Fiscal board has doubts about law allowing retirees to work part-time for gov’t
By The Star Staff
The Financial Oversight and Management Board expressed concern late last week about a law that will allow retired workers to work for the government on a part-time basis and noted that those who retired under an early retirement incentive law, or Act 80 of 2020, can not participate.
The oversight board made its remarks about Act 53-2022, which among other things would permit certain retired pensioners to be reemployed by and rejoin the government workforce on a part-time basis while continuing to receive pension payments. Eligible individuals include those who have retired from any commonwealth municipality, agency, and/or instrumentality, and workers obligated to retire due to age such as Police Bureau employees.
Act 53 permits eligible retired individuals to be reemployed by a government entity as long as the hours worked and remuneration received is not more than half of what a full-time worker would receive when performing the job. The part-time workers would also be eligible for other benefits and compensation, such as mileage reimbursement.
Further, eligible workers would have the opportunity to opt into the Defined Contribution Plan created under Act 106-2017, permitting them to make additional contributions while actively working for the government, and at the same time collecting pension benefits from their initial retirement.
The government told the oversight board that Act 53 will not result in any fiscal impact on the commonwealth and concluded that “Act 53 is not significantly inconsistent with the Certified Fiscal Plan.”
Specifically, the submission states that “Act 53 supports the principles and goals for restoring growth on the island as outlined in Part III of the 2022 Fiscal Plan” and the Act “is consistent with the general goal of transforming the Government to better serve the residents of Puerto Rico as stated in Part V of the Certified Fiscal Plan.”
The oversight board said those statements broadly misconstrue the Certified Fiscal Plan for the commonwealth. For example, the Fiscal Plan devotes an entire chapter to human capital and welfare reform, which in large part focuses on workforce development and training of new employees.
Part V of the Fiscal Plan, which the submission relies upon in making the aforementioned statement, specifically focuses on transforming government services by finding “operational efficiencies to enable better service delivery in a cost-effective way” and by reducing staffing at government agencies, not increasing it.
On June 3, 2021, the oversight board sent a letter to Gov. Pedro Pierluisi Urrutia and the Legislature outlining its concerns with House Bill 533-2021 (HB 533), the bill that became Act 53.
“In particular, the Oversight Board expressed concerns that permitting former Commonwealth employees who retired under incentivized retirement programs to return to work could add unbudgeted costs to the Commonwealth PayGo,” the letter dated Nov. 18 said. “The Oversight Board reminds the Government that any expenditures, including PayGo expenditures, must be accounted for in the Certified Commonwealth Budget.”
After reviewing Act 53 and the submission, the oversight board said it is also concerned about the implementation of Act 53 with respect to Act 80 retirees, assuming the board and the government reach a final agreement allowing for partial implementation of the early retirement program in Act 80-2020 (Act 80).
“As you know, on Dec. 20, 2021, the oversight board filed a complaint against the Governor, AAFAF [the Puerto Rico Fiscal Agency and Financial Advisory Authority] and the Employee Retirement System seeking to have certain pension laws, including Act 80, enjoined and nullified as violative of numerous provisions of PROMESA [the Puerto Rico Oversight, Management and Economic Stability Act],” the board wrote.
Shortly thereafter, the government and the oversight board filed a stipulation resolving the adversary proceeding and requiring the parties to meet certain obligations. The Title III Court entered the stipulation as an order on Dec. 28, 2021.
“The Oversight Board and the Government continue to engage in discussions regarding the partial implementation of an early retirement program as contemplated under Act 80,” the oversight board said.
On July 14 of this year the government asserted to the oversight board that the permanent elimination of the proposed eliminated positions “will not adversely impact each [government] entity’s ability to provide essential services to Puerto Rico residents.”
Further, as noted in the Title III bankruptcy court’s order resolving the parties’ joint informative motion concerning Act 80 of 2020 and Joint Resolution 33 of 2021, as part of the parties’ ongoing discussions, the oversight board and the government “shall work together to agree,” among other things, that “no employee who elects early retirement under Act 80 shall be eligible for employment by the Commonwealth or any of its instrumentalities, agencies or corporations.”
Accordingly, the oversight board advised the government that, because the government has represented that implementation of the Act 80 early retirement programs will not jeopardize the delivery of essential services, reemployment of Act 80 retirees for the purposes of ensuring continuity of services is inconsistent with the government’s representations and assurances underpinning the order to which both parties agreed.
“In other words, if eliminating these positions will achieve cost savings because the loss of employees will not jeopardize essential services, there appears to be no need for legislation that encourages retirees to return to work and imposes additional retirement benefit costs on the Government,” the board said. “The Oversight Board also reminds the Government that prohibiting the reemployment of Act 80 retirees under Act 53, or any similar law or executive order, is an indispensable condition of an agreement regarding implementation of Act 80.”