Nine City of Hollister employees are participating in a retirement/resignation program that will pay $25,000 plus an additional $500 for each full year of employment with the city, a plan devised by officials to help carve away at predicted budget deficits of up to $3.5 million once the Measure E sales tax expires in April 2015. The city will pay just under $498,000 to pay the employees to leave the city's employment. Their positions will be filled by lower-paid employees.
It was estimated that the separation program would have cost $1.8 million if every eligible employee took advantage of it. A large portion of the city's budget funds employee salaries and benefits, so offering the retirement/resignation option helps reduce those costs. City Manager William Avera previously said that in addition to the savings from not having to pay employees at the top of the pay scale, the city would also reduce its costs from Public Employee Retirement System (PERS) contributions.
The city notified employees of the program by email on Oct. 7 and gave them until Oct. 31 to submit their letter of interest. Following a 10-day "cooling-off period," during which the employee could reconsider — one did — the decision to resign or retire became final.
The city undertook a similar program in 2004, when 36 employees took advantage of a payout to leave their jobs. In addition to the $25,000 plus the $500-per-year incentive, employees will also receive whatever eligible leave balance payouts that they are owed, such as vacation and sick time.