Some Los Angeles city employees may get the chance to take an early retirement, with the City Council’s Budget and Finance Committee backing the idea Monday as an option that could reduce proposed worker furloughs.
The city’s initial plan was to furlough 15,000 employees for a select number of days due to the financial effects of the COVID-19 pandemic. The proposed furloughs equated to about a 10% reduction in annual pay to save about $139 million. Most public safety positions are exempt from the proposal.
Of those employees, about 2,850 employees are eligible for a proposed separation incentive — or early retirement buyout — plan, according to the City Administrator’s Office.
Any plan to offer employees early retirement buyouts will have to be approved by the full City Council, which is scheduled to hear a report on the proposals from the City Administrator’s Office at the Tuesday council meeting.
The Budget and Finance Committee voted to send the separation incentive program motion to the full council. The panel also voted to send the full council a motion to delay potential furloughs for two months as Los Angeles tries to find ways to avoid additional cuts to services and city staff.
For eligible employees, the incentive plan would provide a payment equivalent to 2% of their final pensioned salary for each year of service, supplemented by $7,500. The total payment is not to exceed $80,000.
“I am not convinced that even with this program we will avoid future furloughs and even the potential for future layoffs,” said Councilman Paul Krekorian, who chairs the Budget and Finance Committee. “Those things are … still within the realm of possibility, if our revenue projections are as negative as (the Office of Finance) has already predicted. They very well may be. This program will realize some savings. I don’t know if it will realize enough savings to avoid the worst-case scenarios.”
At least 1,300 furloughed employees will have to accept the terms of the separation agreement, otherwise the city and the labor unions that represent employees will have to draw up a new agreement.
The furloughed employees will have from July 6 until 3 p.m. Aug. 3 to agree to a separation incentive program.
Richard Llewellyn, the City Administrative Officer, said about 350 employees retire from the city each year, so the program would increase that number by about 1,000, if the employees agree to the plan.
“Our labor partners believe that this will essentially cover the cost of furloughs,” Llewellyn said.
Llewellyn said his office estimates the furloughs will save the city $5.79 million each biweekly pay period. Based on the targeted timeline for implementation of the separation incentive plan, furloughs would be deferred for approximately four pay periods, costing the city $23.1 million.
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