Story Created:
Aug 20, 2010 at 11:38 AM PST
Story Updated:
Aug 20, 2010 at 11:40 AM PST
INGLEWOOD — Hoping to ease the city’s ongoing $14 million structural deficit, the City Council recently gave its backing to a staff plan to offer a two-year golden retirement incentive to certain classifications of city employees.
By a 4-0 vote on Aug. 10, council members directed Michael D. Falkow, a deputy city administrator and chief information technology officer, to initiate the process which could potentially save millions in future retirement benefits.
In a verbal report to the council, Falkow noted that several times in the past, the city has offered retirement incentives in the form of additional California State Public Employee’s Retirement System (CalPERS) retirement credit in an effort to reduce personnel-related budgetary expenses (salaries and benefits) by inducing eligible staff to retire.
According to Falkow, because the cost of the two-year incentive, which is approximately 70 percent of the employees’ annual salary, is spread across two years and simply added to the city’s annual CalPERS obligation, the city begins to realize savings of approximately 74 percent the first and second years followed by 100 percent savings in the third and subsequent years.
For instance, added Falkow, a hypothetical employee earning a base salary of $100,000 a year, the Year 1 and 2 savings would be $73,750 followed by $100,00 in Year 3 and beyond.
“Since long-tenured, retirement-eligible employees are typically at the top of the pay grade of their positions, the city can incentivize these employees by offering two-years of retirement credit provided that these employees agree to retire during a specified window of the time the city and CalPERS agree to (typically 90 days).”
Falkow revealed that results of an initial survey of eligible employees earlier this year resulted in 51 respondents indicating they were “very interested” (34) or “somewhat interested” (17).
“Since the survey was sent out, six staff members are no longer with the city, leaving 30 respondents indicating that they were very interested and 15 that they might be interested,” said Falkow. “After approval by the administration, a detailed report listing the anticipated early retirements and their associated savings will be brought back.”
In response, Councilman Danny Tabor asked what if a singular, specific position like a vehicle operator was permanently eliminated because someone took advantage of the early retirement incentive, but it was deemed that the city needed that service.
“In that case you would have to create a different classification if you were to hire somebody else,” replied Falkow.
Councilman Eloy Morales, agreed it might affect services, but said he supported the incentive
“In our current financial climate I’m supportive of the measure,” he said, “but I realize it might have an effect on our services.”
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