Council asked to clarify personnel issues over rehiring retirees and retirement costs

Rehiring a previously retired city employee has turned into much more of a problem then the city initially believed and also more costly.

Crossville Human Resources manager Leah Crockett explained part of the problems to the city council during a work session Tuesday saying that the Tennessee Consolidated Retirement System (TCRS) has ruled that because of the way the city is now doing retirement, any rehired employees must be put back on the more expensive TCRS program.

In 2013 the city opted to leave the TCRS program and all new employees after July 1, 2013 went onto a program similar to a 401k that requires an employee put in at least 5 percent of their salary that is matched by the city. An employee can put in more and the city will match up to a maximum of 8 percent of the salary. Previous employees are able to stay on the TCRS program that requires no contribution from the employee and the city deposits 18 percent of the employee's salary toward the TCRS retirement program.

Crossville city council members discuss questions raised by HR Director

Leah Crockett over retirement complications of hiring previous retirees.

After some initial confusion, the TCRS has finally determined that rehiring a previous retiree means that employee must stop collecting any retirement payments if they had started them and they must go back on the TCRS program increasing the city's costs.

Crockett told the council that she needed some direction from council as currently there was no policy on the hiring of a previous retiree in the personnel policy. “There has been a little bit of miscommunication that has gone on between the city and TCRS,” explained Crockett. Initially last year TCRS had given guidance on a retired employee returning to work and receiving retirement pay but the information turned out to be incorrect and TCRS is working to straighten out the information. Crockett said she was waiting on written information from TCRS on their ruling.

Ms. Crockett explained that TCRS had a special session just about the situation at Crossville and they have told Crossville that any employees returning to work must be returned to the TCRS program at the more costly contribution rate. The initial information last year was that a rehire would instead go on the new retirement program through the International City/County Management Association (ICMA).

“Normally entities don't rehire” a retiree to return full time explained Crockett. She added that as she understands what TCRS is saying, if a rehired retiree stays 3 years or longer then their service and benefit is recalculated and it could cost the city even more money. “There's nothing in the handbook, policy or charter or anything that indicates how we are going to handle this,” added Crockett.

Crockett said the policy needs to speak to if an employee retires from our service are we going to hire them back with no questions or if we have stipulations such as a waiting time before rehiring, or an employee could only return in a part-time capacity.

Councilman Danny Wyatt said, “I believe TCRS has set our policy for us, hadn't it?

Crockett also said that even without a buyout, a city retiree is paid a retirement incentive after a number of years of between $2000 and $3500. Should the city pay that bonus again if a retiree retires a second time with more years of service based on the TCRS standard after being rehired?

Wyatt added that now that the city knows this it would be up to the HR department and the new city manager to work this out. “You bring a retired employee back, there's a pretty good reason why you did, he was good at his job,” said Wyatt.

Crockett said, “Council has to set the policy and approve the handbook. For there to be a policy, council has to approve that.”

Further issues could crop up if an employee goes to another job and then after a few years were to come back to a job with Crossville it appears the city would again have to put them back on the more expensive TCRS program.

Council discussed delaying any immediate action until the new city manager starts and they plan to take up the matter at a future meeting.

The current problem has come out of the recent rehiring of former police chief David Beaty who retired 2 years ago as well as the previous hiring of Steve Hill as the interim city manager. Hill has since been removed from that position.