Senate version of early retirement bill adds cap
The state Senate on Wednesday will debate its version of Gov. Charlie Baker's early retirement proposal. Unlike the governor or the House, the Senate’s proposal would cap the number of employees who could take advantage of the pension-sweetening incentives at 4,500.
The Senate Ways and Means Committee on Friday released a redrafted version of the bill that included the cap as a mechanism for addressing the concerns of some senators that the level of service delivered by certain agencies could be harmed if a large number of employees choose to retire this spring.
Under the Senate's plan, the Baker administration would be able to identify critical positions within agencies that would be deemed ineligible for early retirement, while all other applications would be evaluated based, in part, on seniority.
The early retirement program, first proposed by Baker as a means of finding savings to close a projected $1.8 billion shortfall in the fiscal 2016 budget, would allow executive branch employees aged 55 and older with at least 20 years of service to add up to five years to their age or length of service for their pension.
The bill, differing from the version that passed the House on March 25, would also authorize agencies to offer employees one-time payments of unspecified value to encourage them to retire to meet the goals of the program.
The objective of the one-time payments is to incentivize the retirement of employees who have already reached their maximum pension of 80 percent. Senate Ways and Means Chairwoman Karen Spilka estimated that about 800 executive branch employees fall under that category.
While Baker set a target of reducing payroll by 4,500 employees, neither the governor's bill nor the House version recommended a cap on employees that could take advantage of the program. Baker did not include a cap in order to provide flexibility for the administration to meet its target for budget savings, but officials on Friday suggested they would be open to adding the restriction.
"The administration is pleased at the progress that has been made on an early retirement package aimed at closing the $1.8 billion structural deficit inherited this year and looks forward to reviewing the final bill that makes its way through the legislature," Baker spokesman Billy Pitman said in a statement.
Under the Senate bill, the window to apply for early retirement would open on April 27 and run through May 29. Employees taking advantage would have to retire by June 30.
The House had proposed to open the application period next Wednesday and run it through July 15, giving employees an extra month until July 31 to retire. Spilka said she didn't think the shortened application window to allow for a full fiscal year of salary savings would hurt the program's success.
"Senator Spilka and the Committee on Ways and Means has crafted a thoughtful bill that achieves the same amount of savings, limits the long term pension liabilities, and protects the levels of government services," Senate President Stanley Rosenberg said in statement. "The committee did an excellent job incorporating diverse opinions and listening to all concerns during this process."
Like the House and Baker, the Senate bill proposes to allow the administration to backfill positions left vacant by retirement using up to 20 percent of the total payroll savings.
While the House recommended a 120-day "cooling off" period before retirees could be hired back as consultants, the Senate bill simply calls for consultants hired back to be limited to 90 days of work, with their salaries counting toward the 20 percent backfill provision.
The Senate bill also includes an additional reporting requirement, starting in mid-May, for the administration to keep lawmakers informed on how many people are applying for early retirement and what agencies they are leaving.
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