PA Auditor General Says State Could Save Millions By Offering Voluntary Retirement Incentive

HARRISBURG, Pa. – Auditor General Jack Wagner said that state government could save taxpayers up to $381 million annually by offering all commonwealth workers a voluntary severance package similar to the successful program he offered his own employees this past summer.

The Department of the Auditor General saved $1.5 million when 50 workers, or 7.5 percent of the Department of the Auditor General's workforce of 665, chose to participate in Wagner's Voluntary Retirement Incentive Program. The goals of the program were to reduce department costs to meet budget constraints and reduce the number of involuntary furloughs. The program was so successful that enough employees accepted the incentive eliminating the need for furloughs.

Wagner said his program, if offered to all state employees, could produce taxpayer savings of up to $381 million, assuming a participation rate of 7 percent of the state's total workforce of 77,168.

“State government has grown too big and Pennsylvania taxpayers can no longer afford it,” Wagner said. “With Pennsylvania facing a budget deficit of $4 billion to $5 billion next year, it's time to institute a voluntary retirement incentive program that would shrink the state payroll and reduce the cost of state government to taxpayers.”

Wagner, the state's independent fiscal watchdog, said that his financial stewardship of the Department of the Auditor General should serve as a role model for state government. During his 5 1/2-year tenure, Wagner has reduced the size and cost of his department while continuing to produce award-winning audits that have highlighted hundreds of millions of dollars in potential savings to taxpayers. At about $44 million, the department’s current budget is almost $2 million less in the current fiscal year than when Wagner took office in January 2005. These savings were achieved through various measures, including a reduction in the department’s auto fleet, reduced travel expenses and the elimination of overnight trips. The department’s workforce has been reduced from 755 employees in January 2005 to its current 615 -- without any furloughs.

Wagner offered management and, with cooperation from the American Federation of State, County and Municipal Employees, union employees of the Department of the Auditor General a one-time voluntary retirement incentive in July of this year.

The 50 workers who accepted the incentive received $1,000 for each year of service, up to a maximum of $25,000, and left employment with the department on or before Sept. 3, 2010.

There are currently 77,168 salaried employees under the governor’s jurisdiction who are earning an average total compensation of $70,478, including salary and benefits. If 7 percent of the workforce were to accept the voluntary retirement incentive, there would be 5,402 retirees, and based on projected savings of $37,200 per employee (after incentive and leave payouts), the state would save $201 million the first year. In the second year, if those 5,402 positions are not filled, the state would save $381 million.

“These are significant savings that the state can realize on an annual basis,” Wagner said. “Rather than repeatedly raising the spectre of state employee furloughs to address budget shortfalls, I urge the governor, the general assembly, and future governors to offer their employees a voluntary retirement incentive, which would provide greater cost savings in the long run.”         

(Source)