Coeur d'Alene adopts voluntary separation incentive program for employees separating in 2026

Coeur d'Alene — The Coeur d'Alene City Council on Nov. 4 approved a voluntary separation incentive program for employees who separate employment in 2026, aiming to reduce long-term personnel costs through attrition and targeted reorganizations.

Human Resources Director Melissa Tosi told the council that staff developed the program at council direction. Under the proposal approved as Resolution No. 25-063, interested full-time benefited employees must submit an intent-to-participate memo to HR by Dec. 5, 2025. Separation dates would occur during calendar year 2026. The incentive payout formula described by staff is: compute 1% of the employee’s base wage (using the 12 months prior to separation), multiply that factor by the employee’s completed years of service with the city, and pay the result as a taxable separation check. Staff also proposed routing eligible sick-leave payouts for qualifying retirees into the employee’s HRA/VEBA plan (100 percent into VEBA) for tax and retirement-health advantages.

"In the proposal, we would have the employee's sick payout... go 100% of that payout into their HRA VEBA plan," Melissa Tosi said.

Staff said an additional retirement-consultation payout (previously available in limited circumstances) would not be available for employees who accept the incentive; staff explained the city sometimes pays for limited consultative services for separating employees but that the incentive program would exclude that payment in favor of VEBA deposits. Finance and administration staff described the program as a longer-term budget management tool: initial payouts reduce wages immediately but savings are realized over time if positions are held vacant or refilled at lower wages.

City administrator Troy (last name not specified in the transcript) said, "This is a long term play," explaining the savings typically materialize in year two and beyond because vacancies or reorganizations produce the ongoing wage differentials.

Staff noted the program would be evaluated on a case-by-case basis, and that the city would only proceed with individual separation agreements if the projected savings met the program’s screening criteria (staff referenced a $25,000 minimum first-year savings threshold used in prior analysis). The finance director's workshop materials were cited as the source of the sample savings analysis.

The council moved, seconded and approved Resolution No. 25-063. Roll-call votes recorded at the meeting were recorded as: (members present recorded as voting yes) — approval carried.