Tuesday, May 26, 2009

Early retirement incentive: operating budget vs. pension fund

From the NHRs Luther Turmelle:

Eight members of the town’s municipal work force have qualified for an early retirement offer presented earlier this year.

The move will save the town $140,000, which Town Manager Michael Milone said will keep him from having to lay off any municipal employees.

“It may not seem like much, but it’s the equivalent of three positions,” Milone said...

Democratic Councilman Michael Ecke, who is head of the governing body’s budget committee, said the number of individuals selected for the buyout “strikes the right balance."

Ecke continued:

“The key now is not to replace any of these positions that are being vacated or fill them with people at a lower wage.”

I have a different take from Mr. Ecke on the "key" to making this early retirement package a wise decision. But first it must be understood that the annual operating budget is independent of the pension fund. And while you hear about "savings," in government spending, oftentimes the people in power will note a "savings" in the operating budget... while ignoring other long-term liabilities, such as a pension fund.

Anyway, another key for this early retirement incentive is for the Town to transfer part of the savings from the operating budget to the pension fund to offset the increased pension costs that would not have existed... if these early retirements did not occur.

Tim White


Anonymous said...

Maybe that's why Ecke is no longer a CPA. He has no clue of how to manage other people's money.

Anonymous said...

This is not a time for retirement incentives. Retirement incentives don't save money, layoffs do. Also, retirement incentives reduce the chances of getting concessions. With concessions, there is less need for workforce reductions.

Now is the time to make town gopvernment more efficient and that probably requires laying off less productive people.

Another approach would be to combine departments or sections to fully utilize staff. Right now there are jobs that have full-time people that don't have enough work for them.

Also, there is a tendency to never eliminate a job after it is created. A total review of all jobs should be made.