PARS Implements Successful Early Retirement Incentive Plan at City of GlendaleCategories: Early Retirement Incentives,PARS In the News
Faced with a budget gap, Glendale approves retirement incentives
City Council approved a mix of the incentives along with layoffs to close a budget gap.
From the Glendale News Press, By Brittany Levine, 6:46 PM PDT, August 3, 2012
Glendale may save more than $9.5 million annually after 117 employees retire early, but paying for the incentive credited with voluntarily trimming the city’s workforce will cost about $1.6 million.
The City Council approved the expenditure this week, noting that it had committed to the retirement incentive months ago in order to prevent mass layoffs.
“The council has committed already,” said Councilman Rafi Manoukian. “This was just an appropriation of the funds.”
Facing a $15.4-million budget gap for this fiscal year, the City Council approved a mix of retirement incentives, layoffs and elimination of vacant positions. After closing an $18-million deficit last year, it had little but personnel left to trim.
In addition to the early retirement incentive, the city has issued more than four dozen layoff notices, but the majority of people affected will be filling vacant positions in other departments or retiring. The actual number of people losing their jobs may be between 12 and 16, but final numbers won’t be tallied until after Aug. 10. However, City Manager Scott Ochoa last month left open the possibility of more layoffs.
In all, the city expects to cut 140 positions using retirements and layoffs, but expects to refill 30 of those, leaving a net loss of 110 positions, according to a report issued last week.
Most of the incentive cost will be shouldered by the city’s General Fund, which pays for public services such as library and parks, and Glendale Water & Power’s electric works fund, according to a city report.
The deadline to apply for the retirement incentive was to have passed July 6, but city officials extended it to Aug. 10. If more employees take advantage of the option, the cost of the incentive could climb to roughly $1.7 million, according to a city report.
The incentive includes an annuity equal to 5% of a retiree’s base salary. The amount the retirees will get every month differs depending on how they choose to get the annuity: over their lifetime or in spans of between five and 15 years. Under the lifetime option, a worker making $60,000 a year would get an extra $250 per month in retirement benefits.
Notable retirees include Neighborhood Services Administrator Sam Engel and Traffic and Safety Administrator Jano Baghdanian. Of the 117 retirees, 68 are rank-and-file employees, while 49 are managers. Police, fire and some Glendale Water & Power employees were not eligible for the incentive.
The city also plans to give some employees new duties and titles, with some possibly getting pay raises as they take on more specialized positions. Those changes will cost the city about $54,000 annually.
In general, the amount Glendale spent on employee salaries and benefits had been increasing over the past three years, but this fiscal year it dropped below 2010 levels. Last fiscal year, salaries and benefits accounted for $239.1 million in expenditures across all city funds. This year, that figure dropped to $217.6 million.