City adds incentive to get more employee buyouts

Too few city employees are taking buyout offers, so the Tucson City Council is offering a new deal.

Employees who are eligible to retire have until Feb. 5 to retire and receive an extra three months of pay. That offer was made in December.

Now they’ll also get a higher health insurance subsidy.

The council approved the change Wednesday.

City Manager Michael Ortega’s goal for the buyouts is to cut 130 jobs paid from the general fund to help balance the budget.

There are 443 city workers who are eligible for retirement, including 206 who are paid from the general fund. The buyout programs do not include commissioned police and fire workers.

But only 54 employees have agreed to a buyout so far, and only 23 of them are paid from the general fund.

Back to homepage

Subscriber Login

Keep reading with a digital access subscription.

Subscribe now

Employees considering the buyout told Ortega “the costs of medical insurance after retirement are deterrents to retiring at this time,” he said in a memo.

So a new incentive program is available.

Workers who are eligible to retire after Feb. 5 who agree to retire by June 10 will receive $800-$1,275 a month for up to three years to help pay for health insurance outside the city’s insurance plan. The normal subsidy for retirees is $200-$475 a month until age 65.

Those who take the buyout before Feb. 5 will get both the bonus pay incentive and the health subsidy incentive.

If 130 employees take buyouts, it would cost the city $1.2 million a year to pay the subsidies, plus a one-time payout of $2 million for the bonus pay. But the city stands to save $7.8 million a year by removing those workers from the regular payroll.

The structural deficit is $12.7 million this fiscal year and the budget gap would grow to $42.3 million next year if no changes are made. Besides buyouts, a hiring freeze and staff cuts by attrition will help make up the difference in a multiyear plan from the city manager.