DATE: Monday, April 14, 1997                TAG: 9704140045

SECTION: LOCAL                   PAGE: B6   EDITION: FINAL 

SOURCE: BY JON GLASS, STAFF WRITER 

DATELINE: NORFOLK                           LENGTH:   99 lines

RETIREMENTS TO SAVE NORFOLK $1.7 MILLION BUT THE CITY STILL MUST CONTAIN COSTS AS FISCAL YEAR 1998 IS FORECAST AS TOUGH.

Payroll savings from a one-time early retirement offer to city employees will provide a buffer against tax increases in the coming year's budget, officials say.

The city expects to pocket about $1.7 million in savings - roughly equal to 2 1/2 cents on the city's $1.40 real estate tax rate. Put another way, it's more than half of the $3.1 million the city needs to build a gym for Granby High School.

However it is spent, the extra cash is a welcome sight for officials who say fiscal 1998, which begins July 1, is shaping up as another tight budget year.

``First off, it'll allow us to mitigate the need for a tax increase. And, secondly, it'll give us the opportunity to better absorb inflationary increases we get hit with every year,'' Sterling B. Cheatham, an assistant city manager, said last week.

City officials say they expect only modest growth in revenue, and they'll be looking hard at eliminating or consolidating programs.

The need to rein in expenses became even more urgent Thursday, when the Wall Street bond-rating firm Moody's downgraded Norfolk's AA bond rating to A1 because of concerns over the city's slow revenue growth and rising bond debt. As a result, the city may have to pay more to finance projects ranging from school construction to redevelopment efforts.

The City Council will receive the administration's proposed 1998 budget April 22.

The early retirement package offered this year was part of the city's aggressive policy in recent years to cut expenses by ``rightsizing'' its work force - but to do so without laying off people. Through attrition and retirement, the city has thinned its work force to 3,700 from about 5,000.

The last workers to take advantage of the early retirement offer left April 1. Altogether, 245 employees from 18 city departments accepted the offer, about half of them veteran police and fire workers. That reduced the city's work force by more than 6 percent.

Savings will result in two ways: Some retirees may not be replaced, and, for those slots that will be refilled, the city can hire younger recruits at lower salaries than the senior employees who left.

In the police and fire departments, all 130 of the employees who accepted early retirement have been replaced, Cheatham said - a move considered vital to public safety.

But the city has delayed filling most of the remaining 115 vacancies created in other departments.

``We want to re-evaluate these other positions to see if they're absolutely needed,'' Cheatham said. ``We're looking at merger, consolidating functions, privatizing or just doing without. We're also looking at whether we can use technology better rather than adding a body.''

In the Utilities Department, where 21 people left, about half of the positions will be eliminated, said Louis Guy Jr., the department's director.

``As we try to do things better, faster and cheaper, we look at where we can adjust workloads and shift responsibilities,'' Guy said.

But there are downsides. The city lost nearly a third of its veteran police officers, raising concern that crime fighting will suffer. Also, because more officers than expected left, the city had to cough up about $500,000 it hadn't budgeted in a scramble to recruit new hires, officials said.

``We lost a lot of the experience in our police department, the captains, and lieutenants and the sergeants, and in the fire department, too,'' City Councilman Herbert M. Collins Sr. said. ``That always gives me a level of concern.''

City Manager James B. Oliver Jr. said public safety has not been compromised. Training has been stepped up, he said.

``There's no question we lost some talented people, but the longer I've been in this business, the more I've been impressed when people are given new leadership opportunities,'' Oliver said.

But some worry that services will suffer if positions are left unfilled. Since early March, the city has been under a hiring freeze except for positions considered ``critical.''

In Human Services, which includes social services, all but about seven of the 20 employees who took early retirement have been replaced. But the 473-employee department still has approximately 40 vacancies waiting to be filled.

``The biggest impact has been to the child welfare area - people are having to handle work loads that are more than they can do,'' said John Kownack, assistant director of administration for social services.

Employees who had worked on ``nonessential'' programs to strengthen families have been pulled away to handle state and federally mandated programs involving child protective services and foster care, Kownack said. Ironically, he said, the family-building programs left unstaffed often succeed in reducing the need for foster care and protective services, he said.

Overall, the early retirement program is expected to shrink the city's annual payroll by about $3.7 million. But related expenses will reduce the available savings to about $1.7 million, Cheatham said.

Under the plan, the city offered eligible employees an additional four years of credit toward their pensions or a one-time cash buyout of 40 percent of their salary. Of the 245 employees, 21 took the cash, an upfront cost of $307,199, according to records in the Human Resources Department.

The other employees took the four additional years. That will increase the city's annual pension costs by an estimated $1.8 million.

Officials said 370 employees, more than 9 percent of the city's work force, were eligible to take the early retirement. KEYWORDS: NORFOLK CITY EMPLOYEES RETIREMENT BUDGET

Send Suggestions or Comments to webmaster@scholar.lib.vt.edu