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Baker’s buyout proposal offers roadmap for humane cuts

The state is facing a budget deficit that the Massachusetts Taxpayers Foundation estimates could be $1.5 billion.Globe staff file/2014/Globe Staff

BALANCING THE state’s budget deficit — which the Massachusetts Taxpayers Foundation estimates could be $1.5 billion — was always going to require both reducing government services and cutting the size of state agencies. Governor Baker’s challenge is to find ways to make the necessary cuts while minimizing the inevitable pain. His plan to offer buyouts to public employees is a promising step in that direction. The Legislature should recognize it as such and vote into law a bill that would allow the buyouts.

Under Baker’s plan, which is called the Early Retirement Incentive Program and will be introduced to the Legislature on Wednesday, certain employees in the state’s executive branch will be offered buyouts. The proposal would offer workers who are willing to retire in the next few months a pension boost that would credit them with up to five additional years of age or work, as long as the total payout they receive doesn’t exceed 80 percent of what they make at the time they leave. Only employees who have worked in government for 20 years, or will be at least 55 by the time they retire, will be eligible for the program.

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Government officials say that if 4,500 people take advantage of the offer, it will save the state $178 million next fiscal year. However, if that number of buyouts isn’t met, the bill would give the state the ability to meet its target using layoffs. Unlike previous buyouts Massachusetts has offered, this one won’t contribute to the state’s unfunded pension liability. Instead, the additional benefits will be paid directly by the state.

Offering buyouts allows longstanding government employees a way to leave public service on good terms, and is a humane way to rein in payroll among the many agencies and departments that make up the Commonwealth’s executive branch — which takes up about $3 billion of the state’s annual budget.

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The challenge will be to ensure that the departure of veteran staff doesn’t interfere too much with government operations. It is always hard to predict who will take an offered buyout, and clearly, some workers who decide to leave will have to be replaced. But shrinking staff gives managers an opportunity to restructure. Baker should make it clear that he expects department heads to find ways to keep down the size of their staffs. It would be a missed opportunity if the buyouts only led to a year of savings, and payroll ballooned again after this year’s budget shortfall is addressed.

Balancing the budget will require Beacon Hill lawmakers to swallow unpopular cuts to government services. They should realize that the savings from Baker’s plan could help take pressure off other programs that could potentially face dire cuts. Speaker Robert DeLeo has already expressed some reservations, saying that past buyouts have not yielded the expected savings. If necessary, the Legislature can tweak Baker’s plan. But the general approach is worth trying: At the very least, the Legislature should recognize that giving people the opportunity to retire on favorable terms might be the least painful form of restructuring available to the state government.

Related:

State to offer early retirement deals; layoffs may follow

Database: State employees making $100,000 or more in 2014

Dante Ramos: Can late-night T service be saved?

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