We found that the proportion of early retirees' positions that were kept vacant was considerably less than that required to cover the cost of the incentive program for schools, counties, and cities. Both agencies needed to achieve significant reductions in payroll in the 1994-95 biennium. MnDOT's budget required holding more positions vacant than could be accomplished without making many layoffs. DHS had very limited hiring flexibility because it could not lay off employees even though it was closing certain programs. Another purpose of early retirement incentives is to enable employers to avoid layoffs.
Layoffs are costly to organizations as well as to the people involved.
We surveyed public agencies to find out how many layoffs were made by public employers between 1991 and 1994, and how many layoffs were avoided because of the 1993 early retirement incentives. We found that most public employers did not make any layoffs in the years from 1991 to 1994. The percentage of school districts, cities, and counties with no layoffs is over 90 percent in most years, and is below 80 percent in only one year. Employment in state government has not grown, in contrast to school district and county government. More departments made layoffs during the 1991-1994 period, and a few departments in state government, including the two largest, the departments of Transportation and Human Services, needed to reduce staffing levels and create job vacancies in order to stay within their budgets.