May 18, 2006

EDITORIAL

Retirement plan makes sense

It might be painful, but the Village’s new early retirement plan is a sensible, and necessary, step the Village needed to take to reduce costs and get a handle on the budget. It is not uncommon for organizations and businesses facing uncertain financial futures to reduce staffing. So far, the Village has taken a responsible approach to early retirements, putting into place a reasonable incentive plan for senior employees.

Approved by Council on Monday, the retirement plan represents one concrete mechanism with which the Village can start to address what Village Manager Eric Swansen called “an unprecedented period of financial distress.” That distress centers squarely on the Village budget, which includes deficit spending in the general fund and the electric, water and sewer funds. The deficits are caused by expenditures, including capital projects, exceeding revenue.

Early retirements are just part of the actions the Village is likely to take to balance future budgets. Some initial service or program cuts are likely, and Council plans to ask voters to approve a new revenue source in the November election. But, as Mr. Swansen reported to Council, if enough employees do not accept the offer to retire early, the Village will have to examine reducing or eliminating additional services, resulting in layoffs.

Staffers eligible for the retirement plan are part of the Ohio Public Employees Retirement System, which collects contributions from employees and the Village to create pension and retiree medical care accounts. The Village will pay OPERS on behalf of employees for up to two years of employment so that the workers can retire early or receive a larger pension.

Nine Village employees would gain financially from retiring early, Mr. Swansen said, but based on discussions with the staff, he expects four staffers will accept the offer. If that proves to be true, more employees could accept early retirement in the future, if, for instance, the Village has to terminate jobs. Additional retirements could come in the Police Department, where, Mr. Swansen said, he expects some police officers may retire “by the end of the year or next” year. Most police officers are covered by a different retirement plan from the rest of the Village staff.

Over time, the early retirement plan will reduce salaries as well as benefits and Workers Compensation costs. The staff reductions could even make the Village a more efficient organization, as employees learn new skills, take on additional responsibilities and, as Mr. Swansen said, are asked to do more with less.

The Village will surely lose more than employment costs with this plan. Most notably the government will lose good, experienced people who have worked hard for many years serving villagers and making Yellow Springs a better place to live. The knowledge and wisdom that staff members have gained over years of service will be missed.

At least through the new retirement plan, the Village is allowing veteran employees to retire early, on their own terms and with a decent benefit package. This beats getting sacked, and it helps the Village financially.

—Robert Mihalek