Do the numbers add up for PA Gov Wolf’s early retirement plan or does it just sound like a good idea – PB/TK
Wolf’s early retirement plan aims to balance budget, but savings questioned – By Karen Langley March 13, 2017
HARRISBURG — Gov. Tom Wolf’s proposal to help balance the Pennsylvania budget by offering some state workers an incentive to retire early is an approach that has been tried throughout the United States.
Such proposals do not always accomplish their goals. Retirement incentives and cash buyouts offered by Hawaii through a 2000 law that attempted to “tame an unduly cumbersome civil service system” did little to reduce the size and cost of government, according to a state auditor’s report. A 1993 early retirement incentive in Minnesota likely cost more than it saved, the state’s legislative auditor found.
In Pennsylvania, an early retirement incentive offered to public school employees in 1992 and 1993 saved approximately $216 million in salaries but increased the pension liability by $284 million, producing a net cost of $68 million, according to an analysis by the Public Employee Retirement Commission.
“Early retirement incentives rarely live up to their promises, in terms of how much they will save,” said Luke Martel, who oversees research on retirement and pension policy at the National Conference of State Legislatures.
The Government Finance Officers Association, which represents public finance officials in the United States and Canada, has warned that early retirement incentives often have higher costs and lower savings than anticipated, and that governments should use “extreme caution” in considering them.
But aides to Mr. Wolf say the Democratic governor’s proposal to close a small part of the Pennsylvania budget shortfall with a temporary early retirement incentive for state workers not only would save about $25 million next year in the state general fund, but it also would produce savings for the pension system serving state workers.
Continue to post-gazette.com article: http://www.post-gazette.com/news/state/2017/03/13/Pa-early-retirement-plan-state-budget-Tom-Wolf/stories/201703130014
