Agenda - 03-16-2010 - 4i - Laserfiche WebLink

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2 As discussed at the March 4, 2010 Board work session, the County Manager wishes to avoid a reduction in force of current employees for FY2010-11. However, with the continued financial crisis, personnel services costs must continue to be reduced to balance the next budget. Based on this, the Manager asked staff to develop another retirement incentive program, which is described in Attachment 1. In developing the 2010 Retirement Incentive Program (Program), staff increased the eligibility requirements and decreased the timeframes compared to the 2009 incentive. Eligibility for the incentive payment now requires at least ten years Orange County service credit, and the incentive is based only on Orange County service. Those retiring under this Program must indicate their intention no later than the end of May, with an effective retirement date of either June 1 or July 1. Attachment 2 more completely describes the differences between the 2009 and 2010 programs. Given the success of the 2009 incentive, it is anticipated that employees would apply for this benefit if it were offered again. Staff has identified 91 employees who are eligible for unreduced or reduced retirement benefits by July 1, 2010. The current list of eligible retirees includes many employees who were eligible for the previous retirement incentive program but elected not to participate at that time. If 20% of those eligible to participate elect to retire prior to July 1, 2010, 18 positions could be frozen or eliminated in FY 2010-11. Attachment 3 summarizes the years of service and salaries for those eligible for the 2010 program. Departments with employees retiring under this Program, as with any other vacated positions in FY2010-11, will be required to adjust their budgets to reduce overall expenses. The position and/or salary of the retiree may not be available to the department for FY2010-11. Consequently, reorganization or re-alignment of department activities may be necessary, particularly when a retiree leaves an essential position that cannot be eliminated or remain vacant for the entire fiscal year. The County Manager may determine, prior to implementation of the program, which departments and positions will be ineligible to participate. Such determination would be based on public safety requirements or the need to provide mandated services. Any decision to exclude employees from participation would be made in consultation with the department director and the Human Resources Manager prior to announcement of the Program. FINANCIAL IMPACT: The estimated FY 2010-11 cost savings for the Program is $375,000, based on the following assumptions: ^ 18 employees elect to take the incentive. ^ Average salary is $59,784; average savings including benefits costs is $68,752. ^ Positions are frozen for an average of eight months in FY 2010-11. ^ Average incentive payment is $13,671. The estimated cost savings are outlined on Attachment #3. RECOMMENDATION(S): The Manager recommends that the Board approve the offering of an additional Retirement Incentive Program for retirement prior to July 1, 2010 for employees who have been employed by Orange County for 10 or more years and are eligible to retire under the NC Local Governmental Employees Retirement System.