Plan for Budget Uncertainty with an Early Retirement Incentive

Categories: Early Retirement Incentives,Hot Sheets
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Governor Brown’s proposed 2011-12 budget for school and community college districts assumes that voters approve an extension of temporary taxes on the June ballot.  If this does not happen, the Governor projects much greater cuts for education.  This uncertain situation forces districts to conservatively plan now for a worst-case scenario.

As part of this planning process, districts would be prudent to have PARS prepare an analysis of the feasibility of a retirement incentive to reduce labor costs and achieve budget savings for the start of the new fiscal year on July 1.

School Services states at a recent workshop on the budget: “Statutory timelines for layoffs don’t allow for a ‘wait and see’ approach.  Districts must act to reduce personnel costs, assuming the temporary tax initiative fails.”

“PARS prepared a comprehensive analysis that examined the unique characteristics of our district. They discussed various benefit levels, natural attrition, program costs, and fees. PARS is quite knowledgeable about what has worked in other school districts and worked closely with us to craft two plans that would work for us,” Comments Wayne Martin, Executive Director, Business Services for Stockton USD

Possible funding cuts, enrollment issues, cost of step and column movement, and healthcare cost increases drive a need to make further cuts.

A well-crafted early retirement incentive can help reduce layoffs and cut positions in a more humane way.

Also, this year, Federal Education Jobs Act funds are eligible to be used for an incentive, according to the Federal Department of Education.  In this way, these short-term, one-time funds can be leveraged for longer-term savings.

It’s not too late to plan for a PARS Supplemental Retirement Plan. The following is a proposed schedule to implement an early retirement incentive and retire employees by June 30th:

  • January/February:  Prepare analysis
  • March:  Approval by Board to open a window
  • March-May:  Enrollment window opens and closes
  • May:  Post-analysis to finalize savings numbers and Board decision whether to implement SRP
  • June 30:  Retirements/resignations occur and costs savings begin
  • July 1 or August 1:  First benefit payment

PARS SRP Summary

When you implement a PARS plan, senior PARS Consultants will work with you to:

  • Evaluate the feasibility of an incentive through a no-cost, in-depth analysis
  • Determine the best plan design for your district
  • Provide all communications for employees
  • Draft a governing board resolution adopting the plan and trust agreement
  • Provide ongoing plan reporting, including required governmental plan reporting, and fielding all plan participant inquiries

Call PARS now for a complimentary analysis at:

800.540.6369 x 135

We look forward to hearing from you!


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