Early retirement plan with cap clears state Senate
Some senators lashed out against an early retirement incentive program aimed at helping to close a projected $1.8 billion budget deficit before the Senate on Wednesday passed the bill that would trim the state's payroll by 4,500 employees.
Several senators argued there were better ways to achieve the $172 million in savings the Baker administration projects it will gain in fiscal year 2016 if at least 4,500 executive branch employees retire early. Executive branch employees who are at least 55 years old or have at least 20 years of service can add up to five years to their age or years of service in order to boost their pension, under the bill.
The Senate passed the bill on Wednesday afternoon on a voice vote, allowing members to avoid a recorded roll call on the proposal. The House passed a version of the early retirement plan last month. The bills will now likely head to a conference committee for lawmakers to work out the differences between the two versions.
Some senators expressed concerns that the public would suffer from a decreased level of service caused by the retirement of veteran public employees. In its version of the legislation, the Senate capped the number of employees who can retire early at 4,500.
Sen. William Brownsberger (D-Belmont) argued that the early retirement program would cost the state more money in the long run by adding to the state's pension liability. He said it was not a fiscally responsible plan.
"We are kicking the can down the road. This is business as usual," Brownsberger said.
If the Senate voted no, lawmakers would have to make difficult cuts in the state budget, Brownsberger said, adding he believes that would be a "sounder" approach to solve the deficit.
Sen. Kenneth Donnelly (D-Arlington) also argued against the early retirement program, saying it was the wrong answer to the question of how to balance the budget and pointing to the rebounding economy and rising stock markets.
Donnelly said the Baker administration did not answer enough questions about the plan and neglected to show the impact to the agencies that will lose employees.
"With the Baby Boomers, a lot of those workers at the Department of Revenue are ready to retire. The questions we asked the administration, do they know exactly how many people are going to take this? Do we know what services are going to be affected? What services are not going to be provided?" Donnelly said.
Sen. Sonia Chang-Diaz (D-Boston) said the proposal makes an assumption that state agencies can do their work with fewer employees. She said she rejects that notion.
"This proposal is all predicated on the theory, back-of-the-envelope math, that we are living in about 10 percent inefficiency across all our state agencies," Chang-Diaz said.
Sen. James Timilty, the chair of the Public Service Committee, said senators studied the bill for 21 days, held a formal hearing, and had their questions answered by Administration and Finance Secretary Kristen Lepore.
"We engaged the public, we engaged the administration, and had the governor's five secretaries telling us they could do this," Timilty said, referring to Baker's cabinet secretaries.
Timilty, pointing to the need to close a fiscal 2016 budget gap, suggested the alternative to an early retirement program would be less desirable.
"There are things you have to do. What we have before us is a very narrowly constructed group retirement program. We can't get around it. If it is not through early retirement it is going to be through layoffs," Timilty said.
Under the Senate bill, employees could apply for early retirement starting April 27 through May 29, and must retire on June 30.
The Senate bill differs from the one House lawmakers passed by authorizing agencies to offer employees one-time payments of unspecified amounts to encourage them to retire. The one-time payments would incentivize employees who have already reached their maximum pension of 80 percent. Senate Ways and Means Chairwoman Karen Spilka (D-Natick) estimated that about 800 executive branch employees fall into that category.
"If they wanted to take advantage of a buyout, we authorized the administration to do this," Spilka told her colleagues on the Senate floor.
Like Baker's proposal and the bill passed by the House, the Senate legislation would allow the administration to backfill positions using up to 20 percent of the total payroll savings.
The Senate bill also allows retired employees to be rehired for up to 90 days after June 30 if their institutional knowledge has not been transferred to other employees, Spilka said. The House version did not include that provision, but included a 120-day "cooling off" period before employees could be hired back as consultants.
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