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Recognizing that Hollister’s budget could be hamstrung when the Measure E sales tax expires in April 2015, officials are considering offering a retirement/resignation incentive program that would offer employees who have been with the city for five or more years $25,000 plus an additional $500 for each full year of employment with the city. The plan would cost $1.8 million if every eligible employee took advantage of it.

“We have a structurally balanced budget, meaning our expenditures don’t exceed our revenues,” said City Manager William Avera. “However, the general welfare of the budget going beyond Measure E(‘s expiration) in April of 2018 is probably not the case.” He said that if the budget remains the same, the city could face a $2.5 to $3.5 million deficit if steps aren’t taken to save money.

“A good portion of that is salaries and benefits that the city provides to its employees,” Avera said, noting that the idea of a retirement and resignation program was raised during an April retreat. The city undertook a similar program in 2004, when 36 employees took advantage of a payout to leave their jobs. In addition to the proposed payouts, employees would also receive whatever eligible leave balance payouts that they are owed, such as vacation and sick time. There would be no requirement for employees to retire; only that the “voluntary separation” take place before January 30, 2015.

The proposed program, which will be discussed at the Oct. 6 meeting, would not eliminate any positions, Avera said, with the city replacing longstanding employees with lower-paid workers. 

“Given these parameters, the city could reasonably expect a break-even point within two fiscal years,” Avera’s report said. The savings would come from the reduction in the city’s Public Employee Retirement System (PERS) contributions, salary savings from having employees at the top of the pay scale step away, and fewer workers receiving longevity pay.

The exact savings won’t be determined until the city knows how many employees are interested in receiving the separation pay. The city expects to notify employees by email on Oct. 7 and will give them until Oct. 31 to submit their letter of interest. Following a 10-day “cooling off period,” during which the employee can reconsider, Avera said the city will be able to present more precise savings totals at the Nov. 17 meeting.