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County approves voluntary retirement incentive using retiree health fund, with monitoring and caps
Summary
The board approved a voluntary retirement incentive program to encourage employee attrition, offering two phased payment scales to a health reimbursement arrangement, capped at $50,000 per person and $2 million overall and subject to monitoring by the CAO and budget ad hoc.
El Dorado County supervisors voted to approve a voluntary retirement incentive plan designed to encourage eligible employees to retire earlier than planned by offering contributions to a health reimbursement arrangement, with program caps and monitoring requirements included by the board.
Human Resources Director Joey Carrasco told the board the plan offers two phases of payments: employees who retire before the end of the current calendar year would be eligible for $2,500 for each year of full-time service; employees who separate prior to the end of the fiscal year would be eligible for $2,000 per year of full-time service. Carrasco noted part-time service would be prorated.
The board approved the program with additional language recorded at the meeting requiring applicants to submit retirement letters to their appointing authority to qualify and directing the CAO and budget ad hoc to monitor the program and return with recommendations if uptake is unusually large. The clerk recorded the motion as passing 5-0.
Size and limits The board set an individual cap of $50,000 and a program cap of $2,000,000. The CAO’s office said the retiree health fund currently holds roughly $10 million, with about $8 million remaining after the proposed set-aside; county staff also reported the retiree health unfunded liability is approximately $97 million. Staff said the incentive would be funded from the retiree health fund—money restricted to retiree-health uses.
Why it matters Supporters said the incentive is a tool to generate salary savings and operational flexibility: long-tenured employees are often at top pay steps and classic pension tiers, so voluntary separations can reduce PERS costs and allow departments to reorganize positions or hire at lower steps. Opponents raised concerns about loss of institutional knowledge and uncertainty whether the program will produce net savings.
Board-direction and monitoring The board recorded additional clarifying directions: (1) limit eligibility if an applicant already submitted a binding retirement letter to an appointing authority; (2) allow the CAO and budget ad hoc to monitor the program and return quickly to the board if there is an “overwhelming response” or operational concerns; and (3) make the program first-come, first-served but with staff discretion to prorate payments if necessary to keep within the $2 million cap.
Public comment and union input Union representatives and several current and former county employees testified in favor of the program, and unions reported they had met with HR and provided input. Public commenters urged the board to ensure the county balances cost savings with preserving institutional knowledge and continuity of services.
Next steps Human Resources will publish the application window and administer the program within the stated caps and eligibility rules; the CAO and budget ad hoc will review participation rates and recommend adjustments if needed.
