The Secretary of the Agency of Administration is preparing to unveil a retirement incentive package to state employees.
Justin Johnson estimates that the retirement incentive could help the state find about $2.5 million in labor and personnel costs. The proposal, along with $2 million in labor savings from non-union state workers, brings the Shumlin administration closer to achieving a total of $10.8 million in labor savings for fiscal year 2016; $6.3 million in labor reductions have yet to be identified.
The savings from non-union workers includes a cut in planned pay increases for exempt employees, a 5 percent reduction in the number of temporary workers, and a lower mileage reimbursement rate.
Gov. Peter Shumlin proposed the labor cuts as part of a package of reductions to close a $113 million gap between the state’s projected spending and revenues. House lawmakers approved the $10.8 million reduction when lawmakers passed the $1.48 billion general fund budget package last month.
Johnson has asked the Vermont State Employees Association to reopen the union’s contract in order to consider reductions in pay increases that were approved by the Legislature last year. The union has refused to reopen the contract, which was negotiated with the administration in 2013.
So long as the contract is off the table, the state may have to find part of the savings through the elimination of positions in state government, including vacancies left by retiring employees.
Johnson told the Senate Appropriations Committee Monday that the exact details of the retirement incentive are still being settled. He is working with the State Treasurer’s office to find out how the incentive would impact the state’s retirement funds.
Retirement savings can be difficult to predict, he told the committee. The distribution of the employees that take the incentive can be uneven — several employees could choose to leave one department, for instance. Also, some of the jobs that are left vacant may need to be filled, he told the committee.
Johnson told Senate Appropriations members on Monday that he expects around 300 positions will need to be eliminated in order to meet the savings target. Some of those positions would include current vacancies or vacancies left by retiring employees.
He said after the meeting that layoffs are still a possibility as the state tries to find the remaining $6.3 million.
Johnson and Jim Reardon, the commissioner of the Vermont Department of Finance and Management, fielded questions from lawmakers about how the administration is handling the $10.8 million labor savings target.
Sen. Dick Sears, D-Bennington, and Sen. Jane Kitchel, D-Caledonia, expressed concerns that departments will be asked to make labor savings that will impact critical state government functions. They said the Department of State’s Attorneys and Sheriffs’ Association, for example, would see about 3 percent of its total budget cut by the labor savings reduction.
David Cahill, who heads the department, told the Senate Judiciary Committee last month that the cut would mean the loss of five prosecutor positions or three special investigative units, which investigate sexual violence cases and serious allegations of child abuse.
Reardon and Johnson said the administration is not looking for across-the-board cuts. Instead, they say they are selectively identifying areas of state government that would lose positions.
State government will need to continue to evaluate efficiencies, Johnson said.
“It’s an ongoing process that shouldn’t have an end because we should always be doing it,” Johnson said.
