The Senate on Wednesday will debate a version of Gov. Charlie Baker's early retirement proposal that would cap the number of employees who could take advantage of the pension-sweetening incentives at 4,500 employees.
By Matt Murphy
STATE HOUSE NEWS SERVICE
STATE HOUSE, BOSTON, APRIL 10, 2015....The Senate next Wednesday will debate a version of Gov. Charlie Baker's early retirement proposal that would, unlike the governor or the House, cap the number of employees who could take advantage of the pension-sweetening incentives at 4,500 employees.
The Senate Ways and Means Committee on Friday released a redrafted version of the bill (S 44) 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.
"I've tried to listen to all the senators' concerns and the result, I think, is that the Senate has crafted a strong bill that offers several tools to achieve savings without undermining the operation of state government," committee chairwoman Sen. Karen Spilka said in an interview.
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 Ways and Means Committee voted 14-0 to recommend the new draft of the bill, with Sens. Sonia Chang-Diaz, of Jamaica Plain, and John Keenan, of Quincy, reserving their rights. Sens. Kenneth Donnelly, of Arlington, and Anthony Petruccelli, of East Boston, did not vote.
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, which is anticipated to save than $172 million in fiscal 2016.
The objective of the one-time payments is to incentivize the retirement of employees who have already reached their maximum pension of 80 percent. Spilka estimated that about 800 executive branch employees fall under that category. "If they want to leave, that would be an option for them," she said.
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.
"It's out there. It's not like people don't know about it. I think the four-week application period is probably sufficient," Spilka said.
The Senate has scheduled a debate on the bill next Wednesday, with senators having until 5 p.m. on Monday to file amendments.
Senate President Stanley Rosenberg told the News Service the bill, if passed on Wednesday, would probably require a conference committee with the House, but he said he didn't think it would be overly onerous to iron out the differences.
"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," Rosenberg 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.
"What we're hearing is what would be helpful is if people leave to be able to come back for up to 90 days. So it would be July, August and September to ensure that there is a knowledge transfer if had not fully taken place before June 30," Spilka said.
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.