2010-2011 Santa Clara County Civil Grand Jury Report Rehiring of Pensioners:

Conclusions 4

• CL1 Page 8
  In spite of public opinion, there are situations that warrant rehiring pensioners and often it makes good business sense to do so. All managers interviewed follow existing procedures, which allow rehiring of pensioners.
• CL2 Page 8
  For over six years, the City of Santa Clara has filled a previously 24/7 type of management job with a part-time employee. Clearly, the job is not a temporary or limited-time-urgent-needs position and six years is more than sufficient time to find a replacement.
• CL3 Page 8
  The fifteen towns and cities—Campbell, Cupertino, Gilroy, Los Altos, Los Altos Hills, Los Gatos, Monte Sereno, Morgan Hill, Milpitas, Mountain View, Palo Alto, San Jose, Santa Clara, Saratoga, Sunnyvale—and the County may be inadvertently creating a demand to rehire pensioners because the public sector retirement age is relatively young at 50 (police and fire) or 55 (administrative positions).
• CL4 Page 7
  Most cities in SCC and SCC itself rehire retirees. For the most part, rehiring of pensioners is a good business decision, helping agencies to fulfill short-term or urgent work assignments where specialized skills, typically amassed over the career of a retiree, are needed. In some cases, retirees also have the capacity to work twice as fast as a new hire, thus saving agencies time. Hiring RHPs saves agencies the cost of fringe benefits that otherwise would be paid to a full-time replacement worker. Some members of the SCC Board of Supervisors recently made public their opinions that rehiring pensioners is bad policy. By contrast, it appears hiring managers are making generally good business decisions in rehiring pensioners. An unintended consequence of a relatively early retirement age (55 years for public sector employees versus a private industry average of 65) is that employees are incentivized to leave the workforce earlier than they may be ready to stop working. For instance, interviewees consistently stated that if they work past their retirement age, they “lose” money, because they could receive the same pay in pension while not working at all. This creates the well-publicized public sector pension liability that could be avoided for ten years or more by raising the retirement age. The early retirement age also creates a void agencies must fill and, because workers may wish to continue working past age 50 or 55, creates the desire to return to work as a rehired pensioner. 7 Findings and Recommendations Finding 1 In spite of public opinion, there are situations that warrant rehiring pensioners and often it makes good business sense to do so. All managers interviewed follow existing procedures, which allow rehiring of pensioners. Recommendation 1 If the County or the City/Town of Campbell, Cupertino, Gilroy, Los Altos, Los Altos Hills, Los Gatos, Monte Sereno, Morgan Hill, Milpitas, Mountain View, Palo Alto, San Jose, Santa Clara, Saratoga, Sunnyvale desire to end the practice of rehiring pensioners, they should make that official by means of a policy decision. Finding 2 For over six years, the City of Santa Clara has filled a previously 24/7 type of management job with a part-time employee. Clearly, the job is not a temporary or limited-time-urgent-needs position and six years is more than sufficient time to find a replacement. Recommendation 2 The City of Santa Clara should consider consolidating with another agency's fire department for fire services and eliminate the part-time fire chief position or fill the position with a permanent part-time employee. Finding 3 The fifteen towns and cities—Campbell, Cupertino, Gilroy, Los Altos, Los Altos Hills, Los Gatos, Monte Sereno, Morgan Hill, Milpitas, Mountain View, Palo Alto, San Jose, Santa Clara, Saratoga, Sunnyvale—and the County may be inadvertently creating a demand to rehire pensioners because the public sector retirement age is relatively young at 50 (police and fire) or 55 (administrative positions). Recommendation 3 The fifteen towns and cities—Campbell, Cupertino, Gilroy, Los Altos, Los Altos Hills, Los Gatos, Monte Sereno, Morgan Hill, Milpitas, Mountain View, Palo Alto, San Jose, Santa Clara, Saratoga, Sunnyvale—and the County should continue to pursue a higher retirement age with its public sector unions and associations. 8 This report was PASSED and ADOPTED with a concurrence of at least 12 grand jurors on this 19th day of May, 2011. Helene I. Popenhager Foreperson Gerard Roney Foreperson pro tem Kathryn Janoff Secretary 9

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