Board to Study More Buyouts

For the second time in four months, Orange County supervisors will consider offering early retirement to hundreds of employees in an effort to trim the county payroll and stem the growing budget crisis.

The proposed buyout targets employees at the Health Care Agency, Community Services Agency and Department of Child Support Services, and could result in 100 to 150 employees retiring early, said Gary Burton, the county’s chief financial officer.

The Board of Supervisors will consider the proposal next week. If not enough employees accept the offer, and the county’s finances grow worse, layoffs might be necessary, Burton said.

“We wouldn’t put this on [the agenda] if it wasn’t important to reduce the staffing of those organizations and get as much as possible out of it so we can soften the impacts of a layoff if one is necessary,” Burton said.

The county is dealing with a severe budget crunch caused by growing service costs and decreased revenue, plus the annual payments the county must make on the remaining $881-million debt from its bankruptcy in 1994. The supervisors approved $102 million in budget cuts last week.

The county’s financial situation might grow more dire because of the state’s $35-billion budget deficit, which is expected to lead to additional cuts.

Burton said that under the early-retirement plan, eligible employees who opt to retire between March 19 and 31 would receive credit for an extra two years of service. This would typically increase a retiree’s pension by 4%.

For instance, if a 60-year-old man who worked for the county 30 years retires, he is entitled to 2% of his final salary multiplied by the number of years of service. Normally, he would receive a pension equal to 60% of his salary; but under the proposal, he would receive 64%.

Supervisors have noted that the county’s payroll exceeds pre-bankruptcy levels. Before the bankruptcy, the county employed more than 17,000 people. That number was whittled down to more than 14,000 in the aftermath of the bankruptcy, but has steadily grown since and now tops 18,000.

Supervisor Bill Campbell said he is generally supportive of a proposal to cut staff but needs to see a detailed financial analysis that proves it is worthwhile.

“I’ve been assured that this will reduce costs for the county, both in the next year and ultimately as something to help us get through this budget crunch. I want to see those numbers proven to me,” he said. “Show me the numbers.”

Campbell said one factor that concerns him is the loss of experienced managers.

Mark Petracca, chairman of UC Irvine’s political science department, agreed that losing experience is a risk. But he said offering incentives for early retirement is a smart move that is regularly done by other organizations, including his employer.

“Sometimes you lose deadwood. The problem, of course, is sometimes you lose really good people,” he said. “There’s some fiscal sanity to doing it.”

In a similar early retirement plan approved by the board in December, 117 employees retired early. Nearly all were from the Social Services Agency.