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Will county’s early retirement plan pay benefits?

The Pike County Commission’s plan to offer retirement incentives to employees as a future cost control may leave some taxpayers scratching their heads in wonder this year.

The plan, which essentially pays employees a full year’s worth of salary and benefits for only three months’ work, is designed to reduced personnel expenses in upcoming fiscal years.

The theory, as offered by county officials, is that by encouraging eligible employees to take an early retirement, work duties can be readjusted and department’s streamlined, ultimately saving money moving forward.

However, what was proposed as a plan to offer eligible employees 75 percent of their annual salary and benefits if they opted for early retirement, was only a part of the equation. Because the plan was approved and offered after the beginning of the fiscal year (which was Oct. 1, 2008) and because paying a sizeable lump sum benefit in the 2008 calendar year could cause considerable tax issues for some employees, commissioners delayed the effective date of the incentive package to January.

That means eligible employees could work for three months – rightfully earning their full pay and benefits for those three months – and then take their retirement in January, getting a lump-sum payment for the remaining 75 percent of their annual salary and benefits. Confusing? Look at it this way: The county paid eight eligible employees $300,000 – their full combined salary and benefits earnings – to work only three months this fiscal year.

In theory, these departments will be better positioned to operate with fewer personnel in the next fiscal year, which begins Oct. 1, 2009.

But in reality, department heads already have asked, and received, $16,000 in unbudgeted raises for the employees who are left-behind and handling the duties reassigned from retired employees.

In the private sector, these responsibilities would simply be assimilated by remaining employees as companies sought to control expenses through attrition or early retirement. But, in government, the logic of business doesn’t always apply.

We sincerely hope that the county commissioners will be able to hold fast to their original goal of reducing personnel and salary expenses moving forward. If not, this could be an expensive learning experience for the taxpayers of Pike County.