Lepore defends Baker’s early retirement program

Administration and Finance Secretary Kristen Lepore (right), alongside council Bob Ross (left,) testifies before the Public Service Committee Monday morning on Gov. Charlie Baker's cost-saving plan to allow eligible state employees to retire early. [Photo: M. Deehan/SHNS]

STATE HOUSE, BOSTON, MARCH 30, 2015….An early retirement incentive package aimed an enticing 4,500 state employees to leave the state payroll by this summer came under scrutiny on Monday from several senators who questioned whether the Baker administration was prepared for too few or too many employees opting into the program.

Administration and Finance Secretary Kristen Lepore told the Joint Committee on Public Service that she was “very confident” the administration could achieve the desired budget savings of more than $170 million with “minimal disruption” to state services.

During a probing, and at times tense, back and forth with lawmakers on the committee, Lepore said she had put together a working group to consult with agencies and develop plans for backfilling jobs at certain agencies. Falling short of retirements goals would require layoffs, according to Lepore, who said her office was also planning how to handle greater than expected interest.

“It is important that we limit the program only to executive department employees to ensure that we realize the savings through controlling rehires,” Lepore said.

The program, as proposed by Baker, would offer pension incentives to executive branch employees who have reached the age of 55 or have 20 years of service. The Executive Office of Administration and Finance estimates about 14,000 employees would be eligible to add five years to their years of service or their age to boost their pensions.

The bill filed by Gov. Charlie Baker and approved by the House last week would limit rehires to 20 percent of the payroll savings. The Senate is expected to take up the bill as soon as next week, with the Committee on Public Service making its recommendations to the Senate Ways and Means Committee for possible inclusion.

Lepore said the administration was also considering whether to allow agencies, within their existing budgets, to offer employees already eligible to retire with a maximum pension up to $10,000 in cash incentives to retire.

Sen. Kenneth Donnelly, an Arlington Democrat, raised concerns over whether certain agencies with high numbers of eligible employees would be able to continue to deliver services at the same level if they experience a significant turnover.

“But we don’t know what services people won’t have provided to them?” Donnelly asked.

Lepore said her office was still working with agencies to get an idea of how many employees might opt for early retirement and where the bulk of the rehiring should occur. “I didn’t say they wouldn’t have their services. You said that,” Lepore told Donnelly.

Sen. Michael Barrett, a Lexington Democrat, said he shared Donnelly’s concern about what might happen if more than 4,500 employees apply for early retirement, particularly at agencies like the Department of Developmental Services and the Department of Mental Health where more than 40 percent of employees could be eligible.

“You might be significantly underestimating what Baby Boomer employees elect to do,” Barrett said.

Barrett also expressed concern that the administration has not shared any of its detailed analysis with members of the Public Service Committee and he and Sen. William Brownsberger questioned whether the administration had done a comparison to private sector early programs.

“None of this analysis has been shared with members of the Legislature,” Barrett said. “I’m a little concerned where this leaves us in terms of evaluating this program and deciding as a Senate how to vote on it.”

Lepore responded, “I’m not sure I was asked for it, but if I was I would share it with you.”

Lepore said she based the program on what had been done by the state in 2002 and 2003 when the last early retirement program ran. She said they hadn’t compared the incentives being offered, which Barrett called “very generous,” to the private sector.

Lepore also said the administration could be open to a cap on the number of employees who can take the early retirement. However, Gov. Charlie Baker said later he didn’t know if it would be legal to do an agency-specific cap.

Rep. James Miceli, a Wilmington Democrat, questioned whether Lepore had informed individual departments that they would not be able to freely rehire retirees as consultants.

Lepore said department heads had been informed of the plan verbally, but not in writing. Miceli, telling Lepore that her message “was not conveyed,” said he had heard from constituents who believed they would be able to work as consultants after they retire.

When Lepore did not understand a follow-up question, Miceli became frustrated. “I’m speaking English,” he said, before each tried to talk over the other demanding that they be allow to make their point.

“No, let me finish,” Miceli said. “The point I’m making is you should tell the department heads what you’re plan is.”

Some union officials and non-executive branch employees who would not be eligible for the early retirement program as proposed called on the Legislature to expand the program.

SEIU Local 888 President Mark DelloRusso said he was there to “plead with the committee” to expand the incentive program to more employees. DelloRusso’s union represents workers in the Lottery and in higher education.

“I know the treasurer is concerned about a run on the retirement board, but I don’t think that’s going to happen,” he said.

Sheila Dubrawski, a Lottery Commission employee with 41 years state experience, said Baker’s proposal to limit the early retirement program to Group 1 classified employees within the executive branch discriminated against other Group 1 state employees with many years of service. She said employees not covered by the program will be forced to help pay for their colleague’s retirement if health insurance premiums for state employees increase in July to 25 percent, as proposed by the governor.

“The proposed legislation uses the word fair and orderly, when in fact this is nothing of the sort,” Dubrawski said.

Nick Favorito, director State Retirement Board, told lawmakers that the program would require his agency to process more applications for retirement in a few months than it typically handles in a year. Still, Favorito said his team would be “up to the task” and was working for the first time to find a way to accept electronically filed applications.

John Pourbaix, executive director of the trade group Construction Industries of Massachusetts, said his “major concern” was that a high number of employees with experience administering the highway department’s capital program could leave, exposing the state to the loss of federal dollars.

Pourbaix, who estimated at least 400 MassDOT employees will be eligible for the program, said the federal highway department has threatened in the past to withhold funds if capital projects are not being staffed appropriately.

“We would hate to see Massachusetts returning or not taking advantage of every nickel that we could,” he said.
Copyright 2015 State House News Service

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