Lawmakers look to retirement bonuses to save the state money

MONTPELIER — The Shumlin administration has proposed a retirement incentive package for state employees that could save the state $2.5 million, providing most of the retirees are not replaced.

Monday morning, the Senate Appropriations Committee reviewed a proposal that would offer financial bonus to as many as 300 employees who are already eligible to retire, with the goal of leaving 75 percent of those positions vacant after the employees retire.

The offer would be open to employees who are at least 62 years old and have put in at least 5 years of service; employees with at least 30 years of service; and employees whose age and years of service totals 87 or more.

The proposal would pay employees who have worked at least 5 years and less than 15 years a bonus of $750 for every year worked. Employees who have 15 or more years would receive $1,000 for every year worked.

Bonuses would be capped at $15,000 per employee and would be paid out either in one lump sum or in two payments, with no additional money for employees who choose to take two payments.

Currently, there are 915 state employees who are eligible for the incentives. The proposal would cap the maximum number of people who could take advantage of the incentives at 300. If more than 300 workers want to take the retirement bonus, the state will hold a lottery.

Committee Chairwoman Jane Kitchel, D-Caledonia, asked why the offer isn’t being made to employees who have been with the state the longest. Sec. of Administration Justin Johnson said the state needs to be very careful not to give the appearance of engaging in any behavior that could be construed as age discrimination.

Sen. Richard McCormack, D-Windsor, questioned the message some people might take from a proposal that ultimately looks to reduce the state’s work force by as many as 225 employees.

“Are we assuming their work was not being done efficiently?” McCormack asked. ““Either we’re saying these people weren’t pulling their weight in the first place, or their work was not essential.”

The retirement proposal is part of a plan by administration to save $10.8 million in state employee costs, one possible step to close the state’s $113 million budget gap. Shumlin has proposed reopening the state employee contract for renegotiation, a move opposed by the employees’ union.

The administration has warned that failing to reopen the contract could result in hundreds of layoffs, but on Monday, Johnson said that is not what the administration wants.

“It’s important that we don’t do across-the-board cookie-cutter cuts,” Johnson said.

Steve Howard, executive director of the Vermont State Employees Association, said the proposal — which could reduce the number of employee layoffs to fewer than 50 — has the support of his organization..

“We brought the issue of voluntary retirement incentives to the table for negotiation with the Shumlin administration,” Howard said. “While were not thrilled that we might see 300 fewer positions, we like the idea that this might result in fewer (layoffs).”

State Treasurer Beth Pearce warned that savings from offering retirement bonuses will only be found with a commitment to leave unfilled the positions vacated by the retiring employees.

In 2009, the state offered retirement bonuses to employees under a system that Johnson said “mirrors” the current proposal. A total of 243 people took advantage of the incentives.

However, that proposal was coupled with the plan to leave one-third — or 81 — of the positions unfilled. Instead, during the next four years, the state added 543 positions, according to Pearce.

Sen. Diane Snelling, R-Chittenden, referred to the 2009 round of retirements as “disruptive.”

“Will we ever get to the point when we have the right number of employees in the right places?” Snelling asked.

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