Are You Talking About an ERI Program?
School Advisor , 2005 Issue No. 1

This is the time of year when many districts think about implementing an early retirement incentive (ERI) program, better known as a severance incentive program. Commonly, programs are designed only for teaching staff, and the thought is if a district can accelerate the termination of top-of-the-scale teachers and replace them with entry-level teachers, that a large savings should result.

But do the programs save money? It depends on the demographics of a district and the assumptions used. Most programs will recognize a savings over the short term. The longer term results can vary.
Non-economic factors also enter into the picture. The alternative of layoffs is often hard to swallow. Some districts are attracted to the revitalization that can occur from actually hiring teachers as opposed to pink slipping. When downsizing occurs, savings result. Sometimes a program is determined to be a good complement to the reduction of positions.

Program design includes targeting the eligible employee group, concluding on the amount of the incentive payment, the form of the payment (cash or retirement arrangement), and the period of the incentive payment. A number of factors must be considered to arrive at a design that is appropriate for each district.

Time Is of the Essence
If you think that a severance incentive program may be a good approach for your district, time is of the essence. After planning, consensus building, and finalizing the program design have been accomplished, the timeline has just begun!

Legal counsel should draft program agreements. Employee communication material must be prepared that conveys the appropriate message for your district. In-person meetings and frequent communication with eligible employees are important in preparing for a successful program. Employees must receive a minimum 45-day consideration period and a 7-day revocation period before the district knows the final number of employees who have accepted the program. Still, there will be the normal coordinating activities of communicating benefit transition, service credit purchase and, perhaps, rules related to post-program school district employment.

There are many variables to a program, and success will most likely be achieved with a well thought out plan.