Maryland Offers State Employees $15,000 to Retire Early

by | February 23, 2015

By Erin Cox and Michael Dresser

Maryland is offering state workers $15,000 to leave their jobs, part of a cost-saving plan to shrink the government workforce and save millions.

More than 30,000 eligible employees received a letter Thursday detailing the offer, which includes the lump sum plus $200 for every year of service. Those who apply and are accepted must leave their jobs by the end of April.

Gov. Larry Hogan signed an executive order Wednesday launching the process, which seeks to eliminate 500 jobs. The buyout implements a plan proposed by Gov. Martin O'Malley in his last days in office to help reduce a budget shortfall. The goal is to save $37.5 million in salaries and benefits by the end of next year.

"It's going to attract a whole slew of people," predicted Pat Moran, president of the largest union representing state workers, AFSCME Council 3.

While the program is likely to be attractive to many workers, Moran said, it also will disrupt state programs. "This is going to cut front-line services, and that is not good for the people who expect these services," he said.

Del. Maggie L. McIntosh, the Baltimore Democrat who heads the House Appropriations Committee, said the approach is preferable to layoffs.

"We've done this before. It's been successful. It's something you can monitor and see," she said.

In his order, Hogan wrote that the program "will mitigate the need for significant layoffs in the future."

The buyout offer does not extend to employees working in public universities, police or corrections officers, judges, political appointees or state lawmakers.

Officials said the Maryland pension agency is beefing up its staff to be ready for questions about retirement pay to help employees make decisions. Workers have until March 13 to apply for the voluntary separation program and two more weeks to rescind an application. The state will decide which applications to accept by April 24.

Hogan's spokesman, Doug Mayer, said the buyouts "are a standard method used to reduce spending and find efficiencies in government," both of which are among the new Republican governor's goals. Mayer said the deal pre-dated Hogan, who took office Jan. 21.

"This particular buyout agreement was unanimously agreed upon by the Board of Public Works on Jan. 7 and the governor is simply following through with it," Mayer said. He said there is no statewide limit on the number of employees who can receive buyouts and that it will be up to agency heads to decide who is allowed to participate.

Over the past decade, the state has trimmed a workforce that in 2002 stood at 81,113 workers. By 2011, after O'Malley offered a similar buyout, there were about 79,120 employees, a 2.5 percent reduction.

Moran said the current plan "exempts a whole lot of people who would like to take advantage of it." An AFSCME spokesman later said the union was told that all employees at so-called 24-7 facilities -- round-the-clock operations such as prisons and state hospitals -- will not be eligible, though many received an email informing them of the program.

"AFSCME believes that all employees at 24-7 facilities should also be eligible for early retirement if it does not compromise safety and services," the union said in a statement.

Hogan took office facing a nearly $800 million budget gap, which he proposes to close in part by a reducing workers' pay by 2 percent and by requiring 2 percent cuts at every state agency. McIntosh said she isn't nearly as nervous about the buyout affecting services as she is about other aspects of Hogan's budget.

"We're more nervous about the 2 percent across-the-board cut and that method of balancing the budget," she said. "We still don't know what that means and how we're going to get those savings.

Warren Deschenaux, the General Assembly's chief analyst, said it is not certain that the Hogan administration will reach its goal for the buyout.

"It's a rather ambitious target given the performance of the last effort," he said. If the buyout falls short, Deschenaux said, "then they have to make it up" through other cuts.

Deschenaux said the offer is likely to be attractive primarily to "people who are on the edge of leaving anyway."

Hogan's spokesman emphasized that not everyone who applied would be granted a buyout. The last time one was offered, 46 percent of those who volunteered were accepted.

"Someone who's worked there a week wouldn't qualify for this," Mayer said.

In the 2010 buyout, the Board of Public Works eliminated 667 jobs, which cost the state $21.5 million in severance but saved it $39.3 million a year in salaries, according to legislative analysts.

Seven seminars have been scheduled around the state to give employees details on retiring.

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