Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: THURSDAY, April 27, 1995 TAG: 9504270033
SECTION: EDITORIAL PAGE: A-11 EDITION: METRO
SOURCE: RAY L. GARLAND
DATELINE: LENGTH: Long
Left to its own devices, the Allen administration would have preferred to effect this reduction in force by the most economical means available. But state employees are also voters, perhaps vociferously so, and the General Assembly had more generous ideas in mind.
Various bills were passed at the legislature's recent session sweetening the pot for those state workers willing to "cash out" now, or those fired later. But most legislators seemed to accept the idea that downsizing was necessary.
Those departing now with less than two years of service will receive four weeks' salary. If employed for more than two years, they will receive two weeks' salary for each year of service up to a maximum of 36 weeks. All will get a year of free life and health insurance, plus as much as $5,000 in lieu of unemployment benefits. Those losing their jobs down the road will get essentially the same package except for the cash payment in lieu of unemployment compensation. They will be eligible for regular unemployment benefits from the date of severance.
There was also an early retirement option available to all state workers. Those who had reached the age of 50 with 10 or more years of service could start receiving benefits immediately. But their monthly checks will be calculated so that the total estimated lifetime payout will be no more than would have been paid had the employee deferred retirement to age 55.
The "cash-out" benefit could also be combined with the early retirement option, or used to "purchase" additional years of credit on the pension. And those already eligible for regular retirement could do the same thing, which made it a very good deal. In fact, more than half of those approved for the buyout will also be drawing pensions.
In trying to slow the revolving door, the assembly prohibited re-employment with the state for a period of two years after a worker's voluntary acceptance of a buyout. But those involuntarily terminated will get a rehiring preference. They could take both the money and a new job, if one is available.
Judicial personnel, law-enforcement officers and employees of the Department of Corrections were excluded from the cash buyout. Ditto for full-time faculty at state colleges, except as part of an "approved" restructuring plan. Since virtually all senior colleges are trying to restructure, some teachers were approved for the buyout.
The assembly plainly learned from the poorly conceived early-retirement bonus offered in 1991. That was part of Wilder's effort to prevent employee layoffs when state revenues fell below estimates. Under this plan, any worker who had reached at least age 50 with 25 years' service could take early retirement and be credited with five additional years. Unlike the 1995 plan, it was extended to local governments desiring to participate. A total of 3,535 state workers took the early-retirement bonus, joined by 2,607 local employees.
Short term, this certainly saved the state some money. Employment decreased by 2,184 the first year. But over the following two years, state positions increased by 3,915. Those state agencies audited by the Joint Legislative Audit and Review Commission in 1994 had already filled well over half of the positions vacated by their early retirees. JLARC also concluded the effort had created an unfunded liability in the Virginia Retirement System of $238 million.
More than 7,500 state employees applied for the 1995 buyout. At last count, about 5,200 had been approved, or roughly 5 percent of total employment. Among the hardest hit is the Virginia Department of Transportation, which will lose about 11 percent of its staff. VDOT has said it will place greater reliance on private contractors.
State agencies have been given permission to fill about 400 vacated slots and the colleges are seeking authority to replace nearly 800 of 1,228 departing employees. If most of these requests are granted, it will mean an overall reduction of about 4,300 in a work force now exceeding 100,000. If Allen is to meet his goal of a 15 percent reduction, many more will have to follow them out the door over the next 32 months.
The question arises: What will be the impact on service to citizens? Considering the rapid increase in state employment over the past 25 years, there should be sufficient fat in the system to accommodate a sizable reduction in force without anyone being much the wiser. This has been demonstrated repeatedly in the case of private corporations: substantially fewer people supporting substantially higher levels of output.
Whether the same rules can be applied in the political sphere is, of course, an open question. First off, nobody can say with confidence where the fat lies in the state bureaucracy. It would have been nice if downsizing had been preceded by the kind of outside, independent analysis of all operations routinely employed by large corporations when they want to cut costs and increase productivity.
While such a review might have told state leaders where cuts were needed (or more resources, for that matter), nobody wanted to spend the money to do that or take the flak when outside consultants started turning over rocks.
Relying mainly on rhetoric and supposition, state leaders simply cast a wide net, which surely caught many of the wrong fish and let others stay that should have been caught.
If the state is sincere about a permanent reduction in its work force, and will not repeat the mistake of soon filling vacated positions, there's nothing wrong with the incentives offered. They were fair. But it hardly made sense to spend good money buying out those who would soon be retiring, and much of this exercise has come down to that.
Ray L. Garland is a Roanoke Times & World-News columnist.
by CNB