The Associated Press

PORTLAND - With 31 years on the job, June Henry collects her PERS retirement benefits and a salary while continuing to teach her fifth-grade class in Oregon City.

She's not alone.

Public employees across Oregon take advantage of a 12-year-old law that allows retirees in the Public Employees Retirement System to work part time indefinitely or full time for six months.

In Oregon City, 85 percent of the 34 who have retired this school year stayed on. The number hovered at 50 percent in the West Linn and 40 percent in Lake Oswego school districts. About 31 percent of last year's 1,044 state government retirees came back to work.

The surge has been driven by the growing number of aging baby-boomers and their anxiety about locking in benefits before the Legislature trims the state's retirement program, which faces a $15 billion shortfall.

PERS allows recent retirees with more than 30 years service to get pensions nearly equal to their salaries.

Some school districts have reined in the practice out of for fear of irking taxpayers. But a legislator has introduced a bill that could let retirees work unlimited hours.

Actually, officials say the "double-dipping" saves thousands of dollars per employee because the employer no longer has to pay into the worker's retirement account, which slashes up to 18 percent from the cost of hiring a person of equal experience.

The Gresham-Barlow School District estimates it will save $42,000 this semester by allowing more than 20 retirees to stay in their jobs.

Henry, whose salary was reduced when she returned to work in January, said she probably would have waited until June to retire if this option hadn't been available.

She thought it was important to see her class through the year.

Many administrators say they keep retirees on staff because they don't want to interrupt important projects or children's educations.

"We look at it as a wonderful opportunity," said Ron Wilkinson, deputy superintendent of Bend-LaPine Public Schools, where nearly two-thirds of last year's retirees returned to their desks. "We're quite concerned about a huge brain drain and experience drain, particularly this year with a panic over PERS. We're at a point where there's a mass rush to retirement."

The practice has its critics, including Metro Councilor Brian Newman.

"I think I've got the same perspective as the average citizen: That that this kind of practice stinks," said Newman. "I don't begrudge any employee choosing to retire, especially now, when there's uncertainty about PERS. But it's downright offensive for us to rehire those people."

The 1991 Legislature nearly doubled the hours a PERS retiree could work -- to 1,039 per calendar year -- without losing benefits. Because school years are split between two calendar years, employees can work full time for an entire academic year after retiring.

Public employees who retired in 2002 with more than 30 years of service will pull in retirement checks that average 96 percent to 104 percent of their final salary. Coupled with their pay for continuing to work, that gives retirees a big income boost.

David Olmsted wasn't ready to quit teaching social studies at Brown Middle School in Hillsboro, but he agreed in December to retire. He will finish the school year receiving a retirement check, a reduced salary and a four-year stipend the district offers to get expensive employees off the payroll.

If it weren't for PERS problems, Olmsted said, he wouldn't have accepted the offer.

"Mentally, I wasn't ready," Olmsted, 56, said. "I like what I'm doing."

PERS does not track working after retirement, and doesn't aggressively police the 1,039-hour rule, said Jim Voytko, the system's executive director.

"We're entering a demographic period with a bulge of older workers," Voytko said. "As they approach the later stages of their careers, we look and say, 'Geez, there are people whose skills are difficult to replace. How can we continue to retain them even after they retire?' "

The deputy and assistant superintendents in the West Linn-Wilsonville School District retired this month. But both agreed to stay on, working full time for half-time pay.

Superintendent Roger Woehl sees their decisions as generous. He said the retirement money rightly belongs to them, and taxpayers who take issue with it are envious.

"Frankly, I think it boils down to jealousy," Woehl said.