Retirement incentive will save city $3.36 million

Forty employees accept early-retirement incentive; program will help avoid layoffs
By: Sena Christian, The Press Tribune
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The City of Roseville will save an estimated $3.36 million over the course of the next five years, now that 40 employees have accepted an early-retirement incentive. This will also help the city avoid layoffs in the near future. The Public Agency Retirement Services (PARS) supplementary retirement plan acts as an incentive to get top-step city employees to retire sooner than they would otherwise. Tom Goldie, director of central services, accepted the offer. The 59-year-old has worked for the city since 2000, starting as a facilities manager. Since then, he has seen his department drop from about 70 employees to 40. By accepting the retirement offer, he said the department will retain one position — although the director position will be eliminated. “One reason I decided to leave is the budget was out of whack … and this is in lieu of more layoffs,” Goldie said. “It was a tough decision to make in that I will miss the people I work with a lot. I’ve enjoyed my time here.” The Roseville City Council unanimously approved the early-retirement incentive program during its Nov. 3 meeting. On Sept. 1, the council passed the program on the condition that a cost-benefit analysis shows the plan meets the city’s fiscal and operational goals. Councilmembers were satisfied with the results of that analysis. “I really like this and I think the direction we’re going is a good direction,” said Councilman Jim Gray. Currently, 255 city employees qualify for the program and 40 accepted. During the September meeting, PARS Senior Vice President Dennis Yu estimated that about 77 people would take the offer, resulting in five-year savings between $9 million and $13.5 million. With 40 employees opting for the offer, the city will save an estimated $716,140 of personnel-related costs each year over the course of five years. This net savings include the cost of retirement health care, natural attrition and the retirement incentive. Under the program, an enrolled employee receives a cash payment equal to 7 percent of the employee’s final annual base salary after retiring. The employee chooses the payout option, which might be over the course of five years, for instance, or his or her lifetime. Ultimately, the potential savings of the PARS program depend on the resulting vacancy rate of staff positions. “The key to all of this is that we hold the vacant positions vacant,” said city Finance Director Russ Branson. Following the retirements, the city can either choose to leave the vacated positions empty or hire people at lower pay levels. Branson said the city will eliminate 19.5 full-time-equivalent positions and fill 20.5 at a lower salary. To be eligible for PARS, an employee must be 50 years of age as of Dec. 23 2010, have worked for the city for at least five years and can’t enroll in the CalPERS Golden Handshake program. Labor comprises the largest portion of the city’s general fund expenditure. The city has cut 22 percent of its workforce since 2007. Branson said the city is now done offering these incentives, after having already completed three rounds of the PERS incentive program. “We’ve taken it as far as we can,” he said. The PARS program differs from the CalPERS Golden Handshake program in that it provides retiring employees with additional cash compensation, not additional service credit to be used to calculate the employees’ CalPERS benefit. An employee still retires under CalPERS, but also gets the PARS supplemental compensation. PARS is a privately held company founded in 1983 and administers pension plans for public entities. Sena Christian can be reached at