Faced with mounting costs for veteran workers, village officials are hoping cash incentives will be enough to get several employees to take early retirement.
The village board voted 4-0 Wednesday to offer early retirement incentives to employees. Trustee John Stephens was absent from the meeting.
Eligible employees will receive $1,000 per year of service to the village through the program, Mayor Mark Cushman said. The plan is not available to the Water and Light departments, which have their own retirement package, officials said.
Cushman said the board is targeting specific employees, and less than a dozen of the eligible workers have informally shown interest in the plan. There are over 70 total employees in the affected village departments, he added.
Those that take the incentives also still receive benefits for accrued sick time, vacation time and personal days.
So, overall, the budget impact of the program will depend on participating employees’ years served and accrued benefits.
Cushman declined to provide an estimate on the incentive program’s cost, saying the board is “anxiously awaiting” to see who takes the buyout.
But the village board is confident freeing the budget of the accrued time off and salaries of senior employees will produce a net gain, Cushman said.
Budgeting for the coming year requires finding savings, Cushman said, and an anticipated 5,500 accrued off-hours is only working against the village board.
“These are senior employees that have earned a lot of off time,” Cushman said, He emphasized the benefits are a result of loyal service, though. “It’s not their fault, they have earned it.”
But to fill time off by one group requires the village to pay overtime or even means bringing on extra help.
The village board is looking to induce early retirement in select cases and possibly reduce its number of employees through attrition, Cushman said.
Mark Johnson, spokesperson for the state Comptroller’s Office, said the practice is common in both the public and private sector.
“In the current (2009-2010) fiscal year, the state offered a $20,000 cash incentive to employees in targeted positions who were willing to retire,” Johnson stated in an e-mail. “Other local employers have fashioned their own cash incentive programs with varying terms and dollar amounts.”
Village requirements for employee age and years of service are based on state retirement regulations, said Cushman, who was unable in a phone interview Thursday to provide the figures.
For most members of the state retirement system the normal retirement age is 62, according to Johnson. That is the earliest age at which the member can retire without a reduction in their benefit. Vested members can retire as early as age 55, but their benefit is reduced, he added.
Johnson explained that early retirement still results in a reduction in state benefits, and the village’s program simply offers an amount that it hopes will get employees to retire.
The state has allowed early retirement without penalty in the past, according to Associated Press reports. In 2002, the state gave up to three years in added pension credits, and allowed employees 55 years old and older with at least 25 years of service to retire without penalty, the AP has reported.
Members of the village’s Police and Fire departments fall under separate regulations, Cushman said, referring to New York State and Local Police and Fire Retirement System rules.
The PFRS allows for retirement eligibility after 20 years of service. The pension amount is based on years served and salary, according to state officials.
Those that take the village buyout implemented Thursday will either be paid over a three-year period or be able to use all or some of the funds on several health insurance options.
Cushman said any benefits related to health insurance in the plan are modeled after federal Consolidated Omnibus Budget Reconciliation Act (COBRA) health benefit provisions.
The COBRA provisions allow retirees and other qualified individuals the right to temporary continuation of health coverage at group rates, according to the U.S Department of Labor Web site.
Village officials described the offer as giving subsidized retirement medical benefits for 18 months.
Coverage for COBRA participants is usually more expensive than health coverage for active employees, since usually the employer pays a part of the premium for active employees while COBRA participants generally pay the entire premium themselves. It is ordinarily less expensive, though, than individual health coverage, the Web site explains.
Ilion, N.Y. —
