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The city of Kirkland has been asked to reimburse $60,000 in pension payments because a retired woman was hired and allowed to collect both her state pension and a $12,500-a-month salary as the city’s interim public-works director.

The issue revolves around how a private contractor is defined.

As far as the state Department of Retirement Systems (DRS) is concerned, contractors don’t manage, make policies or have offices and hours. As far as Kirkland is concerned, they can.

Pamela Bissonnette had retired from King County in 2007. She was hired by Kirkland in January 2013 as a contractor. According to DRS, Kirkland did not report Bissonnette as a retiree returning to work.

Legally, she could collect her pension and work for about five months, said Dave Nelsen, manager of legal services for DRS. But she continued to work after that, collecting $60,000 in state pension payments that should never have been made.

State officials now want the city to pay it back. According to state law, employers must report to the state any retirees they employ.

Although her state pension continues — and the potential cost
to the city increases daily — City Manager Kurt Triplett said Bissonnette continues to be employed.

He said the city plans to hire a permanent public-works director sometime this year and until then Bissonnette is likely to remain.

“We haven’t received any kind of bill from the Department of Retirement Systems,’’ he said. “When we do, we’ll evaluate it to see if we agree with it.’’

When Kirkland hired Bissonnette the city drafted a contract, “and we think we did everything right,’’ Triplett said.

According to Nelsen, contractors produce a product and do not have set hours or management responsibilities — all of which Bissonnette has. Bissonnette hires and supervises the management team, determines policies and procedures, coordinates the department’s biennial budget and gives updates at City Council meetings.

State and city officials have had telephone conversations about the issue. Triplett said the city might look at appealing the DRS decision.

“If they conclude she’s an employee, we may need to separate her from Kirkland or redo her contract,’’ Triplett said.

“She was never intended to be our employee, and we don’t want to put her retirement at risk,’’ he said.

Bissonnette’s pension payments were valued at $104,241 last year, according to DRS.

The state began to audit pension payments in 2013 after The Associated Press ran stories about firefighters and police officers retiring and being rehired.

In February, DRS found $235,000 in what officials say were wrongfully issued pension payments. In one case, a retiree was hired as the North Highline Fire District’s chief. DRS is trying to collect $98,000 from the department.

In Stevens County, DRS is seeking $137,000 after a risk manager retired and was immediately rehired.

Nancy Bartley: or 206-464-8522.

Times staff reporter Mike Baker contributed to this report.