Clock Ticking on Voluntary Buyout, Terrill Says

A voluntary buyout plan that could ultimately save millions should be implemented starting in January if the state is going to realize savings during the downturn, state Rep. Randy Terrill said.
“An aggressive early retirement program could generate an almost immediate 4-percent decrease in the state government workforce and save at least $65 million annually, perhaps even up to $200 million per year if education is included,” said Terrill, a Moore Republican who chairs the House appropriations subcommittee on public safety and the judiciary. “However, if we want those savings to occur during the current down-budget cycle, the process should begin by early January.”
The Oklahoma Public Employees Association reiterated their support for the voluntary buyout and deferred compensation proposals.
The Oklahoma Public Employees Association agreed with Terrill.
“It’s necessary to take immediate action,” said Sterling Zearley, executive director of the OPEA. “State employees are under the gun from all sides, facing furloughs and RIFs, all the while picking up the slack to keep government services operating. This deferred compensation and voluntary buyout plan will not fix the current budget situation but it will certainly help ease some anxiety and give agency leaders more flexibility as we move into the next few fiscal years. The bottom line is that we must make sure we continue to provide quality services to all Oklahomans during these tough economic times.”
Terrill has called for expanding early retirement buyouts in state government, providing incentives for all workers within two to three years of full retirement to voluntarily accept a buyout offer. Currently, early buyouts typically target workers within one year of retirement.
The upfront costs of the buyout would include payment of a worker’s next longevity check, allowing workers to cash out all unused annual leave, payment of 18 months of an employee’s health coverage, and an early retirement incentive that could be as much as $5,000 plus other benefits such as job training.
However, those costs can be quickly recouped through the savings generated, Terrill said.
No new laws are required for agencies to initiate the process, but Terrill noted that agency officials must be assured of receiving funding for the upfront costs associated with the buyout, and urged the governor and legislative leaders to take that step.
The process typically involves a 45-day opt-in followed by a seven-day period to allow workers to re-assess their decision before it is finalized. Overall, the process takes 60 to 90 days before workers begin leaving state government.
The state has just six months left in the current fiscal year.
“The longer we wait to begin retirement buyouts, the longer we wait to realize savings,” Terrill said. “If agencies are given the signal to begin the process in January, we could begin reducing the state workforce by late March or early April. But if we don’t hurry, we’re going to end up a day late and a dollar short.”
The Department of Corrections was recently able to vacate 119 positions through an early retirement offer.
Excluding teachers and higher education employees, there are more than 35,000 state employees.
Based on extrapolations from the Department of Corrections retirement buyout, Terrill noted a statewide program could vacate as many as 1,500 government positions and save $67.5 million on an annual basis. If education employees are included, the savings could rise to more than $200 million per year.
Terrill noted that other state, including Tennessee, have begun using similar plans.
Terrill also renewed his call to allow state employees to voluntarily defer their pay rather than take unpaid furlough days.

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