An early-retirement incentive bill that caused fireworks in the Senate in March even before it was introduced has now been submitted to the Legislature by Gov. Charles W. Turnbull.
Titled the Public Employees Voluntary Separation Incentive Act of 2000, the bill offers an alternative to a bill sponsored by Sens. Donald "Ducks" Cole, Almando "Rocky" Liburd and David Jones. Government Employees Retirement System board chair Corinne King rejected that measure at a March hearing of the Senate Government Operations Committee.
King said at the hearing that the government couldn't guarantee the $15 million proposed to finance the senators' early retirement program. Ira Mills, director of the Office of Management and Budget, then told the lawmakers that he had a retirement plan of his own which, he said, would cost about $9 million. His announcement was met with astonishment by the senators, who accused Mills of "sabotaging" their proposal.
The bill just now submitted by the governor calls for financing of $15 million from the proceeds of the government's $300 million bond issue last year.
Cole said Wednesday that he, along with Liburd and Jones, met to discuss the new proposal with GERS representatives including King, actuary Howard Rog and executive director Lawrence Bryan, as well as Mills and John deJongh, who chaired the Government House task force that produced a five-year economic recovery plan for the territory.
Liburd said he asked Rog to calculate the number of employees with 25 to 30 years of government service in the system so he could project the cost of the proposal and how best to maximize the $15 million. "We want no unfunded liability," Liburd said.
The senators' proposal, titled the Early Retirement Incentive Act, would allow employees with 25 years of service to "buy" their remaining time toward retirement eligibility by contributing 8 percent of their annuity over the remaining years they would otherwise have to work before retiring. "The purpose of the plan is to reduce the government payroll so employees can retire early without penalty," Cole said.
According to Cole, "The difference between our plan and the governor's is that his plan gives no money to GERS; it goes directly to the employee. Our plan goes to GERS, giving them an infusion in funds so they can invest it." He added, "The governor doesn't want to give any money to GERS."
Liburd said he was surprised that the governor sent down his plan before the figures had gotten back from Rog so that the senators could further evaluate their own plan.
The administration plan addresses only those employees with at least 30 years of service. It would give eligible classified employees a lump-sum payment of 30 percent of their salary to leave service early. Unclassified employees would get 15 percent. The proposal applies only to the executive branch, whereas the senators' plan would cover employees of all three branches of government.
In a letter to Senate president Vargrave Richards, Turnbull said the purpose of his bill is to address the "precarious financial condition" of the government and reduce the government's debt. The governor cited Act 6297 which, among other things, mandated the sum of $15 million from bond proceeds to be used as retirement incentive payments to government employees. "Because the program is cost neutral, it will have no effect on the GERS," he stated.
No legislative hearing has yet been scheduled on either plan. The senators' bill is sitting in the Government Operations Committee; the governor's plan is on Richards' desk.
The governor called a special legislative session for Friday to address a separate retirement proposal addressing the Judges Pension Fund and the Governors and Lieutenant Governors Retirement Fund.
