NJ Early Retirement Program Still Leads to Later Costs

The ongoing budget two-step between the Governor's office and legislature is turning into a bit of a mosh pit when discussing the Gov's proposed Early Retirement Incentive Program (ERIP). All two of you regular blog readers know that the Governor proposes to offer bonuses to state employees at certain service levels to encourage them to retire, which would offer taxpayer savings by removing them from the payroll.

Here at CIANJ, we support targeted layoffs and the legislators who are pushing for them. Here's why:

• The Governor's own analysis shows that the ERIP will save the taxpayers $457 over three years. Unfortunately, it will add $517 million in unfunded pension liabilities.
• We've tried ERIPs before - multiple times in fact. The result has been the refilling of vacated positions rather quickly. This leads to increased pension costs, but the same number of state employees.

As we told the Heartland Institute and wrote for COMMERCE Magazine, layoffs must be included in the mix and are preferable to another ERIP. The Governor has two answers for that: first, that this time will be different because only 10% of positions will be refilled, and that it would be impossible to implement sensible layoffs because of current Civil Service rules.

Respectfully, it is impossible for a Governor to dictate to future administrations or legislatures what they can do in terms of hiring. In addition, the argument that Civil Service rules make it impossible to develop a layoff strategy is a terrific argument for reforming those rules. Something today's Asbury Park Press notes the Governor has already promised. It is time to deliver.