How Auburn's retirement incentive for city employees would work

AUBURN — To address a $5 million budget deficit and avoid eliminating more than 50 positions, the city is offering a retirement incentive for eligible employees.

Union contracts already offer a retirement incentive for workers — a $10,000 payment or $12,500 toward the retiree's health insurance premiums. In 2025, the city added another incentive with a $12,500 payment or $17,500 toward retiree health insurance.

Three employees took the incentive last year, according to Auburn City Manager Jenny Haines.

With the city facing a significant budget gap and the potential for layoffs, a new incentive will be available. If employees take it, the city will pay an additional 15% of their retirement health insurance premiums for five years or until they are eligible for Medicare, whichever comes first.

To receive the incentive, employees must apply by May 15 and their last day of service would be June 30.

The Auburn City Council approved the incentive at its meeting on Thursday. Before the vote, there was a discussion about the incentive, how it could affect the 2026-27 budget and the city's staffing levels.

Haines explained that under most union contracts, retirees pay 50% of their health insurance premiums. The exception is CSEA members, who pay 40%.

If eligible employees take the incentive, they would pay 35% of their premiums. CSEA members would pay 25%. The city would cover the rest.

Haines was not sure how many employees would be eligible for the incentive. Auburn City Councilor Craig Diego said there are 28 fire and police department employees who could get the incentive.

Diego asked about planning if there were several employees who applied and received the retirement incentive.

"We obviously would have to review operational impacts with our department heads depending on how many folks did sign up for that," Haines responded. "That is something that we would need to take into consideration."

If employees elected to take the retirement incentive, Auburn City Councilor Dr. Rhoda Overstreet-Wilson inquired if it would allow the city to avoid job cuts. Haines answered that it would save jobs.

When the city offered a different retirement incentive in 2025, the hope was to generate $300,000 in savings. But that depended on how many employees took the offer.

This time, the city did not share any savings projections.

The retirement incentive could be an important tool for the city as it seeks to reduce the budget gap. The timing of the application deadline comes during the budget process, meaning the city will know how many employees are seeking the incentive — and how much could be saved.

The City Council will hold a public hearing on the budget on May 28, two weeks after the deadline. A final vote on the budget is scheduled for June 4.

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