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Pennsylvania should offer early retirement, Wagner says

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Wednesday, Oct. 20, 2010

HARRISBURG -- Pennsylvania's cash-strapped government could save up to $381 million a year by offering retirement incentives to state employees, Auditor General Jack Wagner said Tuesday.

The figure is a projection based on $1.5 million Wagner saved in his department through voluntary retirements agreed to by 7.5 percent of his workforce, he said.

A spokesman for Gov. Ed Rendell said such a plan might work on a small scale in Wagner's office but, if implemented statewide, would force new hires to fill the positions of retirees.

The proposal "could potentially wind up costing the state more money, not less," said governor's spokesman Gary Tuma. "Our lack of control over who leaves produces significant risks."

Wagner, a Democrat, almost weekly offers suggestions on ways the state can save money to help close what he predicts will be a $4 billion to $5 billion deficit next year.

Because of that anticipated budget deficit, he said, "it's time to institute a voluntary retirement incentive program that would shrink the state payroll and reduce the cost of state government to taxpayers."

During two recent gubernatorial debates, Republican Attorney General Tom Corbett, the front-runner in polls, said he would consult Wagner's audits to help cut the cost of state government.

If Corbett wins, "we're going to dust off audits that Gov. Ed Rendell has had on the shelf," spokesman Kevin Harley said. Wagner's voluntary retirement incentive program "is certainly something we'll look at and review and discuss in further detail" with him, Harley said.

Democratic candidate Dan Onorato, the Allegheny County executive, has said little about Wagner's audits, which include Department of Public Welfare and grant programs, no-bid contracts and the state's vehicle fleet.

Onorato "intends to look at every serious proposal to save money as part of his plans to improve efficiency, streamline government and save taxpayers money," said his spokesman, Brian Herman. "As a former county controller, he has conducted audits himself and has experience implementing such reforms to ensure funds are spent wisely and effectively."

Wagner, a former state senator from Beechview, was a candidate for governor in the Democratic primary. He finished second to Onorato and ahead of two others. His term as auditor runs through January 2013.

Wagner offered his employees a one-time buyout in July. Those who chose to retire received $1,000 for each year of service, capped at $25,000. Fifty people in his 665-person workforce retired.

About 77,000 state employees serve under the governor's jurisdiction. Their average compensation in salary and benefits is $70,478.

After paying incentives, the state could save $37,200 per employee during the first year, Wagner said. That savings would almost double the second year if no one is rehired, he said.

He projected the state could save $201 million the first year, and up to $381 million the second year. Those are conservative numbers, he said, because they do not include thousands more state employees in the judiciary, Legislature and independent agencies.

Wagner said the governor could enact the voluntary retirement incentive, without legislative approval, if he obtains agreement with state employee unions as Wagner did with the American Federation of State, County and Municipal Employees.

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