Early retirement bill heading to Culver

DES MOINES – Eligible employees with at least 10 years of state government service would have until June 24 to take an early-retirement incentive under legislation heading to Gov. Chet Culver for his expected signature.

The Iowa Senate voted 41-6 on Thursday to offer senior state workers an early-out benefit designed to reduce the state's workforce and save up to $60 million next fiscal year. Six GOP senators opposed Senate File 2062.

Under the concept initially proposed by Culver, eligible employees who have worked for the state for at least 10 years could receive $1,000 for each year of service, up to a $25,000 maximum paid in five equal yearly installments beginning next September. They also would get paid for unused vacation time and up to five years of health insurance.

As many as 2,261 veteran state workers could request the incentives, according to legislative projections.

Culver proposed the early-retirement concept after state revenues plunged last year, forcing him to order a 10 percent across-the-board cut as part of an effort to reduce state spending by $600 million during the current fiscal year. A consulting firm hired by the governor to identify efficiencies and savings projected a $59.8 million benefit via an early-retirement incentive.

The nonpartisan Legislative Services Agency estimates the savings in fiscal year 2011 would amount to $57.4 million and would total $189.4 million over five fiscal years for all state funding sources.

S.F. 2062 would prohibit agencies from filling vacancies created by retirements through the program without approval by the state Department of Management. The bill also would prohibit those retirees from resuming state employment.

Backers of the measure said there are tight controls that prohibit employees who take the benefit from being rehired as consultants or contractors.

Opponents questioned whether the projected savings being built into the fiscal 2011 state budget would actually materialize. Republicans voting against the bill Thursday included Sens. Merlin Bartz of Grafton, Jerry Behn or Boone, Randy Feenstra of Hull, James Hahn of Muscatine, David Hartsuch of Bettendorf and Hubert Houser of Carson.

To receive the incentive benefit, an eligible employee must apply for participation by April 15 and leave state employment by June 24. The financial assumptions estimated that about 450 of the positions that become vacant via early retirement will be filled with a lower-paid worker over a three-year period.