Clearwater May Offer Retirement Incentives
By Carl Wagenfohr
CLEARWATER - In their April 2007 report, a citizen Budget Task Force had recommended to the City Council that a buy-out should be offered to retirement-eligible employees, potentially reducing headcount that is at the high end of the city's pay scale. Facing a 2009/10 budget deficit estimate of between $7-million and $13-million, the City of Clearwater is finally heeding their advice.
The city's proposed 2009 retirement incentive is no golden parachute; City Human Resources Director Joe Roseto said, "We can't do that. All we're trying to do is create an incentive for people that are already retirement-eligible under the city's pension plan to see if they will leave."
Under the terms of the proposed offer, the incentive would amount to $10,000, which the retiree would receive in one of three ways:
To collect the incentive, an employee would have to retire before October 1 of this year. An additional $5,000 cash incentive will be given to employees who retire by May 23.
Every employee's circumstances are different, but the incentive would seem to be most attractive to employees who could become covered under their spouse's health care plan, or who are within 2 years of being medicare-eligible. The city does not provide retiree health care insurance, but allows retirees to buy the city's employee health care plan. The 2009 city contribution for employee-only health care coverage is $5,100, a sum the retiree would have to pay to continue coverage.
Roseto said that 170 city staffers are eligible for the incentive. The city conducted an informal employee poll to understand how many might accept the offer, and only 28 have expressed interest thus far. Based on that, Roseto expects that no more than 50 will ultimately take advantage of the incentive.
Employee retirements would benefit the city in several ways. Vacancies would be created that could allow the city to eliminate positions, or backfill those positions with employees that might otherwise be laid-off. If new hires are needed to fill those vacancies, savings would still accrue; "If we do replace those positions, we'll literally replace them at half the salary," said Roseto.
If all 170 eligible employees retire, the incentive would be a one-time cost to the city about $1.5-million, while the salary savings for the remainder of 2009 and all of 2010 would amount to $3.1-million according to city estimates.
During discussion at Monday's worksession, the City Council seemed to favor the retirement incentive, although with a couple of tweaks. In an effort to simplify the proposal's implementation, a consensus formed to offer only the one-time $10,000 payment, rather than two annual $5,000 payments.
Councilmember George Cretekos suggested that the payment should be $10,200, or $5,100 per year for two years, to match the retiree's cost of continuing coverage with the city's health insurance plan.
The retirement incentive will be discussed and finalized during Thursday's City Council meeting.
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