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Personnel Committee 4. 2. Meeting Date: 03/13/2012 By: Colleen Lasher, Administrative Services Title: Consider a Resolution to Offer a Voluntary Early Separation Program Background: Due to budget concerns, the city of Ramsey may desire to establish a voluntary early separation program in order to reduce salary expenses and to meet business needs in tough economic times. Staff analyzed several program design options and has determined the following program to be the most cost-effective. If approved, the program would be strictly voluntary and open only to those City employees who meet the requirements listed below: • Must be a regular employee of the City with a minimum of 10 years of regular service AND: o Who is at least age 55 years and eligible for a full or reduced PERA Coordinated Plan annuity: or o Who is at least age 50 years and eligible for a full or reduced PERA Police and Fire Plan annuity: or o Meet the above age requirement for your PERA plan and are receiving PERA disability benefits. Employees must submit a letter of interest to Human Resources by May 31, 2012. Employees must agree to leave employment with the city no sooner than June 30, 2012 and no later than December 1, 2012. Observations: If a voluntary early separation program were to be established, based on the City's 2012 personnel budget, the following table demonstrates possible estimated savings by participation levels: 2012 Annual Budget Costs $1,261,832 for 15 eligible employees 100°0 Participation 75°0 Participation 50°0 Participation 25°0 Participation 10°0 Participation **Annual Savings **Annual Savings Annual Budget Pay -out 1st year. Sub. Years $1,264,832 $306,254 $658,578 $1,264,832 $948.624 $229.691 $718,933 $948.624 $632.416 $153,127 $479,289 $632.416 $316,208 $70,564 $239,644 $316,208 $126.483 $30,625 $95,858 $126.483 Scenario is based on a minhnum of 10 years of service and PERA eligibility at the full or reduced rate and subject to union agreements. Costs for eligible employees not currently on the City health plan have been calculated at the $290 monthly benefit which is paid by the City to employees hired prior to 2001 for waiving health insurance. **Assumes no rehire or contracted service expenses The numbers listed above were derived from the guidelines listed below, as proposed by the League of Minnesota Cities, as well as Anoka County: subject to City Council authorization. • 10+ years of service at time of termination (includes cumulative total for non-consecutive service and/or pro -rated part-time service) o The City will provide the terminating employee, a payout of $10,000. For each additional full year of service above 10 years, an employee will receive an additional $500 for each year of service, to a total maximum of $22,500 (35 years of service) and,