New retirement incentive plan being weighed at Statehouse

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(Host) A plan to offer several hundred state employees a financial retirement incentive has emerged as part of the budget debate between Governor Jim Douglas and Democratic leaders at the Statehouse.

People who support the plan see it as an alternative to laying off as many as 320 state employees.

VPRs Bob Kinzel reports:

(Kinzel) It’s estimated that between 500 and 900 state employees are currently eligible for retirement but choose to remain in the workforce. This plan is designed to encourage about half of them to leave state government.

Here’s how it would work – state employees who agree to retire by July first would be given a $15,000 bonus. The payment would be made over a two year period.  In addition, the employee’s health insurance premiums would be frozen at current levels.

Former Vermont Auditor Randy Brock now serves as a Republican State senator from Franklin County. He thinks the plan makes a lot of sense:

(Brock) "I think that many people think the size of state government is too large and would like to reduce the number of state employees. At the same time I think there’s a great desire to do it without having massive layoffs. The idea of a retirement incentive is a way to achieve a win-win."

(Kinzel) And Brock notes that 25% of the entire state workforce will be eligible to retire over the next 5 years:

(Brock) "That’s a wonderful opportunity for us to re-engineer what we do as a state – to use technology better, to improve processes, to eliminate duplication in order to get a reduced workforce and the reduced costs that go with it."

(Kinzel) Jes Krauss is the president of the State Employees Union.  His group supports the plan and Krauss says it’s actually cheaper to implement this program than to lay people off:

(Krauss) "So you get to create structural change by creating some movement- some additional vacancies in state government in a humane way. You’re enabling people who are willing and able to do so to retire instead of putting more people in the unemployment line who really have to work and need a job or need to support their families."

(Kinzel) But Administration Secretary Neale Lunderville says the plan hasn’t been well thought out and he says it isn’t a substitute for the 320 layoffs that the Governor is seeking:

(Lunderville) "I don’t see it as an alternative to finding $17 million in labor savings for the fiscal 2010 fiscal year budget – that’s the money that we’ve identified. While the concept has some merit we want to be sure that the analysis has been done. We know the impact on the retirement funds, we don’t rush in to something that hasn’t been tested or vetted at all."

(Kinzel) This issue is expected to be part of the deliberations of the special Legislative session that’s been scheduled for early June.

For VPR News I’m Bob Kinzel in Montpelier.


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