PEORIA, Ariz. (Jan. 10, 2011) – Peoria is a step closer to resolving a projected $3.5 million general-fund shortfall in Fiscal Year 2012 after 58 employees accepted a voluntary severance package. The move is expected to generate an ongoing annual savings of $2.5 million, including $1.2 million in the general fund and $1.3 million in other funds, such as water and wastewater.
As part of the voluntary severance package, employees must resign their positions by June 30; will receive four months of pay; and will be compensated for some accrued sick time. The payouts will cost $1.2 million, but the city expects to recover more than double that amount each year through salary savings from the vacated positions.
“Employee-related expenses make up more than 70 percent of the city’s operating costs,” said Budget Director Jeff Tyne. “The severance program is an effective tool for reducing ongoing costs because it directly addresses our largest spending category. The reduction in positions made possible by the severance program will go a long way toward addressing our shortfall.”
Over the next several
months, city staff will be developing the FY2012 budget and scrutinizing
positions that will need to be filled. The city hopes to internally fill any
necessary positions in the hopes of creating long-term vacancies down the line.
In addition to the
voluntary severance package, staff is looking at other opportunities for cost
savings to close the deficit and propose a balanced FY2012 budget. In April, the
City Council will have an opportunity to review the proposed budget.