Seattle police Sgt. Richard O’Neill and Seattle City Light power line supervisor Thomas Caddy were busy leading up to retirement. Each logged thousands of overtime hours, earning roughly an extra $50,000 on average each of their last five years. For Caddy, that was the end of the benefit. But O’Neill’s overtime added tens of thousands of dollars to his annual pension for life.
The difference? The rules of their retirement plans. Police officers and firefighters are the only Seattle city employees whose retirement plans are managed by the state. These plans allow overtime worked during an employee’s highest-income years to contribute toward their pension, mostly without restrictions.
Police officers and firefighters on average worked significantly more overtime as they neared retirement compared to earlier in their careers, a Seattle Times analysis of city payroll data found. They also added more overtime than Seattle employees enrolled in a city-run retirement plan that doesn’t count overtime toward pensions.
This increase in overtime has created millions of dollars in additional pension obligations each year, some of which taxpayers will continue to pay for decades.
While the data can’t explain what motivates employees to increase overtime hours, Seattle Police Department and Fire Department officials acknowledged that some employees boost their pensions by working extra hours late in their careers.
“I would have to say, anecdotally, yes, we are aware of it,” Sgt. Patrick Michaud, an SPD spokesperson, said in an interview. “People are really padding their retirement rate in the final five years.”
Fire Department spokesperson Kristin Hanson wrote in an email: “We know that some members work to boost their top five years for retirement.”
Experts refer to the practice of working extra hours with the purpose of boosting their pensions as “pension spiking.”
Public pensions are funded by contributions from taxpayer-supported government agencies and the employees themselves, plus investment returns.
Washington’s retirement system is among the best-funded in the country, and spiking has not been a concern of legislators for years. However, the system’s managers warn that the inflated costs are shifted onto other plan participants and future taxpayers.
“Even if the system is financially sound, spiking creates inequities that harm public trust,” Steve Conway, a state senator and member of the Legislature’s Select Committee on Pension Policy who has worked on pensions since the 1990s, said in an interview.
Lawmakers tried more than a decade ago to end overtime contributions to pensions, but the bill died after 10 labor groups testified against it, adding that changes would be required to more than 1,300 employer payroll systems statewide to enable the reporting of overtime.
Lawmakers did order a review of pension spiking in state retirement plans, but retirement officials now acknowledge that they didn’t have the detailed data The Times has recently obtained from city agencies through public records requests. And because the state still does not collect the data, there are no official estimates of spiking’s extent or impact.
“That does not surprise me”
The Times requested 20 years of payroll data for employees who retired from 2015 through 2022 from the agencies that account for most of the city’s overtime expenditures: the police and fire departments and City Light.
Police officers and firefighters on average steadily increased their overtime as they neared retirement, with the highest number of hours recorded around the final years of service, the data showed. Those years tend to be the highest-paid of their careers, and their pensions are based on income during that period. Because of that, and because overtime hours for officers and firefighters are paid at 1.5 times their base salary, extra hours logged in that period had a significant impact on their pension payouts.
In contrast, employees from City Light, as well as civilian staff in the fire and police departments — whose city-run pensions don’t factor in overtime — worked steady or even fewer overtime hours on average as they approached retirement.
“That does not surprise me in the least,” Dan Goldhaber, an education researcher at the University of Washington and the American Institutes for Research who has studied the effects of overtime on pensions, said in an interview. “It’s a matter of incentives and rationality.”
Most public employees in Washington are covered by state-managed retirement plans, but Seattle is an exception. Last year, over 70% of city employees were enrolled in the Seattle City Employees’ Retirement System, a city-run pension plan that, unlike state-managed plans, does not count overtime pay toward retirement benefits.
Seattle police officers and firefighters, however, are covered by the state-managed Law Enforcement Officers’ and Fire Fighters’ Plan 2, or LEOFF2, which includes overtime in pension calculations.
Established in 1977, LEOFF2 introduced safeguards against pension spiking that were absent in its predecessor, LEOFF1. These included raising the retirement age, extending the pension calculation period from 24 to 60 consecutive months and not allowing pay for unused vacation or sick leave to count toward pensions. However, the plan did not set limits on how much overtime could be used to boost pensions.
A $158 million boost, and counting
From 2000 through 2013, Seattle police Sgt. Richard O’Neill didn’t log many work hours beyond regular shifts. Overtime pay accounted for 2% of his total earnings.
By 2013, O’Neill was 55 and had spent eight years leading the police union. That year, he announced he was stepping down as union president and said that, while he was old enough to retire, he wanted to work another four to five years. His overtime shot up starting the following year.
From 2014 through 2018, his final five years on the job, he logged hundreds of hours each year — totaling nearly 20 months of added time on the clock. This boosted his earnings by close to $250,000, accounting for more than a quarter of his total pay in that time. The Times estimated that this increased his pension roughly $37,000 a year. As of 2024, his annual pension was about $148,000.
By comparison, Caddy, the retired Seattle City Light power line supervisor who earned similar overtime pay as O’Neill during his final years, consistently worked extra hours throughout his career, but none counted toward his pension.
The only way for City Light employees to raise their pensions is “to go up the ladder,” Caddy said. “That’s what most of us do at the end of our career. If you want to take on the responsibility, you go to a supervisor job to supplement your retirement income.”
O’Neill declined to talk to reporters who visited his home after they had failed to reach him through phone calls and a certified letter.
Some officers and firefighters in the data didn’t increase their average off-shift hours considerably during the last years of their careers, and some even reduced them. However, nearly twice as many increased them than those who didn’t.
“Public safety workers are likely to have more opportunities to work overtime than many other types of public employees,” said Keith Brainard, research director at the National Association of State Retirement Administrators, a nonprofit association of directors of about 90 public retirement systems. “Allowing unlimited overtime to count toward pensions could create an incentive for employees to take advantage of it.”
O’Neill is among 69 officers and firefighters whose overtime grew so much in their highest-paid years that they effectively added between one to 2 ½ years of extra work. The Times estimated that each of them increased their annual pensions by at least $10,000, with some seeing boosts exceeding $50,000 a year.
About $9 million was paid collectively to officers and firefighters for the net additional overtime hours they worked during their highest-paid five years. That extra pay had the effect of increasing their combined pensions by $5.7 million a year.
Looking ahead, those higher pensions add up. Using life expectancies and cost-of-living adjustments from the office of the state actuary, The Times estimated that the state will have paid at least $158 million in additional pension payments by 2044.
Jean-Pierre Aubry, associate director at Boston College’s Center for Retirement Research and a leading expert on state and local government plans, described public pensions as an employer’s promise to maintain an employee’s retirement income based on what they “learned to live on through their work life.”
If an employee consistently worked overtime throughout their careers, it should be part of their pension, Aubry said. But if overtime is increased “to abnormally increase your pension … it’s hard to argue that that’s really what you learned to live off of.
“You are not supposed to work for your pension; you get a pension for your work.”
Even if the system’s financials are solid, he said, the benefits gained by those who boost their pensions are paid for by other employees and future taxpayers through increased paycheck contributions, reduced benefits for future workers or higher taxes. “Just because the system is well funded doesn’t mean abuse is not abuse,” Aubry said.
Brainard noted that some overtime is necessary to provide basic public services, especially during labor shortages. “You don’t want to set up a system in which there’s no incentive to work overtime,” he said.
Pension spiking is “a problem that is manageable” if guardrails are established, he said. “It is a policy decision.”
Did the number of overtime hours worked by police officers change during the last years of their careers?
Not all of the 479 Seattle cops in the data who retired from 2015 through 2022 increased overtime during their five highest-income years; some even cut hours.
But far more worked significantly more hours, increasing their pensions by thousands of dollars each year.
27 officers logged at least an extra year of overtime in their five highest-income years, increasing their annual pensions by $10,000 to roughly $46,000.
A similar trend was present for the 322 firefighters in the data.
42 firefighters logged at least an extra year of overtime in their five highest-income years, increasing their annual pensions by $10,000 to roughly $62,000.
Together, these 69 police officers and firefighters accounted for nearly a third of the $158 million in additional pension costs estimated by The Times.
A city increasingly reliant on overtime
When a police officer waves you across the street to a Seahawks game at Lumen Field, you’re probably seeing overtime in action.
Seattle has come to increasingly rely on off-shift hours. In 2010, the city spent $51 million on overtime. By 2023, that figure had more than tripled to $168 million. During those 14 years, the city paid a total of $1.4 billion to its employees for extra hours of work.
Three departments accounted for more than 80% of those expenses: police, fire and City Light. The remainder was distributed across more than 50 other city agencies.
City officials say persistent staffing shortages have forced the police and fire departments to use overtime. The Fire Department has a high vacancy rate of uniform staff, and two years ago the number of deployable Seattle police officers was at its lowest since 1991, a spokesperson for the city budget office wrote in an email. Last year, for the first time since 2019, SPD had a net gain of one cop.
Lt. Kenny Stuart, president of the Seattle firefighters’ union, said that has put them in a difficult position. “I’m like a broken record, trying to convince (firefighters) to leave their family, especially on a weekend, and come to work another shift when they’ve already worked almost 50 hours a week,” he said in an interview.
The staffing crisis worsened during the pandemic and racial justice protests, and the police and fire departments have yet to fully recover.
But that doesn’t explain the overtime pattern found by The Times. Of the 69 retirees who logged more than a year’s worth of extra overtime as they approached retirement, over a third retired before 2020.
Seattle’s police and fire departments rely on overtime for different reasons. For police, large gatherings like games, parades or protests are a major driver of extra hours. In 2023, SPD dedicated 38% of overtime hours to those events, according to the spokesperson for the city budget office.
Firefighters primarily work overtime to meet the minimum daily staff necessary to operate fire engines and equipment in case of an emergency, according to Lt. Tucker Lazare, the Fire Department’s staffing officer.
Overtime systems at both departments are primarily voluntary, but they differ in how hours are assigned. The Fire Department prioritizes firefighters who have worked fewer overtime hours. “If I’ve already worked and you are on the list and you haven’t worked, then they will select you,” Stuart said. Seniority is rarely used and only as a tiebreaker, he said.
In contrast, police have given more weight to seniority, at least historically. “If we have more officers volunteering than are needed, the person with the least amount of longevity would not be picked for that event,” Michaud, the SPD spokesperson, said in an interview.
Michaud later said the way the department assigns overtime has changed to a first-come, first-served system, but he could not provide details or any policies documenting the change.
Overtime opportunities used to be rare and often handed out based on personal connections, retired SPD assistant chief Steve Hirjak said in an interview.
As Seattle became a major event city and staffing declined, overtime became plentiful, he said, so much so that the department often wasn’t able to fill all the shifts.
“It’s been like this for probably the last 10 years,” Hirjak said. “Anyone who wants overtime can volunteer for it.”
Hirjak said that the union always “made sure seniority played a big factor.” When overtime was scarce, senior officers got preference. Now they’re often assigned the most desirable shifts, he said. “If you’re a sergeant supervising traffic at a Mariners game, that’s preferable to supervising a bike squad at a protest.”
In 2023, Hirjak settled with the city over a lawsuit he filed alleging he was unfairly demoted after another officer’s tug of war with a demonstrator over a pink umbrella during protests in 2020.
According to the data, during his final five years, O’Neill earned about $180,000 working overtime at events for the Mariners, Sounders, Seahawks, Huskies and Seafair. During this period, he transitioned from serving as president of the police union to becoming its vice president and led a campaign that defeated a proposed labor contract that had sought new accountability measures.
“Relying so heavily on overtime is not the city or the council’s preferred policy,” Seattle Councilmember Dan Strauss, who last year became the chief of the council’s financial committee, said in an interview. Sometimes it is the only option during labor shortages in critical fields, he said.
Jamie Housen, spokesperson for Mayor Bruce Harrell, wrote in an email that Harrell has worked to reverse staffing shortages and reduce reliance on overtime. Those efforts have led “to over 4,000 officer applicants in 2024 — the highest number of applicants in a decade — and the first net gain in officers since 2019,” he wrote.
A Seattle firefighter’s starting salary is $98,000, with the average firefighter earning around $139,000. Police officers begin at $104,000 and rise to $136,000 after 4 ½ years, according to each department. This means that overtime worked by senior employees is more costly than that of newer hires. When those additional hours are logged late in a career, they can significantly increase pension payouts.
Stuart, the firefighters’ union president, said young firefighters have more family obligations than older ones and are more aware today of the long-term health risks of the job, which leads them to volunteer less for overtime, leaving mostly those with more seniority to work extra hours.
Stuart said the union works to “give workers respect, dignity and security in retirement, and a pension should be part of that,” adding that “we’ve watched America shrink pensions across this country right as we watch CEO salaries go up, up, up, up, up.”
The Times first reached out to Michael Solan, president of the Seattle Police Officers Guild, for comment in November. After six attempts went unanswered, Solan responded in March, conditioning an interview for this story on an appearance by The Times reporter on his podcast. The Times declined.
Lawmakers’ unsuccessful attempts at reform
After the 2008-09 financial crisis, many states acted to control pension costs by reducing benefits, increasing employee contributions and restricting pension spiking. According to Brainard, 26 states adopted policies limiting or eliminating overtime in pension calculations.
Washington was among the states that tried, but here the efforts failed.
Pension spiking gained attention in Washington in the early 2010s when a State Patrol lieutenant was accused of padding his retirement by claiming overtime he didn’t work. In 2010, the officer was paid about $91,000 in overtime pay, bringing his total pay to about $163,000, more than the patrol chief.
In 2012, soon after the news broke, legislators introduced Senate Bill 6543, seeking to exclude overtime from pension calculations. “The state was in a far more difficult financial position,” state Sen. Conway said. “We were scrambling to fund things.” The bill also would prohibit collective bargaining over how overtime is assigned, shifting that decision to the state.
Labor groups opposed the bill, arguing it unfairly penalized workers who earned legitimate overtime. It never made it out of committee.
While the bill did not pass, legislators commissioned the Washington State Institute for Public Policy to review overtime and excess compensation in state plans.
Its report found cases of employees working “substantially more” during their pension-calculating years. That same year, presentations from the LEOFF2 board and office of the state actuary pointed out the same pattern, warning that overtime pay is “susceptible to manipulation.”
Neither agency considered these cases enough to pose a risk to the system’s financial stability. However, they warned that “it does not follow that individual spiking is not a problem.”
A key limitation of those reviews was the lack of detail. They had access to total pay data but not how much came from overtime. The failed 2012 bill sought to change that by requiring employers to report overtime data to the Department of Retirement Services. More than a decade later, that requirement still doesn’t exist. DRS collects payroll data from over 1,400 public employers, but they only report total hours and overall pay, with no breakdown of overtime.
The Times requested overtime information from five city departments. Response times ranged from under three months for the Department of Transportation to nine months for the Police Department.
Since 2012, pension spiking has largely disappeared from legislative discussions due to improved budgets and shifting policy priorities.
“Budgets have not been as critically underfunded since then, and so we did not have a lot of conversation about (spiking),” Conway said. Issues like increased longevity and higher cost of living adjustments have taken precedence, he said.
Ultimately, experts say, it’s about the rules of the pension system.
Employees “are responding to the incentives they have,” the UW’s Goldhaber said. “I think it is incumbent on policymakers, if they don’t want to incur larger pension obligations, to change the rules so that they don’t create the incentives for spiking.”
Credits:
Reporter and data analysis: Manuel Villa
Research and data support: Miyoko Wolf, Mike Reicher
Editors: Laura Greanias, Mike Reicher
Graphics: Frank Mina, Mark Nowlin
Illustration: Chris Kaeser
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Photo editor: Bettina Hansen
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Audience engagement: Ryan Nguyen
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