Designing and evaluating early retirement programs: the state of Wyoming experience.

• Author: Ferrari, David

The State of Wyoming Early Retirement Program demonstrates ways in which a government can invigorate its workforce with new people, new ideas, provide advancement opportunities for employees, downsize without laying people off, and, most importantly, reduce spending without impairing the delivery of services.

A number of governments have used early retirement incentives as a tool to reduce spending. In too many instances, the plans have failed to produce the expected outcome, resulting in more government outlays rather than less and with little benefit for government employees. Shortcomings in these plans can be overcome as demonstrated in the Wyoming early retirement incentives program. If properly designed and implemented, these programs can contribute significantly to an entity's mission, provide motivation to the workforce while simultaneously reducing COSTS.

During the late 1980s and early 1990s, several states offered early retirement incentive plans to their employees in an effort to reduce employment levels and personnel costs. These plans were met with mixed results.

Surveys of the States

In 1991, the National Association of State Budget Officers (NASBO) surveyed state governments to assess their experience in offering early retirement programs. This was followed by the National Conference of State Legislatures (NCSL) survey conducted in October of 1992. Both surveys produced similar results. Neither was particularly flattering in assessing the effectiveness of the incentives offered. The NASBO surveyed 25 state plans and one commonwealth that offered early retirement in the five years preceding November 1990. The NCSL surveyed 17 state early retirement incentive programs in effect during 1991 and 1992.

NASBO's report concluded:

"A key element of a successful early retirement plan was to maintain position vacancies for an extended time period, such as three to five years.... If positions were refilled within a couple of years, states that pay retiree health benefits might see their health benefit costs surge as the state pays benefits for both current and retired employees. Successful plans, in a budgetary sense, require discipline on the hiring side. Without such discipline and without a long-term focus, states could find themselves refilling the majority of positions after funding generous retirement incentives."

The NCSL's conclusion was very similar:

"State experience over the past decade indicates that early retirement...