HUNTSVILLE, Ala. -- Governor Robert Bentley on Monday announced details of legislation that would offer a retirement incentive to eligible state employees who voluntarily retire from state service.
"The Voluntary Retirement Incentive program will give eligible employees an attractive choice," said Governor Bentley. "The program will be a benefit for employees who choose to participate and a benefit for taxpayers as well. This program will save taxpayer dollars in both the short term and the long term. The result will be a less costly, more efficient state government.”
Projections from the Alabama Department of Finance show that for every 500 employees who participate, total overall savings in salaries and benefits would average between $18 million to $26 million a year, with $6 million to $10 million of those savings directly benefiting the General Fund budget. The state is not counting on a pre-determined number of employees to participate. The goal is simply to make this option available as another way of increasing efficiency.
Pending legislative approval of the program, employees who choose to participate would be able to select one of the following retirement incentives:
Option 1: Post-Retirement Group Health Insurance Coverage
The State will pay 100% of the retiree’s monthly premiums for non-tobacco users for up to 5 years for member-only coverage or up to 2.5 years for family coverage or until the retiree qualifies for Medicare or reaches age 65, whichever comes first. If the employee or his or her covered spouse is a tobacco user, the employee will be responsible for paying the difference between the non-tobacco user premium and the tobacco user premium.
– OR –
Option 2: Cash incentive payment of $15,000
The cash incentive payment would be made in two installments. The first installment would be $7,500 upon retirement. The second $7,500 installment would be paid in January of 2014.
Senate President Pro Tem Del Marsh will serve as the Senate sponsor of the legislation.
“Voluntary retirement incentives are a win-win for both the taxpayers and employees who choose to participate,” President Pro Tem Marsh said. “We’re able to realize significant short- and long-term cost savings for taxpayers, as well as offer an attractive incentive to employees who have served the state for many years. I appreciate Governor Bentley’s commitment to right-sizing state government. We look forward to continuing our work with his administration to reduce costs, maximize taxpayer resources and operate as efficiently as possible.”
Representative Mac McCutcheon will serve as the House sponsor of the legislation.
“The retirement incentive bill is one more way of managing our budgets and being fiscally responsible to the Alabama taxpayers,” Representative McCutcheon said. “Governor Bentley and the Legislative Leadership are committed to living within our means. We are well on our way to saving the taxpayers of Alabama one billion dollars. The Voluntary Retirement Incentive is the latest of several initiatives that will help us reach our goal.”
Qualified employees would include:
- Executive Branch, Legislative Branch, and Judicial Branch state employees who meet the minimum retirement eligibility requirements.
- The plan covers both merit and non-merit staff.
The program does not affect education employees; however, a separate Teacher Voluntary Retirement Incentive program could be proposed at a later date.
House Speaker Mike Hubbard voiced support for the Voluntary Retirement Incentive plan, saying it builds on a promise to maintain services while right-sizing government.
“When the Republican legislative majority was elected in 2010, we promised to reduce the size of government and cut back on out-of-control spending while continuing to provide essential state services to those who need them,” Speaker Hubbard said. “By offering an early retirement package, we can accomplish all of these goals while also ensuring that the promises made to the affected employees when they were hired are promises being kept as they retire.”
An application process will be conducted to allow the state to determine the level of interest among employees. Agency heads will have discretion on whether their particular state agency will participate based on factors such as staffing levels for critical positions.
The state plans to eliminate many of the positions of those who retire. However, critical positions will be refilled in order to ensure the viability of essential state functions. Refilling positions will be considered on a case-by-case basis.
Lieutenant Governor Kay Ivey also voiced support for the proposal and the increased efficiency it provides.
“As we continue to identify ways to streamline state government, the Voluntary Retirement Incentive program proposed by Governor Bentley offers an attractive option for state employees to consider,” Lieutenant Governor Ivey said. “The successful implementation of the proposed VRI program will help reduce the size of state government without impacting essential services.”
“The Voluntary Retirement Incentive is part of our overall plan to right-size state government,” Governor Bentley added. “We will conduct this program in a responsible manner in order to ensure that we are providing essential state services while also increasing efficiency in government agencies.”
Click here to read the proposed legislation in its entirety.