State Seeing Fewer Early Retire Applicants Than Expected

The number of state employees opting into Gov. Charlie Baker's early retirement program is falling well short of projections, forcing the administration to weigh other options to reach its desired budget savings.

Baker, as part of his plan to close a projected $1.8 billion gap in the state's fiscal 2016 budget, has sought to trim the executive branch payroll by 4,500 employees to save $172 million. But with a deadline approaching Friday for employees to submit applications, only 2,700 employees had applied as of Monday afternoon.

State retirement and administration officials now expect between 3,000 and 3,300 employees to apply for the early retirement pension sweetener before the deadline.

Lawmakers in May approved the early retirement package as part of budget-balancing plans for fiscal 2016, which begins in less than a month. As part of that legislation, the House and Senate gave Baker several tools to achieve the desired budget savings.

Administration and Finance Secretary Kristen Lepore said in a statement late Tuesday that she remains "confident" that the early retirement plan can generate the budget savings with "minimal impact to the state's ability to deliver services" and without having to resort to immediate layoffs.

"While the deadline is still several days away, a number of factors remain in play towards achieving the targeted savings," she said. "We also have additional options available and under review, including a reduction in the percent of backfills due to the lower number of people choosing to retire."

In addition to early retirements and layoffs, the law gave Lepore the authority to continue a hiring freeze and to offer one-time buyouts to incentivize long-time state employees who have already accrued their maximum pensions to retire.

In a report to the State Retirement Board in May, Lepore estimated that 124 jobs could be eliminated by the continuation of a hiring freeze put in place shortly after Baker took office in January. She also projected that 100 employees who have already reached their maximum pension benefit could be enticed to retire with one-time $10,000 payouts.

As part of the program's design to ensure savings, rehiring for vacated positions was limited to 20 percent of the total payroll savings. Lepore on Tuesday said the administration could rehire fewer employees, boosting savings to account for the lower number of employees taking the early retirement.

Budget officials also said that the average salary of employees taking the early retirement package has trended higher than original models, possibly generating higher savings with fewer employees opting in.

Those taking early retirement will leave the state payroll after June 30, in time for the start of new fiscal year on July 1.

Concerns among some lawmakers that the program would generate a flood of retirements impacting the state's ability to deliver services have not materialized. The Senate in its negotiations with the House insisted on a cap for the program, ultimately limiting its size to 5,000 employees.

Baker officials are not ruling out the possibility of some layoffs down the line after agencies restructure to accommodate for fewer employees.


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