May 18, 2006

By Robert Mihalek

Up to nine Village employees could retire early under a new plan adopted on Monday by Council, as part of an effort to reduce the Village workforce to cut costs.

Prompted by what Village Manager Eric Swansen described as “an unprecedented period of financial distress,” the incentive plan will be offered to Village staff for one year, beginning June 1.

The Village will purchase from the Ohio Public Employees Retirement System (OPERS) up to two years of “service credits” for employees, allowing them to retire two years early and still receive a full pension or a better benefit package, Swansen said.

Full pension under OPERS, which collects contributions from employees’ salaries and the Village to create pension and retiree medical care accounts, is two thirds of an employee’s salary, according to Swansen.

All Village staff members who are 55 and older with at least 24 years of service and all employees of any age with 29 years of service are eligible for early retirement under the new plan. However, Swansen said that only employees who worked for 28 years before June 2007 would likely gain from the early retirement offer.

Swansen said that nine employees “could benefit” from the retirement plan, and that discussions with staff indicate that “as few as four may” accept the offer.

The Village would pay for the four employees’ buyouts in about 14 to 15 months, he said.

The government will provide financial planning services to those employees who accept the deal, Swansen said.

At its meeting May 15, Council unanimously approved a resolution adopting what is formally called the Voluntary Retirement Incentive Plan.

It wasn’t the only budget-related item on the meeting’s agenda. Swansen also gave a presentation on the services the Village is required to provide and those that the Village chooses to offer. A report on the presentation will appear in next week’s News.

The review of services and the creation of the retirement plan are part of the Village’s effort to respond to its deficit budget.

The deficits, which exist in the Village’s four main budget funds — the general fund, electric, water and sewer — are caused by expenditures, including capital items, surpassing revenues.

Without additional revenues, those funds are expected to continue to spend down their reserves, or savings, next year as well.

Earlier this month, Council began considering a suggestion from Swansen to ask voters in November to approve additional tax revenue. While Council has yet to commit to a specific increase in a specific tax, Swansen has recommended that the Village seek a property tax levy. Swansen has said that the levy would pay for daily operations for at least 10 years in the general fund and would fund capital improvements for the Village utilities, streets and needs in the general fund.

In addition to seeking additional tax revenues, the Village may reduce costs by cutting services and working with other agencies, such as Miami Township, for public works activities, or with other Greene County communities for a proposed central dispatch facility.

Enticing employees to retire early would reduce costs over time, because, as workers leave, the Village would restructure jobs, eliminate positions or leave posts vacant until the early retirement benefits are paid for.

Swansen said the staff will be asked to “do more work with less, given the financial position of the organization.”

“This retirement incentive is the first part of an effort to reduce staff that will enable the Village to live within the revenue stream provided, instead of deficit spending,” Swansen said in a written report on the plan.

After the meeting, he said he does not foresee the Village offering or renewing the early retirement plan after it expires in June 2007. The plan is one mechanism the Village can use to balance next year’s budget, he said.

Swansen emphasized the complexity of creating an early retirement program. For instance, he said that if the Village has to lay off employees later in the year, some staff members may choose to take early retirement

The retirement plan covers workers in the Ohio Public Employees Retirement System. The employees, however, are not covered by Social Security.

Many Yellow Springs police officers are not in OPERS and, therefore, are not eligible for the new retirement plan. Instead, many officers are covered by the Ohio Police and Fire Pension Fund and participate in a different state-mandated plan that allows for early retirement for officers, Swansen reported.

Swansen said he anticipates that some officers may also retire “by the end of the year or next” year.

“We know of a number of uniformed police officers who will have to make separation or retirement decisions,” he said.

Contact: rmihalek@ysnews.com