Owens pulls back her retirement proposal

Early buyout plan could have cost more than it saved, consultant says

June 23, 1999|By Matthew Mosk | Matthew Mosk,SUN STAFF

Under pressure from the County Council, County Executive Janet S. Owens has scrapped an early-retirement package intended for 160 Anne Arundel County employees.

The plan, a key cost-saving feature of Owens' fiscal 2000 budget, was picked apart in a June 17 report by a consultant to the council.

Among other things, consultant R. Scott Gregory found that the buyout could end up costing considerably more than its projected savings.

To achieve $2.3 million in salary reductions, the county would spend $8.8 million over eight years, the report says.

"In my judgment, the program is flawed," Gregory said.

Generating savings "can be done in better, less costly ways, with a higher likelihood of true success," Gregory said.

Attrition option

With the council poised to reject the proposal in a vote Monday night, Owens withdrew it, opting instead to accrue the $1.2 million in anticipated savings by not replacing retiring workers.

"We agreed we would try to save the money through attrition," said Marvin Bond, Owens' chief of staff. "That was a reasonable alternative."

Owens initially offered the buyout as way to free up money for schools in the $730 million budget.

The plan was to shrink the county's bureaucracy by giving 50- to 60-year-old employees who had worked more than 20 years the option of retiring with a full pension.

Those slots would then be left unfilled.

County finance officers predicted that if 40 people took the deal, the county would save $1.2 million.

Risks noted

That plan had risks, Gregory's report says.

If all of the 160 eligible employees decided to leave, for example, the county would be stuck with an $11 million increase in pension payments, the report says.

If half left, the county's pension costs would rise $6 million.

"We told [the county executive] we had serious concerns about that," said Councilwoman Pamela G. Beidle.

"We did not want to get into a situation where we were paying out more than we were saving," she said. "That just doesn't make sense."

Less control

Bond said the early-retirement plan is a "cleaner" way to reduce the size of county government because it allows Owens to better target the positions she wants to lose.

It's tougher to predict what positions will be eliminated when looking for cuts through attrition, he said.

Council members said they prefer looking for savings that don't come handcuffed to huge long-term costs.

"We felt there was a great risk that early retirement would be a very expensive program," said Councilwoman Barbara Samoracjzyk.

"What we've asked them to do is try to reach their goals in a less expensive way," Samoracjzyk said.

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