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Personnel Related Cost Savings Measures

Personnel Related Cost Savings Measures. Options and Issues Hazel McMullin, Deputy Director Human Resources. Where Gwinnett County Started. Third Quarter 2008 Services, Value and Responsibility Study Primarily County Administrator Departments 9 Ad Hoc Committees

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Personnel Related Cost Savings Measures

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  1. Personnel Related Cost Savings Measures Options and Issues Hazel McMullin, Deputy Director Human Resources

  2. Where Gwinnett County Started • Third Quarter 2008 • Services, Value and Responsibility Study • Primarily County Administrator Departments • 9 Ad Hoc Committees • Fleet, Core Services, Administration, Public Safety, Supplies/Inventory, Personnel/HR, Planning and Development, Rates/Fees, Facilities/Support Services • $26.2 million in savings for 2009 budget

  3. Personnel Related Cost Saving Measures • Implemented • Hiring Freeze • Vacant Position Eliminations • Retirement Incentive Offer • Reduction in Force • Departmental Reorganizations/Staff Realignment • Reallocation of personnel costs – Capital, SPLOST and enterprise funds where appropriate; other agencies • Other policy changes • Reduction of excess sick leave payout • Exclusion of overtime from pensionable earnings • Increased employee contribution to DB pension • Eliminated longevity pay

  4. Personnel Related Cost Saving Measures • Considered but not implemented • Furloughs • Across the board pay reductions • Specified vacancy to posting hold times • Total/no consideration hiring freeze • Holiday reduction • Leave cap/carryover/accrual reductions

  5. Retirement Incentive Offer • Offered only in departments where a business need existed to reduce personnel costs to achieve budget targets • Costs for program paid by reserve fund set up from departments budgets or directly from departmental budgets • Required that costs savings be carried into future years • Captured full cost of program RIO and regular retirement costs

  6. Retirement Incentive Offer • Offered to 317 employees • Target was 250 • 203 accepted • Left organization by 9/18/09 • Cost/Savings of program • $5 million in salary savings ’09 • $4 million in RIO (only) costs ’09 • $1 million in net ’09 savings • $55 million in cost savings thru 2012

  7. Retirement Incentive Offer • Eligible to retire on or before 12/31/2010 • Components of the Incentive • Additional 20% Annual Leave payout • 20% Sick leave payout • Longevity – 1 week of pay for each 2 years of service • Health Insurance at no cost for 24 months • Leave without Pay until eligibility date, if not currently eligible for retirement

  8. Retirement Incentive Offer - Issues • Future retirees on LWOP hard to administer – tracking, future leave accruals, status during LWOP • Program administration hectic but doable • Clarity about RIO provisions and communication (how to calculate what) for administration staff • Pensionable versus nonpensionable earnings • Clarity about what are costs, what are savings, how to calculate and communicate • Press/Media Interest/Open Records

  9. Reduction in Force • January 2009 • Planning and Development (30) • September 2009 to Present (17) • Human Resources, Support Services, Department of Transportation, Department of Financial Services • Still more to do based on new business plans for departments • Future outsourcing impacts

  10. Reduction in Force • General announcements in advance • Merit Rules • Guide process • Retreat rights in January • Multiple rounds of bumping • Administrative and timing nightmare • Removed before September • Individual meetings with designated employees on day of notification • Two weeks paid administrative leave • Severance pay – 2 weeks per full year of service • Required signed severance agreement with litigation waiver

  11. Reduction in Force - Issues • 40 and over/under 40 • ADEA severance agreement requirements • Date/timing requirements • Different timelines • Adverse impact • Immediate removal of access • Facilities, computers • RIF to retirement (declined RIO) • Severance payout • Must be after last paycheck and separate from earnings • Tracking • General • Simultaneous with RIO with similar but different rules and timelines

  12. Furloughs • Reduction of work hours to achieve cost savings • Unpaid or through accrued leave usage • Voluntary or Involuntary • Cost savings easy to capture • Cost savings immediately realized • Easy concept to understand • Seems “fair” if applicable to whole organization

  13. Furloughs - Caution • FLSA • No problem for non exempt • As long as receiving at least minimum wage for hours worked • Exempt • Can’t reduce “salary” without losing exemption – generally speaking • Furlough for full work week without pay or with leave usage • Volunteer to take unpaid time off for “personal reasons” • Must be completely voluntary • Must be in full day increments

  14. Furloughs - Caution • FLSA Exempt Continued • Announce separate day/reduced schedules in advance • Can reduce weekly schedules • Must meet minimum salary basis of $455/week • Best to set regular intervals Example: 1 day per month for the next three months or state specific dates

  15. Furloughs - Caution • FLSA Exempt Continued • Exempt employee choice or irregularly scheduled furlough days • Public employers may make salaried pay deductions (furlough) during a week but must treat employee as non-exempt during that week • No blackberries, no phone calls, no computers/email, no emergency response without hourly pay for it

  16. Furloughs - Caution • Additional administrative issues • Close business or stagger furloughs • Absences on furlough days • “Essential” employees – Yes or No • Furloughs applied fairly to different schedules • Rule issues – requirement to use all paid leave prior to unpaid ? Suspend? • FMLA, STD, Workers Comp • Part time employees – pro-rate • Contract workers – work or not • New hires

  17. Furlough Information Sources • Department of Labor, Wage and Hour Division • http://www.dol.gov/esa/WHD/flsa/FurloughFAQ.pdf • Comprehensive sample policy example • Google “Technical Guidance on Mandatory Furloughs” – First listing is for the State of Colorado Department of Personnel and Administration

  18. Personnel Related Cost Saving Measures Thank you for your attention. Hazel McMullin Hazel.mcmullin@gwinnettcounty.com 770-822-7935

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