Employee buyouts designed to save millions of dollars for Montgomery County actually will wind up costing the county $12.8 million over the next 10 years, according to a new county report.
The buyout of 150 county employees in 2008 saved the county about $8.5 million initially, the county’s office of legislative oversight reported. But those savings will disappear over the next 10 years, largely because the county replaced almost two-thirds of the employees who were bought out, according to the report.
In the end, the county will save $20.2 million from the 2008 buyouts, while the costs will total $33 million, according to the report.
But officials in County Executive Ike Leggett’s administration dispute the report’s findings, saying it incorrectly calculates the savings buyouts produce because of faulty assumptions about how employees would act if they weren’t offered buyouts.
“We are not at all agreeing on their math,” Leggett spokesman Patrick Lacefield said.
Human Resources Director Joseph Adler said he stood by the projections made last year that the county ultimately was going to save money by offering the buyouts.
Leggett is proposing more buyouts in this year’s budget. Like with last year’s package, employees must be eligible for retirement or be within two years of retirement. The county is offering $40,000 as an incentive to take the buyout this year, compared with $25,000 last year.
The report recommends the county council, which must approve the budget, target the buyouts to employees whose jobs would not be replaced.
“Much of the fiscal benefit of a buyout is lost when, after the buyout, an employer continues to pay for work previously performed by the departing employee,” the report found.
Leggett, who is proposing that the county eliminate 400 county jobs, appears to agree a more targeted approach is needed.
“The retirement incentive program we successfully implemented last year was more focused on cost savings and reducing the size of the work force,” Leggett wrote in the memo explaining his budget. “While that will certainly be one result of the plan … it will also provide a means for more coordinated management of the very large number of pending reductions in force of county government positions.”
