First came furloughs. Then came salary reductions, now, some Maryland State employees will have the option of accepting a buyout from the state government under a Dec. 7 executive order signed by Gov. Martin O’Malley aimed at balancing the state’s budget.
Under what the state is calling the State Employees Voluntary Separation Program eligible employees will receive a lump sum payment of $15,000 plus $200 for each year served as an incentive to quit. The state will extend medical, dental and prescription benefits for three months after employment has ended. Employees will also receive payment for all accrued leave.
There’s a catch, though. Once a state employee departs, they can’t come back even as a contract or temp worker with any state office for at least 18 months. .
The O’Malley administration has already cut 4,200 positions in addition to instituting furloughs and proposing temporary salary reductions. In total, the decisions have saved the state $5.6 billion.
The deadline for applying is Jan. 4, 2011. Employees who take the buyout by then will allow the administration time to anticipate the cost savings based on who applies for the buyout, according to Rick Abbruzzese, an O’Malley spokesman.
In the first year of the program, the program will be cost-neutral because the savings from the departed employees will be balanced out by the absence of those employees on the payroll. The savings, still undisclosed, would be more dramatic in subsequent budget years, he said.
“We continue to face significant budget challenges as we come through this national recession,” O’Malley said in a statement. “While we are creating jobs at more than twice the national average, we all need to do more to cut costs in a fiscally responsible way. I want to thank all of our state employees and labor leaders who have worked with us to develop this voluntary program that will help our state cut costs, avoid layoffs and reduce the size of our state government.”
The program was praised by the American Federation of State, County and Municipal Employees of Maryland, an organization that in the past wanted the state to increase taxes to save jobs.
“Our political leaders must stop turning a blind eye to companies who hide their profits,” AFSCME MD Director Patrick Moran said last year. “They must consider all revenue possibilities—no matter how unpopular with the corporate crowd. Among other initiatives, they must consider combined reporting and increasing revenue generated from Maryland’s wealthiest citizens.”
However, the union claimed the program will “allow us to retire early and potentially ease the strain of our state budget.”