Update for Early Retirement Incentive

The following is an update of the status of our efforts to obtain an ERI.

ERI – is Early Retirement Incentive

On January 19, 2011 representatives, including one from PARS (Public Agency Retirement Services) met for the 5th time to discuss the effectiveness of a classified employee Early Retirement Incentive. 

Up until this time, the district had been using independent PARS analysis and CSEA had been using its own independent source.  Tuesday’s meeting included a partial review of the union’s analysis showing cost effectiveness of ERI in limited circumstances.  The participating parties are approaching the evaluation of potential success of an ERI by constructing a new, joint model, and much of the discussion focused on what elements should be included in that model. 

It was agreed by the parties that CalPERS allows districts to spread the cost of an ERI out over 5 years, but in doing so, CalPERS would charge applicable interest to payments received over 5 years, as opposed to payment for an ERI in a lump sum when the incentive is offered.  Importantly, any interest charged should be a factor considered as a cost to implementing an ERI. 

Analysis has focused on the difference in cost to the District if (1) a group of eligible employees took an ERI and were replaced with new hire versus (2) the cost the District will pay (salary, benefits, etc) for the eligible employees if an incentive were not offered and the employees chose to remain with the District. Parties agreed that to evaluate these costs, longevity increases that would be experienced by senior employees in the coming years should be a factor considered when evaluating the cost of (2) eligible employees remaining with the District.  Also, parties agreed that elements in our contract, including different length in time in progression between steps, the limitations in health plan selection for new hires, and the limitations to retiree health plan selection, should be factored into the model.  It was mentioned by the PARS representative that the savings from natural attrition (the gradual reduction in the number of employees by natural means such as retirement, resignation or death) should be considered when evaluating savings from an ERI.  

Finally, the parties agreed to meet again in a minimum of two weeks from 1/19/11 – that date has not yet been determined. 

Contributed by Linda Sandoval

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