Sunday, December 28, 2008

The Governor Takes a Suggestion, Part 2: Early Retirement?

Yesterday I mentioned the suggestions that were sent to the Governor's office on how to save the state some money; the list posted at the Washington Policy Center is pretty interesting reading, really. One theme that comes up a number of times in the document is to offer early retirement to employees to get them out of the system:

*An incentive program for people who are within two to three years of Retirement. Some people would like the opportunity to enjoy an early retirement. I think they should at least have that option.

*Every so many years, to help with the State's budget, the Governor offers staff who are close, or sort of close, to retirement, an "offer hard to refuse" to retire early. I am 60, have 17 years under my belt, and would love to be able to retire early! Good luck and we are behind you in these very difficult times…
I'm wondering how feasible that would be for teaching.

Consider--this year a teacher at the top of the salary schedule makes $64,887 while a new teacher earns $34,426, a difference of $30,461 dollars. If you offered the top-scale person $20,000 to get out and hired someone new to take their place, the savings in salary alone would be $10,000. Figure in the benefits and the difference between someone on TRS1 and someone on TRS3, and that number could balloon quite a bit, to the point that you could offer $30, maybe even $35k for people to leave and still have a savings. Project the savings out over 5 years (e.g., (MA+90+16 years)-(BA+0, BA+1....BA+4), and it's very nearly $150,000.

The trick is that this plan presupposes that people would be interested in retiring. A lot of the teachers I know who are staying in the system are there because they need to bridge the gap to medicare so they can afford health insurance, meaning that no matter how effective they aren't or how much they don't like the job they're going to do everything in their power to get to the magic age.

Similarly, those on TRS2 and TRS3 have recently seen their Defined Contribution accounts go in the tank in a truly epic way; anyone watching that happen would need to be shown a pretty substantial emolument before they'd commit.

I don't know if it would work, but it could be an idea worth pursuing.

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