May 26, 2010 in City
Spokane County restores raise to save pensions
Spokane County commissioners moved Tuesday to ensure that 243 nonunion employees’ pensions won’t be diminished because of bad advice from state officials.
Commissioners voted unanimously to restore a canceled 2 1/2 percent cost-of-living raise. They had withheld the raise to help balance this year’s budget with the mistaken understanding that the action wouldn’t affect pensions.
County employees’ state-managed pensions are based on earnings in their final five years of employment.
In an example based on the most common of three Public Employees Retirement System pensions, a 30-year employee who earns $61,700, which is the average for the affected workers, would lose $77 a month on a pension that otherwise would have paid $3,162 a month.
A new state law last year offered to keep pensions intact despite emergency cuts in wages or hours. Two state Department of Retirement Systems employees – including a supervisor – told commissioners in writing that the law also covered cancellation of a planned raise.
Commissioners acted on that advice, which Retirement Systems representatives have since said was wrong. Employees must have actual cuts in pay or hours, not canceled raises, to qualify for pension protection, state officials said.
On Tuesday, commissioners made the affected employees whole by restoring the cost-of-living raise retroactively. Department heads were directed to cover the cost by reducing other spending.
Commissioners said they will ask the state Department of Retirement Systems to pay for the $325,000 fiasco. They directed staff to file a formal claim, which is the first step in suing a government agency.
Retirement Systems spokeswoman Dawn Gothro said she couldn’t comment on the potential litigation.