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Report Number 09-126 110NEWBWATMN Agenda Section VI-3 the city that works for you Council Meeting Date May 26, 2009 REQUEST FOR COUNCIL CONSIDERATION ITEM DESCRIPTION: Resolution Adopting an Early Retirement Incentive Plan for City DEPARTMENT HEAD'S APPROVAL: Dean R. Lotter, City Manager Schawn P. Johnson, Assistant to the City Manager s? CITY MANAGER'S APPROVAL: No comments to supplement this report Comments attached Recommendation: City Council approval of an Early Retirement Incentive Program (ERIP) for employees. The long-term financial health of the City has been greatly impacted by the State budget deficit. As a result, a work force reduction plan may be needed in the future. In order to minimize potential employee layoffs and furloughs, the City Manager is recommending that a voluntary early retirement incentive plan be offered to all City employees with at least ten (10) years of service with the City and who are eligible for a full or reduced PERA pension. Legislative History: None-The City of New Brighton has not offered an Early Retirement Incentive Program to it's employees in the past. Financial Impact: The financial impact on the City will vary based upon the number of employee's that agree to participate in the proposed Early Retirement Incentive Program. At this time, Department Directors are projecting a potential savings of $167,950 (difference between projected 2010 salaries and ERIP) in 2010. All employees that voluntarily agree to participate in the Early Retirement Incentive Program would be required to officially resign from their position no later than December 31, 2009. Explanation: The City is proposing that the following benefits be provided to employees that elect to participate in the City's Early Retirement Incentive Program: (1) The City will contribute an incentive equivalent to 120 hours of gross salary at the employee's current rate of pay. The 120 hours of payment will be taxable and paid directly to the employee; (2) The City will pay out vacation (maximum of 260 hours) and compensatory time accruals at the employee's current rate of pay. This payment will be taxable and paid directly to the employee. (3) The City will deposit a maximum of 960 hours of sick leave hours into a Post Employment Health Care Savings Account for the employee. The contribution I:\COUNCIL\REPORTS\2009\Admin\Early Retirement Incentive Plan-May 2009.doc