ERI
savings slim pickings for state
 By SHERRY HALBROOK
The state’s 2002-03 fiscal year is running out, and
your chances of taking advantage of either of the two
early retirement incentive (ERI) options enacted last
year are fading with it.
The state held off on opening the 90-day window for the
25-55 option until the last allowable minute —
January 1.
Unfortunately, the state is withholding this option from
30 PEF titles containing 186 PEF members otherwise
eligible. Most of these are at the state Office of Mental
Health.
PEF will challenge the state’s claim that these
employees are critical to the state workforce for health
and safety reasons and that it must reject any of these
members’ application for early retirement.
Some members at the state Office of Mental Retardation
and Developmental Disabilities were offered the
traditional ERI in January.
All opportunities to take advantage of the 2002-03
legislation expire March 31, but PEF is already pressing
the Legislature and governor to enact a better offer this
year.
The union wants one that’s permanently open to all
state employees who meet the age and service
requirements, and not linked to elimination of the
vacated positions or layoffs.
In light of deep budget deficits, members often ask why
the state doesn’t let every eligible employee take
advantage of early retirement offers.
According to PEF Assistant Director of Civil Service
Enforcement Marty O’Connor, “Early retirements
don’t save the state as much money as you might
think. The cost of the incentive is borne by the
employer, not the Retirement System.
“In fact, if the vacated positions are filled, it
can end up costing the state money after a few
years,” O’Connor said.
PEF was successful in getting part of the language
removed from the 2002 ERI legislation requiring the state
to eliminate any positions vacated by employees taking
the ERI.
However, the state continues to use the ERI as a way to
eliminate positions without laying off the employees in
them, “because it simply doesn’t save enough
money if it refills the positions,” O’Connor
said. It costs the state 60 percent of the
employee’s final salary if he or she takes advantage
of the ERI to retire. Spread over five years, that’s
12 percent annually .
For a salary-grade-18 employee at the job rate, 60
percent of final average salary is $30,506 — an
annual cost to the state of $6,101 for five years.
If the state refills that grade 18 position at the hiring
rate, it will save $9,993 on the new employee — the
difference in pay between the hiring rate and the job
rate — the first year, less the $6,101 it’s
paying the retired employee, for a net savings of just
$3,892. As the new employee moves up the annual salary
steps, the state’s net savings drop.
“While there will be a small savings in the first
couple of years, in the fourth and fifth years the state
loses money,” O’Connor said.
Although the 2002 legislation made the traditional ERI
available to all state agencies, many chose not to offer
it to any employees, or only to a few employees.
“They don’t offer it,” O’Connor said,
“because the state expects enough positions will be
vacated at that agency by ordinary attrition and neither
a retirement incentive or layoffs will be
necessary.”
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COMMUNICATOR HOMEPAGE
Inside This Issue:
Features
Ad blitz aims to save jobs,
services
Pataki eyes budget cuts
ERI savings slim pickings
for state
Bill outlaws discrimination
is now law
Leaders open PS&T
contract talks
PEF honors its Ground Zero
heroes
Departments
President's Message: Budget
balancing act
You Said It: Member's
letters this month
Health & Safety:
Smallpox vaccine concerns
Member
Mobilization:Organization is key
Nurses' Station: Lobby Day
plans for May
Health Notes: Empire Plan
number reaches all
Retirees In Action: Losing
ground financially
PEF Membership Benefits
Program & Travel Corp
Union Matters
Worker's Rights
Reg. 8 brings holiday cheer
State promises Rx for
docs’ pension-credit snafu
They got the 'write stuff':
• Furlani • Wilcox
AED training provides
statewide life support
PEF, Black Caucus plan
receptions
Apply May 1 for Jean DeBow
scholarship
PEF magazine, TV ad win big
2003 Election Rules Dates,
Rules, Requirements
Other Links
Professional Directory
Members' Classified
Member Communicator Feedback
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