Vernon Offers Early Retirement Buyout Plan to Employees

By Nancy Martinez, EGP Staff Writer

Some city employees in Vernon will be retiring early this year, opting to take advantage of an early retirement program approved by city officials.

The city council approved approximately $1.1 million per year for the next five years to fund the Public Agency Retirement System (PARS) Supplementary Retirement Plan, an early retirement incentive program, in hopes of reducing the city’s budget deficit for the 2013-2014 fiscal year.

Through the supplemental program, employees will receive 8 percent of their final base pay in addition to their retirement benefits and a retirement medical plan that was enhanced to include dependants and a stipend.

With 35 employees voluntarily retiring to take advantage of the incentive, the plan is expected to give the city a net savings of $1.9 million this year and $8.1 million over the next five years, according to Teresa McAllister, Vernon’s director of human resources.

Adding the incentives helped speed up the retirement of some of the city’s employees who, if they had stayed on, would have cost the city more in the long run, she explained.

“The program expedited the savings for the city…” McAllister said. “So it’s a savings that we would probably not see for another two, three years out that we are able to see currently.”

The city’s estimated million-dollar savings incorporates the costs associated with replacing some of the employees and leaving some positions vacant.

As many as 68 city employees were eligible to retire early, but only thirty-five have opted to take the city up on its offer. Of those, five are from the police department, eight from the fire department and 22 from various other city departments.

McAllister said her department has recommended that some of the retiring employees be replaced, including the fire marshal, a police sergeant and police captain. Those positions, she said, would be filled through internal promotions rather than hiring from the outside. Going that route, said McAllister, would result in more cost savings to the city even though the promoted employees would likely receive an increase in salary. The lower level vacancies caused by the promotions would not be filled and that’s where additional savings would come in, according to the city.

Vernon’s city council approved funding for the program because they saw that despite the initial cost, the program would save money and reduce the deficit, McAllister said.

The supplemental program is a one-time offer and will not be available next year, she added, explaining that starting next year, under the California Pension Reform Act, cities will no longer be allowed to offer these types of programs.

“This was a take it or you will not see it return next year,” she said.

Employees who have opted to take advantage of the program can start to retire as early as Jan. 31.

“It’s a positive for the employees that are retiring and it’s a positive for the city that is saving” money, said McAllister.

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January 17, 2013  Copyright © 2012 Eastern Group Publications, Inc.


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