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Buyouts to cost Pittsburgh about $4.6M

| Tuesday, June 3, 2014, 11:06 p.m.
Stephanie Strasburg | Tribune-Review
Buyouts of 65 nonunion employees who accepted Mayor Bill Peduto's early retirement offer will cost Pittsburgh about $4.6M.

Pittsburgh will shell out more than $700,000 for unused sick, vacation and personal time to 65 nonunion employees who accepted Mayor Bill Peduto's early retirement offer this year, according to city documents.

Documents obtained through a Right To Know Law request and from City Council show the city must pay $717,812 worth of paid time off to the employees, plus $280,554 in Social Security taxes to the federal government on the salaries.

That's in addition to the $3.6 million the employees will receive in salary and pension payments during two years for retiring early.

“It was a big waste of money,” said Controller Michael Lamb. “We ended up paying almost $5 million to people who were probably going to retire anyway over the next two years with no bonus.”

Peduto spokesman Tim McNulty disagreed, saying the administration stands by its assertion that Pittsburgh will realize $5.5 million in salary and benefits savings over five years by inducing longtime employees to retire and eliminating 30 percent of the vacant positions.

McNulty said the paid time off couldn't be avoided.

“These are not extra costs to the incentive package, because they would have been paid whenever the employees left the city anyway, even if the package didn't exist,” he said in an email.

He said the Personnel Department budgets money each year to cover such costs for retiring employees, and the $717,812 is “well within what they budgeted for 2014.”

Lamb, who has criticized the buyout from the beginning, questioned whether the administration will eliminate vacant positions as Peduto has promised. He also doubted whether the city will realize reported pension savings, saying the city is plowing about $5 million more next year into pension funds.

“So how is there a savings?” Lamb said. “They completely underestimated the costs and overestimated the savings.”

Peduto, who is attending a leadership conference in Denver, lobbied for the buyout program, saying it would streamline city government.

“The numbers are not only spelled out in a report the administration filed with council, but they are incorporated into the (Act 47) recovery plan filed last week, too,” McNulty said. “The controller will have plenty of opportunity to question the Act 47 experts if he likes.”

City Council members offered mixed reactions.

“The city doesn't have money to burn like that,” said Councilwoman Darlene Harris of Spring Hill.

Councilmen Dan Gilman of Shadyside and Corey O'Connor of Swisshelm Park said they weren't surprised by the numbers. They said the administration originally advised them that the retirements would cost about $5 million.

“These are always the costs to the city when employees retire,” Gilman said.

Bob Bauder is a staff writer for Trib Total Media. He can be reached at 412-765-2312 or bbauder@tribweb.com.

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