Incentive Plan Helping PUHSD Avoid Further Lay-Offs

PHOENIX - More than 200 Phoenix Union High School District employees have taken advantage of an early incentive package, allowing the district to recall a majority of the employees laid-off last June. All but 72 staff members were recalled through the summer as a result of the Voluntary Incentive Plan (VIP).

As a cost containment tool, the district offered the one-time incentive to staff who met defined eligibility requirements of 10 or more years of service with the district. The buy-out attracted 129 teachers, 62 support staff and 15 administrators. Employees who elected to take the offer will leave service with the district by June 30, 1996.

Through the VIP program, terminating employees will have a 10-year monthly stream of income in addition to any other pay to which they are entitled, such as sick leave pay. The additional income cannot exceed $500 a month for administrators and teachers, and $300 for support staff. Many of the employees who took advantage of the plan - many at the top of the district’s pay scale - were able to retire three to five years earlier than expected.

The district expects a salary budget reduction over a five-year period, helping to control rising costs and avoid future lay-offs and program cuts. The plan was structured by the district and Educators Preferred Corporation, a consulting firm that specializes and has implemented more than 80 such plans nationwide.

Teachers

Normal Exits: 12

Original VIP Projection: 120

Actual Exits with VIP: 125

Percent Increase: 1004%

Classified

Normal Exits: 8

Original VIP Projection: 50

Actual Exits with VIP: 60

Percent Increase: 750%

Administrators

Normal Exits: 1

Original VIP Projection: 8

Actual Exits with VIP: 15

Percent Increase: 1500%

Phoenix Union’s objective was to find a method of reducing its budget with the least impact to staff and programs. This was accomplished via the VIP program, which gives employees at the top of their respective pay scales incentive to retire. Those employees were replaced with those laid-off at the end of the last school year. Savings occurred as a result of reduced salaries. For instance, the average salary of teachers taking advantage of the VIP plan was $48,000, while the salaries of the teachers who were called back are $32,300.

"This is part of a comprehensive, long-term solution to a growing fiscal crisis," said Rene X. Diaz, Ed. D., district superintendent. "No one likes to lay off employees, so when we find programs like the VIP to help reduce the budget while keeping good employees, we will take advantage of them."

Despite passage of an override in 1995, Phoenix Union still faces budget cuts as a result of current and expected cuts in state education spending. District staff is in the process of recommending ways to balance the budget over a three-year period that will minimize cuts to programs and staff.