HomeMy WebLinkAboutAgenda - 03-16-2010 - 4iORANGE COUNTY
BOARD OF COMMISSIONERS
ACTION AGENDA ITEM ABSTRACT
Meeting Date: March 16, 2010
Action Agenda ,
Item No. ~- - ~
SUBJECT: Retirement Incentive Pro ram
DEPARTMENT: Human Resources PUBLIC HEARING: (Y/N) No
ATTACHMENT(S):
Attachment #1 -Proposed Program
Description
Attachment #2 -Comparison of
Retirement Incentive Programs
Attachment #3 -Summary of Currently
Eligible Participants
Attachment #4 -Estimated Cost Savings
INFORMATION CONTACT:
Michael McGinnis, Human Resources
Director, 245-2552
Diane Shepherd, Benefits Manager,
245-2558
PURPOSE: To approve the offering of an additional Retirement Incentive Program for FY 09-
10 to reduce the number of positions in the County.
BACKGROUND: As part of the FY2009-10 budget, the Board approved several Personnel
Services Cost Reduction options including a Retirement Incentive Program. This program
provided those employees eligible for retirement with the NC Retirement System to receive a
special financial incentive if they voluntarily agreed to retire within the 2009 calendar year.
Service requirements were based on total creditable service in the NC Retirement System with
no minimum requirement for Orange County service. Employees from all departments in all
positions were eligible to apply for the retirement incentive. In July 2009, staff identified
approximately 150 employees eligible to retire with the NC Retirement System, and estimated
that 25% or 37 would apply for the incentive. Savings of $375,000 was projected, based on
these positions being frozen for 12 months. Staff implemented this program and the Manager
approved incentives for 46 employees (30% of those eligible) retiring between July 1, 2009 and
January 1, 2010. Savings are currently estimated to be $800,000, assuming that unfilled
positions remain vacant for the remainder of FY 2009-10.
While this program resulted in significant savings in personnel services costs, it also challenged
departments' ability to provide critical services. Staff developed a workforce review process to
allow departments to request a waiver of the hiring freeze for critical positions or to utilize
temporary employees to cover mandated functions. Staff assisted several departments develop
opportunities to reorganize functions or to merge with other departments. These processes
have motivated departments to take advantage of the economic crisis to improve how the
County uses resources to provide services..
2
As discussed at the March 4, 2010 Board work session, the County Manager wishes to avoid a
reduction in force of current employees for FY2010-11. However, with the continued financial
crisis, personnel services costs must continue to be reduced to balance the next budget. Based
on this, the Manager asked staff to develop another retirement incentive program, which is
described in Attachment 1. In developing the 2010 Retirement Incentive Program (Program),
staff increased the eligibility requirements and decreased the timeframes compared to the 2009
incentive. Eligibility for the incentive payment now requires at least ten years Orange County
service credit, and the incentive is based only on Orange County service. Those retiring under
this Program must indicate their intention no later than the end of May, with an effective
retirement date of either June 1 or July 1. Attachment 2 more completely describes the
differences between the 2009 and 2010 programs.
Given the success of the 2009 incentive, it is anticipated that employees would apply for this
benefit if it were offered again. Staff has identified 91 employees who are eligible for unreduced
or reduced retirement benefits by July 1, 2010. The current list of eligible retirees includes
many employees who were eligible for the previous retirement incentive program but elected
not to participate at that time. If 20% of those eligible to participate elect to retire prior to July 1,
2010, 18 positions could be frozen or eliminated in FY 2010-11. Attachment 3 summarizes the
years of service and salaries for those eligible for the 2010 program.
Departments with employees retiring under this Program, as with any other vacated positions in
FY2010-11, will be required to adjust their budgets to reduce overall expenses. The position
and/or salary of the retiree may not be available to the department for FY2010-11.
Consequently, reorganization or re-alignment of department activities may be necessary,
particularly when a retiree leaves an essential position that cannot be eliminated or remain
vacant for the entire fiscal year.
The County Manager may determine, prior to implementation of the program, which
departments and positions will be ineligible to participate. Such determination would be based
on public safety requirements or the need to provide mandated services. Any decision to
exclude employees from participation would be made in consultation with the department
director and the Human Resources Manager prior to announcement of the Program.
FINANCIAL IMPACT: The estimated FY 2010-11 cost savings for the Program is $375,000,
based on the following assumptions:
^ 18 employees elect to take the incentive.
^ Average salary is $59,784; average savings including benefits costs is $68,752.
^ Positions are frozen for an average of eight months in FY 2010-11.
^ Average incentive payment is $13,671.
The estimated cost savings are outlined on Attachment #3.
RECOMMENDATION(S): The Manager recommends that the Board approve the offering of
an additional Retirement Incentive Program for retirement prior to July 1, 2010 for employees
who have been employed by Orange County for 10 or more years and are eligible to retire
under the NC Local Governmental Employees Retirement System.
Attachment 1
ORANGE COUNTY
2010 RETIREMENT INCENTIVE PROGRAM DESCRIPTION
Orange County has developed a Retirement Incentive Program ("Program")" in an effort to achieve cost
savings and provide eligible employees an opportunity to retire and receive a lump sum payment.
1. ELIGIBILITY REQUIREMENTS:
To be eligible for the Retirement Incentive Program, participants must meet all requirements listed below:
• Be a full-time or part-time permanent or provisional employee with ten years or more Orange
County Service;
• Meet the qualifications for service retirement (reduced and unreduced) under the North
Carolina Local Governmental Employees' Retirement System (NCLGERS);
• Elect to retire with an effective date of June 1 or July 1, 2010 by applying between March 22
and May 14, 2010;
• Complete and sign the Program Election and Release Form ("Release") and submit to the
Human Resources Department by May 14, 2010. Eligible employees who voluntarily elect
to participate in the Program are required to execute and submit the Retirement Incentive
Program Election and Release Form to the Human Resources Department and have seven
days from that date to revoke their Release and withdraw from the Program;
• Have submitted a "Claiming Your Monthly Retirement Benefit" (Form 6) to NCLGERS
prior to June 30, 2010
• Be in a position and/or department that is not exempt from the Program.
Any employee who elects to participate in the Program, but fails to timely and properly comply with the
above requirements, may not be eligible to participate in the Program.
*The County Manager may determine, prior to implementation of the program, which departments and
positions will be ineligible to participate. Such determination would be based on public safety
requirements or the need to provide mandated services. Any decision to exclude employees from
participation would be made in consultation with the department director and the Human Resources.
Manager prior to announcement of the Program.
2. TIME LIMITS APPLICABLE TO THE PROGRAM
• March 17, 2010 -Preliminary information communicating Board of County Commissioners'
approval of the Program will be distributed to employees. Election and Release Forms will be
distributed to Program-eligible employees as identified by the County.
• March 22, 2010 -The first date an individual may apply for service retirement benefits under
this program.
• June 1, 2010-July 1, 2010 -The retirement effective dates of this Program.
• March 31, 2010 -Deadline for employees who believe they are eligible but did not receive the
Election and Release Form ("missed" eligibles) to notify the Human Resources Department that
they may be eligible.
• Apri16, 2010 -Last date for information for "missed" eligibles to be distributed.
• Late March-early April, 2010 -Information Sessions (group and individual) will be held (to be
announced).
• May 14, 2010 -The last possible date to declare an intent to participate in the retirement
incentive by signing the Election and Release Form
• June 30, 2010 -The last possible date to apply for retirement to the NCLGERS for participation
in this program.
• July 1, 2010 -The last effective retirement date under the Program.
This is a voluntary Program. Employees will not be coerced or pressured to retire or to take advantage
of this benefit. Employees with concerns relating to this process are encouraged to bring them to the
attention of the Human Resources Director. Employees are also encouraged to consult with an attorney
and/or financial consultant before signing the Release Form.
3. BENEFITS AVAILABLE UNDER THE PROGRAM
• Eligible employees who elect to participate in the Program and comply with all requirements of
the Program shall receive in consideration for their participation in the program an incentive
payment based on their base annual salary and years of service in a lump sum as shown below.
The lump-sum payment will be made within 30 days following the effective date of retirement
and will be subject to the usual deductions and withholdings. The lump sum payment is an
incentive payment and will not be considered in the final compensation amount used for the
calculation of retirement benefits as provided in the North Carolina Local Governmental
Employees' Retirement System guidelines.
• Employees will receive any earned but unused vacation to a maximum of 240 hours and, in
addition, longevity pay prorated to the date of retirement. Vacation and prorated Longevity Pay
will be included with the employee's final pay check in accordance with County policies and
procedures. These payments will also be included in the calculation of the employee's
retirement benefits.
• An employee will receive applicable benefits as provided in the Orange County Personnel
Ordinance and state and federal regulations.
4
Incentive Amount
The amount of an individual employee's incentive is determined by base annual salary as of the last day of
employment and years of service as determined by Orange County.
Orange County Service
Credit # of Weeks Salary
Paid as Incentive
10 but less than 15 years 8 weeks
15 but less than 20 years 10 weeks
20 but less than 25 years 12 weeks
25 but less than 30 years 14 weeks
30 + years 16 weeks
5
4. RETIREMENT INFORMATION SESSIONS
The Human Resources Department will offer several informational workshops in late March. All
eligible employees who meet the Program requirements are encouraged to attend the workshops to
receive information on a variety of related topics, including Retirement System procedures and Health
Insurance. Spouses, domestic partners and significant others are welcome to attend these workshops
with employees. A schedule of meetings is included at the end of this material.
5. RETIREMENT ELIGIBILITY UNDER THE NC LOCAL GOVERNMENTAL
EMPLOYEES' RETIREMENT SYSTEM
The table below summarizes eligibility requirements. Please refer to the North Carolina Retirement
System at www.myncretirement.com or 919-807-3050 for more detailed information.
Unreduced Benefit Reduced Benefit
Employees, Law Employees, Law
excluding Law Enforcement excluding Law Enforcement
Enforcement Officers (LEO) Enforcement Officers
Officers Officers (LEO)
Thirty (30) or Thirty (30) or At least age 50 At least age
more years of more years of with at least 20 50 with 15
creditable creditable ser- years of Years of
service, vice, creditable creditable
regardless of age regardless of service service as an
a e officer
At least age 60 *At least age 55 *At least age
with at least 25 with 5 years of 60 with at least
years of creditable creditable 5 years of
service service as an creditable
officer service
*At least age 65
with at least 5
years of creditable
service
Sick leave may be applied to creditable service in accordance with the
provisions of the Local Governmental Employees' Retirement System.
Eve 20 da s of sick leave = 1 month of service credit.
*Employees with less than 10 years of Orange County service are eligible for retirement under the LGERS
requirements but are not eligible for the Retirement Incentive.
6. RETIREMENT APPLICATION PROCESS
The North Carolina Local Governmental Employees' Retirement System recommends that employees
submit applications for retirement at least 90 to 120 days before the retirement effective date in order to
timely receive initial retirement benefits to ensure timely payment of the first monthly benefit.
Applications cannot be submitted more than 120 days prior to the retirement effective date.
Employees who elect to participate in the Retirement Incentive Program and meet all program
requirements are required to submit an application for retirement to the NCLGERS no later than one
day prior to the chosen effective date. Eligible employees are encouraged to visit the Retirement System
website prior to contacting the Human Resources Department for additional information.
7. REEMPLOYMENT
6
An employee electing to participate in the Program shall not be eligible for reemployment with the County
as a permanent or provisional employee.
8. MISCONDUCT/PERFORMANCE FAILURE
Employees who elect to participate in the Program are still obliged to adhere to County and department
policies and procedures. The election does not excuse an employee from complying with the County's
conduct rules as well as disciplinary policies and procedures.
RETIREMENT INFORMATION SESSIONS
Each session will include information related to NC LGERS and the incentive. Plan approximately two
hours. Spouses and domestic partners are welcome to participate with prospective retirees. A schedule
will be provided to all employees.
7
Comparison of Retirement Incentive Programs
Attachment 2
Eligibility
Incentive Amount
Program release
requirement
Timeframe for decision
Effective retirement dates
Projected participatior
Actual participation
Information about EI
Average salary and
benefits
Average pro-rated
Average vacation
Average incentive
2009
Eligible for retirement
(unreduced or reduced
benefits) under the Local
Governmental Employees
Retirement System
(LGERS)
Based on LGERS service
credit
5-9 years = 6 weeks
10-14 years = 8 weeks
15-19 years = 10 weeks
20-24 years = 12 weeks
25-29 years = 14 weeks
30+ years = 16 weeks
Accepted releases up to 7
days before the last day
worked (as late as
October 23, 2009)
4 months
July 1 -October 31, 2009,
with possible extension to
December 31, 2009, for
critical positions (15
extensions granted)
37 employees
46 emolovees
ible Retirees
$ 64,380
$ 1,137
$ 5,621
$ 15,013
2010
10 or more years of
Orange County service
and Eligibility for service
retirement (unreduced or
reduced benefits) under
the Local Governmental
Employees Retirement
System (LGERS)
Based on Orange County
service only
10-14 years = 8 weeks
15-19 years = 10 weeks
20-24 years = 12 weeks
25-29 years = 14 weeks
30+ years = 16 weeks
Must declare intent to
retire and sign release
prior to May 14, 2010
2 months
June 1 or July 1, 2010
18 employe
N/A
$68,752
$994
$6,398
$13,671
2/26/2009
Attachment 3
2010 Retirement Incentive
Program Eligibility and Cost Savings Estimates
-Years
of
Service
Eligible
Employees
Unreduced
Benefit
Reduced
Benefit Incentive
(weeks of
salary) '
Totaf Salary
&$enefits Retiree
Health Ins (1
year).
..Prorated
longevity
Vacation'
Pay
Incentive Replace
Salary &
Benefits*
Total Cost
Savings
Average
Payment**
30+ 5 5 0 16 $ 458,000 $ 24,000 $ 13,000 $ 45,000 $ 123,000 $ 135,000 $ 118,000 $ 36,000
25-29 21 5 16 14 $1,560,000 $ 120,000 $ 28,000 $ 144,000 $ 365,000 $ 458,000 $ 445,000 $ 25,500
20-24 34 3 31 12 $2,383,000 $ 198,000 $ 32,000 $ 237,000 $ 478,000 $ 706,000 $ 732,000 $ 22,000
15-19 14 4 10 10 $ 746,000 $ 75,000 $ 10,000 $ 61,000 $ 128,000 $ 251,000 $ 221,000 $ 14,000
10-14 17 6 11 8 $1,109,000 $ 87,000 $ 8,000 $ 96,000 $ 150,000 $ 358,000 $ 410,000 $ 15,000
Totals 91 23 68 $6,256,000 $ 504,000 $ 91,000 $ 583,000 $1,244,000 $1,908,000 $ 1,926,000 $ 21,000
Examples (Actual Eligible Employees)
30
29
25 X
X
X 16
14
14 $ 82,000
$ 96,000
$ 47,000 $ 6,000
$ 6,000
$ 6,000 $ 1,912
$ 1,175
$ 804 $ 8,207
$ 7,184
$ 2,158 $ 21,886
$ 22,500
$ 11,478 $ 24,729
$ 30,129
$ 13,014 $ 19,265
$ 29,012
$ 13,546 $ 32,006
$ 30,859
$ 14,440
Estimated Cost Savings Based on
Acceptance Rate
Acceptance Rate
# of
Employees Estimated
Cbst
Savings
10% 9 $192,600
15% 14 $ 288,900
20% 18 $385,200.
25% 23 $481,500
30% 27 $577,800
"Replacement salary and benefits calculated for 4 months at an annual salary 10% above minimum of range and benefits equivalent to 30% of annual salary.
**Average payment includes incentive, prorated longevity and vacation payments.
00
Attachment 4 2010 Retirement Incentive 9
Program Eligibility by Department and Salary Grade
D
epartment: Unreduced Reduced Total
LGERS'` LGERS*
Benefit Benefit
Ain and OPT 1
Animal Services 2 3
Asset Mana ement and Purchasin Services 0
1 0
5 0
Board of Elections 6
Child Su ort 0
2 1 1
Coo erative Extension
0 2 4
Count Attorne
0 0 0
Count Commissioners
1 0 0
Count Mana er
1 0
0 1
1
Economic Develo ment 0 1
Emer enc Services
0
4 1
4
Environment and Resource Conservation 0 3
Financial Services
0
2 3
2
Health 3 12 15
Housin and Communit Develo ment 0 2 2
Human Resources 0 1 1
Information Technolo ies 0 1 1
Libra Services 0 1 1
Parks and Recreation 0 0 0
Plannin and Ins ections 0 6 6
Re ister of Deeds 2 0 2
Sheriff 5 6 11
Social Services 4 10 14
Solid Waste/Landfill 3 6 9
Tax Administration 0 3 3
Total
*1 ,.....I lam... ...-..~_._a r~~~_..___~ r. _`~__.__ _ .-. ,. .~~.-..,. 23 68 91
w~..ai vvvcnnncrn Gn~fJwyCBS KeLlremeni JySiem (LCitKS)
*`Some employees identified as eligible for reduced retirement benefits may be eligible for unreduced benefits when accumulated sick leave
balances are calculated as service credit.
**`Departmental totals include 9 Department Directors who are eligible for the retirement incentive.
Years of
.Service Salary. Grades
8-12 13-17 18-22 23-26 27-31 32-37 Total
30+ 0 1 2 0 2 0 5
25-29 3 6 7 4 1 0 21
20-24 11 7 9 2 5 0 34
15-19 5 3 6 0 0 0 14
10-14 5 3 6 1 2 0 17
Total 24 20 30 7 10 0 91
Salary Grades Examples of Positions
8-12 Convenience Center Operator, Medical Office Assistant, Public Transportation Driver, Deputy Register of Deeds
II, Parks Conservation Technician
13-17 Revenue Technician III, Office Supervisor I, Deputy Sheriff II, Child Support Officer, Senior Public Health
Educator
18-22 Recreation Program Supervisor, Environmental Health Program Specialist, Public Health Nurse II, Animal Control
Director
23-26 Family Nurse Practitioner II, Planner III, Deputy Sheriff/Major, Social Work Program Manager
27-31 Clerk to the Board, Environment & Resource Conservation Director, Health Director, Solid Waste Director
32-37 Assistant County Manager, Dentist, County Attorney, County Manager