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At a time when more than one in 10 working-age Oregonians is unemployed, Gov. Ted Kulongoski and some lawmakers want to expand how many retired public employees can keep collecting a public paycheck on top of their pension checks from the Public Employee Retirement System.

That push to expand a practice some critics call “double-dipping” alarms a coalition of public employee unions who call themselves the “PERS Coalition.”

“You have a new workforce that is ready to go to work, and you are blocking their entry through artificial means,” says Mary Botkin, a lobbyist for the American Federation of State, County and Municipal Employees and a member of the PERS Coalition.

Beyond the merits of the debate, the fight is interesting politically because it pits traditional allies against each other: public employee unions versus Kulongoski and his fellow Democrats in the Legislature.

Once upon a time, “retired” meant “retired,” and for good reason. PERS Deputy Director Steve Rodeman says federal law requires that employees must actually demonstrate bona fide retirement; otherwise the tax benefits accorded to retirement and pension savings would be a sham.

But beginning 20 years ago, Oregon lawmakers began chipping away at that requirement. They created exemptions for hard-to-replace retirees in rural areas, school superintendents and nursing and public safety instructors.

Following pension reforms in 2003, the number of exemptions to working after retirement ballooned, growing to include routine jobs.

The basic exemption allowed retirees to return to work for up to 1,039 hours annually, or just short of six months of 40-hour work weeks. Employers benefit because they get experienced workers for whom they no longer must pay PERS contributions; employees benefit because they collect a paycheck and a pension check.

PERS officials say there are now about 5,500 retirees working up to 1,039 hours annually and another 800 who, because of various exemptions, may work an unlimited number of hours. (PERS has about 105,000 active members).

The largest proposed expansion of retirees returning to work is backed by the Oregon School Employees Association, which wants non-teachers and non-management (about 6,000 employees statewide) to be able to return for unlimited hours. “Most of our members don’t make enough to retire,” says OSEA lobbyist Tricia Smith. (The association is also a member of the PERS Coalition, but is at odds with other members on the issue.)

But OHSU and the Oregon Fire Chiefs Association are also pushing bills that would exempt various more highly paid retired PERS members from restrictions on hours worked.

And top public officials, such as Kulongoski and Oregon Lottery Director Dale Penn, have sought exemptions for specific positions. Both tacked amendments onto a PERS housekeeping bill that would equalize treatment of employees who retire with a monthly benefit and those who take a lump-sum payout.

Kulongoski, for example, wants an exemption for Bob Mink, director of the troubled Oregon Youth Authority. Mink previously retired after a long career as a high-level state bureaucrat. Kulongoski spokeswoman Anna Richter Taylor says the OYA conducted a nationwide search last year for a new director. But the search committee decided that Mink, who retired as the director of the Oregon Department of Human Services in 2002 and is eligible for a pension of upwards of $60,000, was the best choice for the $163,000 job. She added that Kulongoski does not consider the 800 retirees who are working full-time to be too many.

Penn’s issue is slightly different. By law, he told the Senate Commerce Committee on March 9, the Lottery must hire Oregon State Police detectives to root out fraud, conduct background checks and perform other security procedures. But Penn says OSP personnel are more interested in investigating higher-profile crimes, leaving the Lottery stuck between a mandate and a thin, aging talent pool.

“OSP has hired 130 new troopers,” Penn told lawmakers. “None has applied for this work.”

The five gubernatorial appointees who oversee PERS are open to exemptions in specific, narrowly defined cases with provisions for those exemptions to expire. But Rodeman, the deputy director, says they do not support any of the broader bills that promise large expansions of how many employees can return to work.

Rodeman explains that the system is funded by employer contributions for eligible workers, so having thousands of jobs filled by retirees for whom employers make no contributions weakens PERS’ s financial position.

Botkin says the PERS Coalition wants lawmakers to scrutinize exemptions to ensure they comply with genuine recruitment and retention challenges.

“Let’s go back to the original intent of the law,” she says. “With every good intention, there’s somebody who finds a way to exploit it.”