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State to public employees: Please retire. Now.

Karen Dwyer, of Hicksville, enjoys her second week

Karen Dwyer, of Hicksville, enjoys her second week of retirement by camping at Lido Beach. She worked for the Nassau County Police Department or 24 years and decided to take advantage of the state's early retirement incentive. (Aug. 10, 2010) Photo Credit: Newsday / Thomas A. Ferrar

In a bid to help local governments survive the lingering effects of the economic meltdown, New York State has authorized early-retirement incentives that could total up to three extra years' pension credit to get longtime public employees out the door and give taxpayers a smaller public payroll to bankroll.

Under the state plan, signed into law in June and in effect just for this budget year, qualified workers can choose extra pension credits based on one month for every year served, up to three years. A second option allows workers who are 55 years old, with 25 years in the state pension system, to retire without penalty; that's normally not permitted until age 62.

For a 62-year-old worker with 25 years' service earning $60,000 a year, the extra credits would raise the pension benefit from $30,000 to $32,496 a year for life, according the Empire Center for New York State Policy, a conservative think tank. If a worker making $60,000 wanted to retire at 55, with 25 years in the system, the incentive would lift the normal 27 percent penalty, and the worker would get $8,100 more a year than if that penalty were in place.

 

Projected savings in millions

The program is expected to save Suffolk at least $12.1 million over the next three years. Nassau officials could not be specific but said savings would be in the millions. The state projects it will save $225 million in fiscal 2011-12.

State and local officials could not estimate how many employees would take advantage of the incentives. The last state incentive in 2002 resulted in an exodus of 7,243 state workers, 5,552 local government employees and 2,790 teachers across New York. Total extra pension costs topped $693 million.

Already, officials say 587 Suffolk County government workers have applied for the incentive, though about 80 so far have been found ineligible. Another 55 nursing home workers also have applied but will not be allowed to take the incentive unless the county Legislature votes next Tuesday to sell the county's nursing home. Nassau so far has 460 seeking to retire.

Allen Kovesdy of Dix Hills is one of thousands of workers on Long Island and statewide taking advantage of the incentive approved in Albany in May. The measure affects not only county governments, but state government, towns, villages, the state universities, public schools and any other jurisdictions that are part of the state pension system.

For years, Kovesdy has toiled every summer helping prepare Suffolk's $1-billion-plus operating budget, making sure it all added up. But this year, the $135,408-a-year director of management and research personally will be part of the balancing act.

Kovesdy will exit the payroll this month with the maximum three years' extra credit. "It provided a financial incentive to leave, and it gave me the ability to look for new and other exciting opportunities while I'm still young," Kovesdy, 63, said of his decision to leave.

 

Benefit, drawbacks debated

Backers of the incentive tout it as a humane way to cut payroll without layoffs in an already difficult economic climate. Not only can governments trim staff, but crucial vacancies can be filled with newer people who earn less, proponents say.

But critics question the long-term savings, noting that some employees who would retire anyway get a needless benefit. They also point to the added cost to municipalities, which give retirees free health insurance.

"Is is worthwhile? No one knows because the state has never done a cost-benefit analysis of any of the 10 incentives it has offered in the past," said Lise Bang-Jensen, an Empire Center senior policy analyst. "It may save money in the short run, but it might only push the problem over the next five years. You can only hope the economy improves."

Lorraine Deller, executive director of the Nassau Suffolk School Board Association, said local school boards have to make decisions based on a host of local factors, such as the age of its staff, how many are about to retire anyway, and what impact it might have on the classroom. Only 15 of the 124 Long Island school districts have so far signed up.

"You wouldn't want to do it if it's going to decimate the entire English or math department," Deller said. "And the bottom line is you don't want to do it if it doesn't save significant money."

With Laura Rivera

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