Auburn offering retirement incentive to city employees in attempt to balance budget

AUBURN — Eligible city employees are being offered a retirement incentive to help close a $2.8 million budget deficit in the 2025-26 fiscal year.

The Auburn City Council approved the retirement incentive at its meeting Thursday. Employees have two deadlines to apply for retirement and receive lump sum payments or credits for health insurance premiums.

If they notify the city of their intent to retire by May 17, they will be eligible to receive a $12,500 payment or $17,500 toward their health insurance premiums. The second deadline is July 18, with a lower lump sum payment ($10,000) or $12,500 in credits for health insurance premiums.

Auburn City Manager Jeff Dygert explained the incentive was introduced in 2014 and updated in 2017 when there were challenging budgets and the city sought to generate more savings.

"These things give us an opportunity, when employees take advantage of them, to typically replace folks with folks coming in the door at a lower salary and a different (health insurance and pension) contribution," Dygert said.

Employee salaries and wages are the city's largest expense. The proposed 2025-26 budget totals $50.8 million, with more than $26.2 million for salaries and wages.

More than 30 employees are eligible for the incentive, according to Dygert. City officials won't know until closer to the May 17 deadline how much will be saved.

Auburn City Comptroller Mary Beth Leeson told the City Council that the savings will depend on the employee and their position.

"If you've been in the same position for 30 years in the city, you're maxed out on longevity and maxed out on raises, as opposed to somebody who maybe has moved up over time and only been in their current position for a short time," Leeson said.

Other factors, including the employee's retirement plan or what tier they're in, will determine how much is saved through the incentive.

Leeson said her goal was to save about $300,000, but she is unsure if that target will be reached. She acknowledged that employees will consider whether it's the right time for them to retire and the impact on their families.

"They have to think about things like health insurance and all of that stuff, so I understand both sides of it and would not ever want to force somebody into retirement," Leeson added.

One employee who is on the verge of retiring will not be taking the incentive. Dygert announced in 2024 that he would retire when his contract expires this year. He will retire at the end of May.

Dygert confirmed in an email to The Citizen Tuesday that although he could be eligible for the incentive, he decided to retire before it was available and will not seek the payment.

The retirement incentive is one of the options for the city to close its budget gap, which has been reduced from $8.6 million to $2.8 million. Other alternatives include overriding the property tax cap and increased state aid.

"In the past, it's been relatively successful," Dygert said of the incentive. "We're hoping that will be the case here as well."

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