Governor signs early retirement bill
State employees eligible for a new early retirement program can begin applying for the pension sweetener starting next Monday in an attempt by the governor and lawmakers to shave at least 4,500 employees from the payroll at the end of June.
Gov. Charlie Baker on Monday signed the early retirement bill that was hustled to his desk after House and Senate leaders struck a deal late Friday, clearing the path for retirement board officials to begin preparing for an onslaught of applications from workers who hope to leave their jobs just as the weather improves.
"We're very happy with the Legislature's compromise on this, and we're thrilled that they acted expeditiously to get this done. I appreciate the fact that it was a complicated piece of legislation to begin with and we're looking forward to moving forward with the act of actually implementing it," Baker said.
Baker has estimated that he will need to trim payroll by about 4,500 employees to save more than $170 million in the fiscal 2016 budget. The House built the payroll savings into its fiscal 2016 budget proposal that passed last week, and the Senate is expected to do the same in the budget Democratic leaders will release early next week.
Baker and House Speaker Robert DeLeo said they were not concerned about the delivery of government services being negatively impacted by the possible loss up to 5,000 employees over the next two months.
"We're going to make sure that the executive side of government continues to perform," Baker said.
The governor noted that similar numbers of employees took advantage of early retirement incentives the last two times the Legislature authorized early retirement and government continued to function.
"I think that with the plan that we have in place now, I think the governor's right. I think it will work out. I think it will work out fine," DeLeo said.
Six lawmakers assigned to work out differences between House and Senate versions of the bill, which was originally proposed by Baker, agreed to a compromise (H 3353) late Friday afternoon that would cap at 5,000 the number of positions that could be reduced under a variety of programs, including early retirement.
The cap, initially put forward by the Senate, was intended to safeguard against larger than anticipated numbers of employees taking early retirement and leaving the agencies they work for vulnerable to depleted workforces. The bill also allows the administration to hire new employees to fill vacated positions, but cannot spend more than 20 percent of the payroll savings on backfills.
Employees seeking to take advantage of the program will have between May 11 and June 12 to apply, and would have to retire effective June 30.
The program is not first-come-first serve, and those seeking the retirement benefit will be ranked based on seniority only if more than 5,000 employees apply.
Eligibility for the program will be restricted to just under 14,000 executive branch employees with at least 20 years of service, or who are at least 55 years old with 10 years or more of state work experience. Participating employees can add up to five years to their age, years of service or in any combination.
An employee, for example, who is 60 years old with 20 years of service earning $80,000 could boost their pension from $32,000 to $40,000, or 40 percent of their salary. An employee earning the same salary who is 70 with 30 years of experience would see no benefits from adding to their age but could hit their maximum 80 percent pension, up from 75 percent, of $64,000 by retiring with 35 years of service.
The average state employee paying into the retirement system is currently 47 years old and earns $63,000 a year, according to the retirement board, which expects the bulk of applications to come from older employees closer to reaching their maximum pension benefit.
The bill gives Secretary of Administration and Finance Kristen Lepore until May 8 to designate in writing "critical positions" ineligible for the early retirement incentives, and requires her to estimate at that time the number of positions that will be eliminated through a hiring freeze, buyouts or layoffs authorized to meet budget savings goals.
The legislation requires the Public Employees Retirement Administration Commission to analyze, study and evaluate the costs and liabilities associated with the additional benefits payable to state workers under the program. A report from PERAC would be due on Jan. 15, 2016.
In a statement, Senate President Stanley Rosenberg said, "The compromise bill achieves the necessary savings to balance our budget and protects the delivery of vital state services."
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