In difficult economic times many public policy decisions are based almost solely on budget considerations with little thought about the unintended consequences. A recent trend in state governments demonstrates this problem. Several states have reformed the practice of that is, retiring from employment in a state or local government, receiving a pension, and then returning to full employment in the former agency or another agency within the same retirement system. These cases, especially when they involve high-paying jobs, reinforce public perceptions about government waste and heighten public anger. Public retirement actuaries warn of the high cost of double-dipping, which resonates with elected officials looking to find savings in desperate budget environments. However, the retirees wonder what the problem is since they have earned their retirement benefit and cannot see how it matters if their employer hires them or someone else; any employee would be given the same compensation and benefits whether he or she worked for the government prior to retirement or was a young graduate right out of college. What is often lost in the debate about double-dipping are the unintended consequences of making it more difficult for retirees to return to work. When employees truly retire after years of public service and leave the workforce for good, a vast quantity of knowledge can be lost that is difficult to recover if rehiring is disallowed. The purpose of this essay is to review the costs and benefits of the practice of double-dipping or return to work for retired state and local government employees. First, it presents the reasons why double-dipping has become an issue for state and local governments. Second, it reviews the costs of double-dipping to states and some recent state actions taken to curb these costs. Third, it presents the potential benefits of doubledipping and illustrates the potential of state changes in return-to-work laws by looking at their impact on one state agency in Utah. It concludes by urging caution to ensure that as states move to curb the costs of double-dipping in this time of recession they do not foreclose the potential benefits as well.