Personnel Related Cost Savings
Measures
Options and Issues
Hazel McMullin, Deputy Director
Human Resources
Where Gwinnett County Started
• Third Quarter 2008
• Services, Value and Responsibility Study
– Primarily County Administrator Departments
– 9 Ad Hoc Committees
• Fleet, Core Services, Administration,
Public Safety, Supplies/Inventory,
Personnel/HR, Planning and Development,
Rates/Fees, Facilities/Support Services
– $26.2 million in savings for 2009 budget
Personnel Related Cost Saving Measures
• Implemented
– Hiring Freeze
– Vacant Position Eliminations
– Retirement Incentive Offer
– Reduction in Force
– Departmental Reorganizations/Staff Realignment
– Reallocation of personnel costs – Capital, SPLOST and
enterprise funds where appropriate; other agencies
– Other policy changes
• Reduction of excess sick leave payout
• Exclusion of overtime from pensionable earnings
• Increased employee contribution to DB pension
• Eliminated longevity pay
Personnel Related Cost Saving Measures
• Considered but not implemented
– Furloughs
– Across the board pay reductions
– Specified vacancy to posting hold
times
– Total/no consideration hiring freeze
– Holiday reduction
– Leave cap/carryover/accrual
reductions
Retirement Incentive Offer
• Offered only in departments where a business
need existed to reduce personnel costs to
achieve budget targets
• Costs for program paid by reserve fund set up
from departments budgets or directly from
departmental budgets
• Required that costs savings be carried into
future years
• Captured full cost of program RIO and regular
retirement costs
Retirement Incentive Offer
•
•
•
•
•
Offered to 317 employees
Target was 250
203 accepted
Left organization by 9/18/09
Cost/Savings of program
– $5 million in salary savings ’09
– $4 million in RIO (only) costs ’09
– $1 million in net ’09 savings
– $55 million in cost savings thru 2012
Retirement Incentive Offer
• Eligible to retire on or before 12/31/2010
• Components of the Incentive
– Additional 20% Annual Leave payout
– 20% Sick leave payout
– Longevity – 1 week of pay for each 2 years of
service
– Health Insurance at no cost for 24 months
– Leave without Pay until eligibility date, if not
currently eligible for retirement
Retirement Incentive Offer - Issues
• Future retirees on LWOP hard to administer –
tracking, future leave accruals, status during
LWOP
• Program administration hectic but doable
• Clarity about RIO provisions and communication
(how to calculate what) for administration staff
• Pensionable versus nonpensionable earnings
• Clarity about what are costs, what are savings,
how to calculate and communicate
• Press/Media Interest/Open Records
Reduction in Force
• January 2009
– Planning and Development (30)
• September 2009 to Present (17)
– Human Resources, Support Services,
Department of Transportation,
Department of Financial Services
• Still more to do based on new business
plans for departments
– Future outsourcing impacts
Reduction in Force
• General announcements in advance
• Merit Rules
– Guide process
– Retreat rights in January
• Multiple rounds of bumping
• Administrative and timing nightmare
• Removed before September
• Individual meetings with designated employees
on day of notification
• Two weeks paid administrative leave
• Severance pay – 2 weeks per full year of service
– Required signed severance agreement with
litigation waiver
Reduction in Force - Issues
• 40 and over/under 40
– ADEA severance agreement requirements
– Date/timing requirements
– Different timelines
• Adverse impact
• Immediate removal of access
– Facilities, computers
• RIF to retirement (declined RIO)
• Severance payout
– Must be after last paycheck and separate from
earnings
• Tracking
– General
– Simultaneous with RIO with similar but different rules
and timelines
Furloughs
• Reduction of work hours to achieve cost
savings
• Unpaid or through accrued leave usage
• Voluntary or Involuntary
• Cost savings easy to capture
• Cost savings immediately realized
• Easy concept to understand
• Seems “fair” if applicable to whole
organization
Furloughs - Caution
• FLSA
– No problem for non exempt
• As long as receiving at least minimum
wage for hours worked
– Exempt
• Can’t reduce “salary” without losing
exemption – generally speaking
• Furlough for full work week without pay or
with leave usage
• Volunteer to take unpaid time off for
“personal reasons”
– Must be completely voluntary
– Must be in full day increments
Furloughs - Caution
• FLSA Exempt Continued
– Announce separate day/reduced
schedules in advance
» Can reduce weekly schedules
» Must meet minimum salary basis of
$455/week
» Best to set regular intervals
Example: 1 day per month for the
next three months or state specific
dates
Furloughs - Caution
• FLSA Exempt Continued
– Exempt employee choice or irregularly
scheduled furlough days
– Public employers may make salaried pay
deductions (furlough) during a week but must
treat employee as non-exempt during that
week
• No blackberries, no phone calls, no
computers/email, no emergency response
without hourly pay for it
Furloughs - Caution
• Additional administrative issues
– Close business or stagger furloughs
– Absences on furlough days
– “Essential” employees – Yes or No
– Furloughs applied fairly to different
schedules
– Rule issues – requirement to use all paid
leave prior to unpaid ? Suspend?
– FMLA, STD, Workers Comp
– Part time employees – pro-rate
– Contract workers – work or not
– New hires
Furlough Information Sources
• Department of Labor, Wage and Hour
Division
– http://www.dol.gov/esa/WHD/flsa/Furlo
ughFAQ.pdf
• Comprehensive sample policy example
– Google “Technical Guidance on
Mandatory Furloughs” – First listing is
for the State of Colorado Department of
Personnel and Administration
Personnel Related Cost Saving Measures
Thank you for your attention.
Hazel McMullin
Hazel.mcmullin@gwinnettcounty.com
770-822-7935