COVINGTON -- The city of Covington is offering an early retirement incentive to eligible employees.
Based on preliminary estimates, the city could save about $3 million over a five-year period, according to Human Resources Director Ronnie Cowan.
"This incentive is similar to other early retirement incentives offered by the city in the past," Cowan said. "There are approximately 18 employees who have expressed interest in the early retirement incentive, and based on that, I have an estimate of costs, which may vary as we work through the details for individual employees."
Current estimates are that the retirement incentive will cost approximately $357,687, paid to employees over a five-year period, at a cost of approximately $71,537 per year.
The cost reduction of labor and benefits is $3,123,440 over a five-year period, or approximately $696,225 annually. Those numbers are based on the assumption that at least 13 positions are left vacant or staffed with temporary workers over the same period.
The incentive being offered is a service credit of $62.50 for each completed month or $750 annually, in addition to the employee's retirement benefit calculated up to Dec. 31, 2010. The incentive would be paid out monthly over a period of five years.
An eligible employee with 35 years and 2 months of service would receive $26,375 payable over five years for a total of $439.58 per month, in addition to the employee's retirement benefit, for example.
Eligible employees are those age 55 or older who qualify for early retirement benefit; normal retirement benefit; rule of 95 retirement benefit; or late retirement benefit under the city's pension and retirement plan.
A similar incentive was offered to employees two years ago.
"In the past few years or so, the city has been very mindful of effectively managing its expenditures in the wake of decreasing revenues from local taxes and state and federal assistance," Cowan said. "Labor and its associated benefit costs can be expensive; therefore, it has been our priority to adjust to the normal attrition or loss of employees. We have been very frugal in filling vacant positions in the past two years, the result of which has allowed the city to avoid layoffs and furloughs.
"The economic conditions in the state and the community have contributed to an atmosphere (of) caution and fear among many of our employees who have delayed their retirement from the city," he continued. "The result is that nearly one-tenth of the city's workforce is now eligible to receive a retirement benefit. This presents the city with an opportunity to further reduce its labor costs through a retirement incentive and to realign its work force based on the current economic situation without adverse impact on employee morale or service to the community. Our goal is to manage and operate the city in good times and bad times in the most effective and efficient manner possible, which means that we must adjust our operations from time to time."