Buyouts to bring future savings

Only 26 employees have taken the option so far, but 185 are eligible.
By HAROLD GWIN
VINDICATOR EDUCATION WRITER
YOUNGSTOWN -- Youngstown State University employees taking advantage of an early retirement incentive plan this year are saving the university about $763,000 in salaries and benefits.
It's costing the university more than that to buy out their service time, but that's no surprise. University officials have said that initial costs of the plan will exceed savings for a couple of years, explaining that savings won't accumulate until the buyout process is complete.
The savings so far are from the first 26 employees who signed up for the plan, said Dr. Ronald Chordas, interim executive director of human resources.
The university is offering to buy up to two years of service time to allow employees to retire early or retire with larger pensions.
Qualifying for the program
Only those employees who contribute to the Ohio Public Employees Retirement System and who are at least age 55 with 25 years of service, age 60 with at least five years of service or have 30 years of service at any age are eligible. The university has said there are 185 people in that category.
Chordas said the university realized one-time savings of $277,000 in salary and benefit costs just by delaying the filling of all but one of those 26 vacant positions by about a month.
Base salary savings for the 26 spots (the difference between the retiree's salary and the minimum pay range for that position) are $486,000 in salary and benefits annually, he said.
Buying out an employee's service time requires the university to make an up-front payment to the Ohio Public Employees Retirement System.
Not all of the numbers have been calculated yet, but the university had to pay $980,393 for the first 21 retirees on the list.
The numbers came in better than expected for that group, Chordas said, noting the cost was $74,000 less than anticipated.
Upfront cost estimates
Early cost estimates predicted the plan would cost YSU nearly $10 million in buyout expenses over a three-year period if all those eligible took advantage of the program. Savings (from leaving vacant posts open for a month and then filling them with lower salary employees) would be $7.84 million over that period.
As the buyouts are one-time expenses, the base salary savings to the university after the three years would be about $3.6 million per year, the university said.
However, Jeff Taylor, former YSU director of budget planning and resource analysis, told the university's Board of Trustees in March that revised numbers showed the cost over three years if all 185 employees retire would be $7.17 million while the savings would be $7.83 million.
After the three-year buyout period ends, the university should still see base salary savings of $3.6 million a year, Taylor said.
gwin@vindy.com