County to discontinue employee buyouts

Wednesday, Aug. 4, 2004 | 11:06 a.m.

As Las Vegas city officials were continuing to pay out millions of dollars to employees to get them to retire, Clark County officials quietly concluded at the end of June that employee buyouts are not the best value for taxpayers.

The county's decision not to continue its voluntary separation program that began in 1999 comes on the heels of an audit of the program released June 30 that determined "the buyout assumptions did not take into consideration how close a person was to regular retirement" before a buyout was offered.

"An employee with close to 30 years (on the job) may have been planning retirement within a few years anyway, and thus the buyout money would have been saved," the audit said.

The auditors, after examining the county's program for the period of July 1999 through the end of June 2002, also said that while they could quantify the savings to the county, they could not determine whether the buyouts "impacted quality of service provided to customers" because the factors were "not quantifiable or readily subject to tracking."

The audit found that the net savings to the county to buy out 228 employees was about $2.29 million. It resulted in 52 positions remaining open for a year or more and 13 positions being transferred to other departments, the audit said.

The savings included $20.3 million in salaries and more than $330,000 in other savings, including vacancy savings not considered in the original plan. But it also cost the county about $18.3 million in replacement employee salaries.

Las Vegas, which offered its voluntary separation program in 1999, 2001 and this year, is not bound by the county's audit. The city has not done an audit of its employee buyout program.

Las Vegas defends its program, saying it saves money and provides time to evaluate whether the posts were necessary.

This year 65 city employees with 20 years or more experience accepted early retirement, which cost $6.3 million but is expected to save the city potentially millions of dollars more than that, City Manager Doug Selby said.

Selby said years of experience and "institutional knowledge" will be sacrificed as the city loses the workers who choose to take the deal that pays 1.25 percent of their salaries for each year of their employment.

The cost includes $4 million in buyout money. The other $2.3 million is for projected accrued vacation time and sick leave -- benefits the city would have had to pay regardless of when the employees retired. Those benefits, plus longevity pay, increases as the years pile up.

The city expects to recoup its money by leaving most of the vacated posts open for six to 18 months, though Selby said public safety positions are filled much quicker. Some positions won't be filled and the workload will be divided among other employees, keeping them busy and saving even more money.

About $1.5 million in annual savings are projected from paying the replacement city employees considerably less than their predecessors, city officials said.

But the issue of whether to use taxpayer money to, in effect, give departing city workers what is called in the business world a "parachute," is a sore spot for some critics of government spending.

Selby, however, says the program should be attractive to government critics because the city strives to keep the potential drop-off in services at a minimum while saving money on salaries and benefits. Plus, he said, the city can look at the vacated positions to determine if they were indeed necessary.

"In a growing city, we do not have the time to reexamine every position," Selby said. "We have organizational assessments where outside consultants make recommendations that could change the scope of some assignments. But there has not yet been one study that has found that we need fewer employees."

The separation program gives officials "time and opportunity to determine if a particular job can be done better without hiring someone" to fill the post, Selby said.

One parting city employee from this year's rounds of buyouts is Planning Director Robert Genzer, who was a recent candidate for a vacated City Council seat.

Genzer says he understands why some members of the public might perceive that taxpayer money should not be used for public employee buyouts, but he says there is more to the program than meets the eye.

"One area that some do not take into consideration is that what I am now paying for health insurance is a minimal deduction from my paycheck, but it will be savings to the city because I will have to find my own health plan," said Genzer, 54, who has been with the city 30 years and will retire Jan. 7.

"Another big cost to the city is my longevity (pay) that currently accounts for 16 percent (of earnings). That too will disappear."

Genzer announced when he launched his unsuccessful bid in the June special election for a City Council seat that he would be leaving his city job no matter the outcome of the election. He said this week that he hadn't been talking about routine retirement, however. He said he had been offered -- and accepted -- the buyout months before that announcement.

"The whole thing is voluntary -- from the inquiry seeking the interest level to signing to accept the separation to a period where you can change your mind," he said. "Some people don't accept the buyout offer because they have kids in college and need to work. Everyone's circumstances are different."

A list of applicants to the program, provided by the city, included the scratched-out names of four employees who at some point in the process withdrew their applications after tentatively agreeing to take early retirement.

Genzer said he had planned to remain at his job for at least another two years, had the buyout carrot not been dangled in front of him. He figured there was no guarantee it would be offered again in a few years -- or ever, so he took it.

Genzer also noted that a number of employees have congratulated him, saying they wish they were in his shoes, indicating that perhaps periodic buyout offers could be incentives for talented people not to leave for the lucrative private sector and instead put in many productive years with the city and earn a buyout -- in addition to what are often hefty checks for years of accrued vacation and sick leave.

Regarding the county audit's point that many people who are bought out would have retired anyway, Selby said it is "pure speculation" that people with many years on a job would be retiring anyway, which the county audit indicates would negate the need to offer a buyout.

"We have some employees with 20 years who are only in their 40s and can work many more years, collecting longevity and more benefits," Selby said.

Whether intentionally or unintentionally, the city also can use its buyout program to entice those veteran workers who may not be as productive as others -- or those who have caused the city embarrassment -- to leave.

For example, in November, Las Vegas Neighborhood Services Department Senior Planner Michael Chambliss, who recently accepted a buyout, became the third employee in that department within one week to be placed on disciplinary leave.

The action occurred during an audit of work performed by Chambliss' then-co-worker in Neighborhood Services, Assemblyman Wendell Williams and Williams' then-supervisor, the department's director Sharon Segerblom, both of whom were placed on administrative leave.

Williams eventually was fired after a city investigation determined that he did not work for the city during hours in which he claimed he did. Segerblom was reassigned to another city department. Chambliss, who had the minimum 20 years with the city, left its employ with a buyout July 6, according to city records.

Chambliss could not be reached for comment.

While not discussing any employee by name, Selby acknowledged that undoubtedly the buyout program might encourage someone who perhaps is best suited to work elsewhere to leave the city. But he insisted that is not its prime objective.

"It is a voluntary program intended to save money -- not to get rid of employees," Selby said. He also noted that such a program cannot be offered to some 20-plus-year employees and denied to others.

The cities of Henderson and North Las Vegas do not have such buyout programs and officials said they do not plan on instituting them. North Las Vegas officials say the savings they get would not offset the loss of veteran talent.

"We have about 1,500 full-time employees and just 29 percent were hired in 1995 or earlier," City Manager Gregory Rose said. "While there may have been a benefit in some savings, we would lose some very senior employees. That is something we just cannot afford at this time."

Still, Rose was cautious not to say whether the county's audit or the city of Las Vegas' philosophy were not appropriate for those entities' needs.

"Each government must decide for themselves what is good management practice," he said.

While the county plans to follow the advice of its audit and not immediately seek to implement another buyout, the city of Las Vegas plans to consider offering it again in three to five years, if the conditions warrant it.

"We would consider doing it again if it makes financial sense," Selby said.

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