Early retirements net better-than-expected savings

DES MOINES – An early-retirement incentive that becomes final today for senior state government workers will produce better-than-expected savings of $88.6 million for the next fiscal year that begins July 1, according to Gov. Chet Culver.

Culver administration officials and legislative sponsors initially pegged the estimated savings – for executive-branch employees only -- at about $60 million, but they upped that projection today as a result of the participation of legislative branch employees and statewide elected offices.

About 2,100 state employees signed up for the incentive program.

“From a purely budgetary standpoint, this program is successful and these savings will help us keep the (fiscal year) 2011 budget balanced,” Culver said in a statement.

“It achieved more than our original estimates,” he added. “This program is voluntarily removing about 10 percent of the executive branch workforce and will allow the state to bring in people who have different skill sets, are at earlier stages in their career, and who may be currently unemployed. At the same time, I want to express my thanks to retiring state employees for their service to Iowa. As committed public servants with vast institutional knowledge, their departure is a notable loss to the state workforce as a whole.”

Under Senate File 2062, eligible state workers who were aged 55 or older had to leave employment by Thursday (June 24) to take an early-retirement incentive that will provide health insurance and monetary benefits for five years. Eligible employees who had worked for the state for at least 10 years and up to 25 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 will get paid for unused vacation time and up to five years of health insurance.

The new law prohibits agencies from filling vacancies created by retirements through the program without approval by the state Department of Management. The bill also prohibits those retirees from resuming state employment.

According to the governor's office, the projected savings assume that about 1,100 of the positions being vacated will be refilled in fiscal 2011 in order to maintain essential services. Of the total projected savings, about $42  million will be in the state's general fund compared to the original projection of $26.4 million.

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rod.boshart@gazcomm.com