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FORT MILL — Town Manager David Hudspeth is retiring Friday. But not for long.
Hudspeth will be rehired by the town in his old position effective July 16 and begin a new, two-year contract that pays the same $99,343 annual salary he earned prior to June 29, when he “retired.” However, like other public employees vested in the state retirement fund who changed their status, Hudspeth, 48, will also begin collecting a monthly pension check for life.
Anticipating drastic changes to the state retirement system – the S.C. Legislature approved an overhaul Aug. 21 – Hudspeth and others moved to take advantage of current rules that allow public employees who have accrued enough time in the system to retire and, after 14 days, become a government worker again without forfeiting any pension payouts.
“Once I started to get to eligibility, I started making plans because [state legislators] were talking about making the kinds of changes to the retirement system that wouldn’t allow employees to work and draw their retirement,” Hudspeth said.
Under the rules that existed prior to last week’s overhaul by S.C. lawmakers, employees needed 28 years of accrued service before they can start drawing their pension. Hudspeth, who was hired as Fort Mill Town Manager in 1997 and had accrued public service time elsewhere in S.C., was actually about six months short of the required 28 years, but the system allowed him to “buy” the remaining time.
He said some his unused vacation time was used as part of the arrangement to get the required 28 years in the system.
The Fort Mill Town Council approved Hudspeth’s new contract on a 7-0 vote at its May 14 meeting. Assistant Town Manager Joe Cronin will be the town’s Interim Manager June 29-July 16.
“We’ll make sure the doors stay open, the lights stay on and hope nothing exciting happens,” Cronin joked.
“The [state] legislation coming in was going to impact him (Hudspeth) in a negative way and if we can find a way to help him, we wanted to do that,” Fort Mill Mayor Danny Funderburk said.
“David has done an outstanding job for us and he certainly deserves it.”
Funderburk also said he thinks it would be difficult to find a new town manager as experienced as Hudspeth who would be willing to work for the same salary.
“If we had to go out on the competitive market, we’d have to pay a lot more,” he said.
Officials said there are no state or local laws they are aware of that would require the town to actually post an opening for the town manager’s position even though it’s technically vacant for two weeks.
“There’s no state law requiring a municipality to open its process if a vacancy occurs. That’s all dictated by local procedures,” said Scott Slatton, senior field service manager for the S.C. Municipal Association.
Lawmakers also killed the controversial TERI program, which allows state workers to retire and return to work for up to five years while they earn both a salary and a retirement check. They also made it much harder for public-sector employers to hire retired workers back to their old jobs. Under the new law, retired employees who return to work would have to forfeit their retirement checks once they earn $10,000 in salary in one year.
And if those public-sector employees – state and local government workers plus teachers – want to buy service time to retire early like Hudspeth did, the price is about to go up significantly.
The S.C. State Employees Association supported the bill but said the TERI and return-to-work programs are not the boogeyman that lawmakers made them out to be.
“TERI is an incentive to get quality employees to come and work for the state,” said Carlton Washington, the association’s executive director.
TERI will be phased out over five years. The return-to-work changes and the “service time” requirements, which allow workers to buy credit for additional years of service, will not go into effect until Jan. 2, 2013. That gives current state workers who are close to retirement six months to make up their mind.
And it could lead to an onslaught of retirement requests.
“What’s the net effect on ‘brain drain’ on state and local agencies?” Slatton asked, rhetorically. “It could prompt a wave of retirements and there’s a dearth of experience around the state – maybe not Fort Mill, but smaller towns for sure – and that means towns having a horrible time finding managers and administrators because there are so few of them.”
Without incentives, qualified workers who would otherwise be attracted to public jobs might opt for the higher-paying private sector instead, leaving many important vacancies in the wake of mass early retirements from government.
“If it’s as widespread and broad as I think it could be, it can point to a lack of people going into government management. It’s good, stable work doing good thing for [the public]; TERI worked well for what it was intended to do,” Slatton said.
Lawmakers have agreed to end the TERI program by 2018 as part of a broader bill designed to encourage employees to work longer before retiring. By working longer, state workers would withdraw less from the state's $25 billion pension fund -- which accountants estimate will run out of money sometime over the next 30 years, falling about $15 billion short.
The House approved the bill 88-9, and the Senate approved the bill 43-0. It now goes to Gov. Nikki Haley, who can sign it into law, veto it or allow it to become law without her signature.
The bill means state workers will pay more, but it should save taxpayers money. The bill requires state workers to match any taxpayer increases to the system, meaning taxpayers and state workers would share in any increases. Right now, taxpayers have to pay for any required increases.
The bill also guarantees an annual 1 percent cost-of-living-adjustment for retirees, capped at $500.
Rep. Jim Merrill, R-Berkeley, who lead the negotiations for the House, called it "a wonderful bill both Democrats and Republicans can feel good about."
However, Merrill was not pleased with all aspects of the bill.
The bill also creates an 11-member Public Employee Benefits Authority that would govern the retirement system. Four of the members would be either retirees or state workers, and all of the members would earn $20,000 annual salaries.
The authority would also make decisions about the employee health insurance plan. Merrill warned that, because the board would make decisions about non-retirement issues, the state Supreme Court could rule the bill unconstitutional under the "one subject" rule.
"It endangers this bill, in our opinion," he said.
But Merrill said the Senate and Gov. Nikki Haley insisted on the authority, and the bill would not have passed without it.
The state’s retirement fund has $25 billion in it. The state uses it to pay monthly retirement checks to retired state workers, teachers, police officers, firefighters and lawmakers. The money in the fund comes from employee contributions, taxpayer contributions and investment returns.
However, over the last decade, the retirement fund has not been able to keep up with the benefits it owes retired state workers for a variety of reasons, including huge investment losses the system sustained during the Great Recession.
Accountants predict that sometime over the next 30 years the retirement fund will run out of money, falling about $15 billion short. To avoid this, state taxpayers would have to pay billions of dollars to make up that shortfall. That’s why lawmakers want to change the law to make state workers contribute more to the system and work longer before they retire.
Reporter Adam Beam of The State newspaper contributed.
Hudspeth will be rehired by the town in his old position effective July 16 and begin a new, two-year contract that pays the same $99,343 annual salary he earned prior to June 29, when he “retired.” However, like other public employees vested in the state retirement fund who changed their status, Hudspeth, 48, will also begin collecting a monthly pension check for life.
Anticipating drastic changes to the state retirement system – the S.C. Legislature approved an overhaul Aug. 21 – Hudspeth and others moved to take advantage of current rules that allow public employees who have accrued enough time in the system to retire and, after 14 days, become a government worker again without forfeiting any pension payouts.
“Once I started to get to eligibility, I started making plans because [state legislators] were talking about making the kinds of changes to the retirement system that wouldn’t allow employees to work and draw their retirement,” Hudspeth said.
Under the rules that existed prior to last week’s overhaul by S.C. lawmakers, employees needed 28 years of accrued service before they can start drawing their pension. Hudspeth, who was hired as Fort Mill Town Manager in 1997 and had accrued public service time elsewhere in S.C., was actually about six months short of the required 28 years, but the system allowed him to “buy” the remaining time.
He said some his unused vacation time was used as part of the arrangement to get the required 28 years in the system.
The Fort Mill Town Council approved Hudspeth’s new contract on a 7-0 vote at its May 14 meeting. Assistant Town Manager Joe Cronin will be the town’s Interim Manager June 29-July 16.
“We’ll make sure the doors stay open, the lights stay on and hope nothing exciting happens,” Cronin joked.
“The [state] legislation coming in was going to impact him (Hudspeth) in a negative way and if we can find a way to help him, we wanted to do that,” Fort Mill Mayor Danny Funderburk said.
“David has done an outstanding job for us and he certainly deserves it.”
Funderburk also said he thinks it would be difficult to find a new town manager as experienced as Hudspeth who would be willing to work for the same salary.
“If we had to go out on the competitive market, we’d have to pay a lot more,” he said.
Officials said there are no state or local laws they are aware of that would require the town to actually post an opening for the town manager’s position even though it’s technically vacant for two weeks.
“There’s no state law requiring a municipality to open its process if a vacancy occurs. That’s all dictated by local procedures,” said Scott Slatton, senior field service manager for the S.C. Municipal Association.
Lawmakers also killed the controversial TERI program, which allows state workers to retire and return to work for up to five years while they earn both a salary and a retirement check. They also made it much harder for public-sector employers to hire retired workers back to their old jobs. Under the new law, retired employees who return to work would have to forfeit their retirement checks once they earn $10,000 in salary in one year.
And if those public-sector employees – state and local government workers plus teachers – want to buy service time to retire early like Hudspeth did, the price is about to go up significantly.
The S.C. State Employees Association supported the bill but said the TERI and return-to-work programs are not the boogeyman that lawmakers made them out to be.
“TERI is an incentive to get quality employees to come and work for the state,” said Carlton Washington, the association’s executive director.
TERI will be phased out over five years. The return-to-work changes and the “service time” requirements, which allow workers to buy credit for additional years of service, will not go into effect until Jan. 2, 2013. That gives current state workers who are close to retirement six months to make up their mind.
And it could lead to an onslaught of retirement requests.
“What’s the net effect on ‘brain drain’ on state and local agencies?” Slatton asked, rhetorically. “It could prompt a wave of retirements and there’s a dearth of experience around the state – maybe not Fort Mill, but smaller towns for sure – and that means towns having a horrible time finding managers and administrators because there are so few of them.”
Without incentives, qualified workers who would otherwise be attracted to public jobs might opt for the higher-paying private sector instead, leaving many important vacancies in the wake of mass early retirements from government.
“If it’s as widespread and broad as I think it could be, it can point to a lack of people going into government management. It’s good, stable work doing good thing for [the public]; TERI worked well for what it was intended to do,” Slatton said.
Lawmakers have agreed to end the TERI program by 2018 as part of a broader bill designed to encourage employees to work longer before retiring. By working longer, state workers would withdraw less from the state's $25 billion pension fund -- which accountants estimate will run out of money sometime over the next 30 years, falling about $15 billion short.
The House approved the bill 88-9, and the Senate approved the bill 43-0. It now goes to Gov. Nikki Haley, who can sign it into law, veto it or allow it to become law without her signature.
The bill means state workers will pay more, but it should save taxpayers money. The bill requires state workers to match any taxpayer increases to the system, meaning taxpayers and state workers would share in any increases. Right now, taxpayers have to pay for any required increases.
The bill also guarantees an annual 1 percent cost-of-living-adjustment for retirees, capped at $500.
Rep. Jim Merrill, R-Berkeley, who lead the negotiations for the House, called it "a wonderful bill both Democrats and Republicans can feel good about."
However, Merrill was not pleased with all aspects of the bill.
The bill also creates an 11-member Public Employee Benefits Authority that would govern the retirement system. Four of the members would be either retirees or state workers, and all of the members would earn $20,000 annual salaries.
The authority would also make decisions about the employee health insurance plan. Merrill warned that, because the board would make decisions about non-retirement issues, the state Supreme Court could rule the bill unconstitutional under the "one subject" rule.
"It endangers this bill, in our opinion," he said.
But Merrill said the Senate and Gov. Nikki Haley insisted on the authority, and the bill would not have passed without it.
The state’s retirement fund has $25 billion in it. The state uses it to pay monthly retirement checks to retired state workers, teachers, police officers, firefighters and lawmakers. The money in the fund comes from employee contributions, taxpayer contributions and investment returns.
However, over the last decade, the retirement fund has not been able to keep up with the benefits it owes retired state workers for a variety of reasons, including huge investment losses the system sustained during the Great Recession.
Accountants predict that sometime over the next 30 years the retirement fund will run out of money, falling about $15 billion short. To avoid this, state taxpayers would have to pay billions of dollars to make up that shortfall. That’s why lawmakers want to change the law to make state workers contribute more to the system and work longer before they retire.
Reporter Adam Beam of The State newspaper contributed.
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