Alternative Retirement Cancellation Program
The quote below is from the Commission on Government Forecasting and Accountability's report on Illinois's Alternative Retirement Cancellation Payment, and the words in bold are my emphasis.
It should be noted that ARCP-related savings will continue to accrue beyond FY 2005 if the vacant positions remain unfilled. As noted earlier, the major cost component associated with ARCP – the lump-sum payouts for unused sick and vacation leave – was a one-time cost factor in FY 2005 only. Greater savings will be realized in FY 2006 in the absence of this cost.Mark Gordon's blogger brief writes citing the same report,
.... the Governor’s early retirement incentive program drew only 542 participants, far fewer than the 3,000 employees who were expected to take advantage of the program.There were $23.4 million in start up costs for this program and the savings in the first year were only $4.5 million; so those empty slots will need to stay empty for a good four years to just break-even.
So much for getting a timely FOID card
UPDATE: Assume is a red flag word for me. (Assumptions can make an ass of you and me.)
The commission uses it here in the report,
Based on the reduction in State headcount through FY 2005, Commission staff assumes that the vacated positions have most likely not been filled.Sounds like Illinois doesn't know for sure if the empty slots it needs to keep empty to recoup the $23.4 million payour are empty to begin with, or --if really vacant-- which ones Illinois should not refill.
6 comments:
Should also consider how many retirees were replaced by contractors, some of them being the exact same person that took the retirement.
Generally, the State Government does not count the cost of lifetime health insurance benefits for state pensioners, which is around 33% of their previous salary. Add this to a 50% pension and you get 83% of original costs, or a 17% saving for each early retiree. If 1 of 6 employees are replaced (by FTE), you net 0 savings, (for full timers, in fact, you get a loss as benefits must be paid).
JBP
Good point!
thanks
Oh come on. The best measure of performance here is the state's total headcount, which remains 50-some thousand, way below the peak in the 70s. Sure, the G Ryan ERI helped start that trend, but the one thing the Gov (Filan) has done right is to squeeze agencies on their headcount. If agencies like ISP have problems with too few frontline positions, that's b/c they couldnt find any bloated middle managers to get rid of (and I grant there are a lot of those agency directors who have been totally co-opted on this). But the answer is not to increase headcount but to get better agency senior leadership that actually knows how to reorganize to do more with less.
Many state employees recognized that ARCP was a bad deal for most of them, so few took it.
Amazingly, there were a few souls with 20+ years in who took a lump sum of around $100k and forfeited around $3k a month for the rest of their lives, plus loss of paid healthcare until Medicare kicks in. And ARCP appears to have made barely a dent in the state's overall financial picture.
Still, nothing surprises me...I wouldn't be totally shocked if an Early Retirement plan was offered next year, especially if the gov doesn't make it, to "take care of his people".
A couple of notes on the inaccuracies of previous posts-
On John's post- as anonymous points out employees who took the ERI do not get pension payments; they substituted those payments for a large lump sum. For some people that might be a bad deal, and for others it might be a good deal. Forgive the morbid example, but if you have reason to believe that your life expectancy may be shorter than average, you would be better served with 100k up front than with 1k/month indefinitely after you reach 60.
On anonymous's post- retiree healthcare was not effected by ARCP. The employees who took the plan remain eligible for state subsidized health insurance (for free if they already had their twenty years).
There were 2 ARCP's. The one offered in 2004 did NOT feature post-retiree healthcare. Because the 2004 ARCP had such a poor turnout, post-retiree healthcare was offered in the 2005 ARCP. The report in question that was the subject of the original post was for the 2004 version.
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