement benefits, won’t be included in the 2020 Hawaii State Association of Counties Legislative Package.

The bill aimed to improve the short-term viability and long-term outlook for the Employees’ Retirement System of the State of Hawaii by combating what is referred to as “pension spiking.” It’s 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.

Councilmembers decided that the bill for an act was too wide of a net to cast for a small number of people taking advantage of the system. Councilmember Kipukai Kuali‘i said that he would like to correct the abuse but wants to be careful that others aren’t punished for it in the meantime.

He also added that “some of the abuses” are specifically coming from the fire department and that there is an audit currently happening that is focusing on “spiking” within the county.

Councilmembers agreed that it’s an issue that still needs to be addressed because the county is going to have to fill a “looming” $8 million puka in the next few years because of it, Council Vice Chair Ross Kagawa said.

The money will have to come from somewhere and since “un-funding” the county’s annual budget is “unrealistic,” the only way it will be paid is by increasing citizen’s taxes, he said.

Therefore, other options will have to be considered. Otherwise, Kagawa said it will end up costing upcoming generations, especially “children who don’t have a job yet.”

The county’s excess pension costs due to seven “spiking” retirees during the 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.

“We’re not taking away the benefit, we’re changing the benefit,” said Councilmember Mason Chock regarding the purpose of his proposed legislation, adding that he hoped the issue would continue to be discussed, particularly at the state level.

Unions like the Hawaii Government Employees Association (HGEA) weren’t supportive of the legislation for a variety of reasons. One is that there isn’t evidence that employees are doing anything wrong, according to Caroline Sluyter, communications officer for the HGEA. When The Garden Island reached out to her on Wednesday regarding the county council’s vote, she declined to comment.

Kagawa said he isn’t afraid to keep kicking the can down the road.

“Because it’s a problem that needs to be fixed,” he said. “I’m trying to speak for all the people who don’t work for the government.”

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Coco Zickos, county reporter, can be reached at 245-0424 or czickos@thegardenisland.com.