Early retirement incentive earns support in Annapolis But governor, legislators have yet to settle on plan

March 28, 1996|By Peter Jensen | Peter Jensen,SUN STAFF

While Gov. Parris N. Glendening and legislative leaders agree that Maryland state employees should be offered financial incentives for early retirement, they are having difficulty settling on a plan to do it.

As the governor moves to shrink the state's work force of 70,000 with promised layoffs of 800 or more workers annually for the next few years, the chance to get some employees to leave voluntarily has gained broad appeal in Annapolis.

The House of Delegates is expected to approve a bill that would extend health benefits to employees who have lost their jobs as a result of budget cuts. The state would offer to pay laid-off workers four-fifths of their health care premiums for one year after their termination.

But the House measure is a mere shadow of the bill approved by the state Senate last month. Under the Senate plan, senior employees would be offered an incentive -- increased retirement benefits -- if they left state service between Oct. 1 and June 30, 1997.

Under the Senate plan, a worker with 30 years of service, for instance, would have his retirement benefit calculated at 35 years.

The deal would be offered to employees with 30 years of service, as well as to those with 25 years who are age 50 or older. Workers with 20 years of service who are at least 45 and have had their jobs abolished also would be eligible.

In all, state officials say about 4,200 workers would be eligible, and they predict about half of them would choose to retire. That would cost the state's retirement system about $141.5 million -- primarily the cost of increased benefits over the next 30 years.

But there also would be significant savings. The Senate proposal would require the state to abolish 60 percent of the vacated jobs. Even with the extra cost, that would save the state $10 million in the fiscal year that begins July 1.

In the House, delegates initially showed interest in a less costly proposal that would offer the early retirement option to workers in selected jobs with lump sum payments of up to $75,000. The program would cost the retirement system far less, in part because it would give no special benefits -- aside from health insurance -- to those who lost their jobs.

But the program ran afoul of the law: Its provisions might have violated federal age discrimination protections. As a result, the best chance for an early retirement program will rest with a conference committee expected to be formed shortly to settle differences between the House and Senate measures.

"We're working on it," said Harford Democratic Sen. William H. Amoss, chairman of the Senate's pensions subcommittee. "If the governor is intent on getting 2,000 more people out of the system, this is the way to do it."

Wicomico Democratic Del. Norman H. Conway, vice chairman of the House Appropriations Committee, said he expects the House to endorse an early retirement plan. But he believes it will have to be less costly than the Senate proposal. Meanwhile, the Glendening administration has offered an alternate plan -- a $56 million package of cash buy-outs to potential retirees and severance pay to laid-off workers.

The negotiators have a powerful incentive to complete their work before Monday -- the day the House and the Senate must finalize the state's $14.5 billion budget.

"Maybe when we get six people around a table in a conference committee, we can work it out," said House Speaker Casper R. Taylor Jr., an Allegany County Democrat.

Pub Date: 3/28/96

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