I have gotten word that I willl be laid off from my job for the State of CA within the next three months. I’m trying to decide what to do about it. This’ll be long, sorry.
**Option 1: **I continue to work until the date of layoff, which will be somewhere between 4/1/11 and 6/1/11. If I take this option, I will be considered a laid-off state employee (called SROA) , and will be allowed to apply for any State of CA job that is within 10% of my current wages. If one or more SROAs apply for a given position, the 3 with the top seniority are interviewed, and one of them must be offered the job. I’ll stay on SROA for up to 5 years.
Option 2: I stop work on December 30, and sign a paper waiving my SROA status. In exchange, I get 6 months’ pay plus $9,000, for a total of just under $31k. However, this is taxed at 42%, so my actual takehome is going to be about $18k (still nothing to sneeze at, though). I’m on my own for finding a job after that - I’d have no priority over anyone else for a State job.
Some factors:
I’m 41 years old, and have been working for the State for 7 years. I had planned on working here until I retire. As boring as my job often is, I like the stability of public service (and of the pension that comes with it - I don’t trust 401ks.)
My husband is out of work, and hasn’t worked for 3 years.
Either way, I’ll still be eligible for unemployment. However, that pays only 50% of my salary, which the two of us were barely sqeaking by on as it was.
About 1,600 of my co-workers are also being laid off, across the state. Not all of them are in my same job, but a good chunk of them are. The ones that don’t take the payout will be potential competition for the open jobs. I don’t know how many people are on SROA status from other State layoffs from other divisions.
I have to decide by December 15th.
I would love to have other people’s opinions on this, especially anyone who’s gone through the SROA process or something similar. At the moment I’m leaning toward not taking the payout, but I really don’t know. If it’s too difficult to get a job through SROA, the payout might be the better option.
I voted to stay. At your age you have many years yet to work. The job market still stinks (I’m out almost 3 years myself). While you’ll be getting a nice chunk of change if you leave now, you’ll spend $$$ on your healthcare benefits which I’m assuming were covered by your state job. Now that the recession has been dragging on, all the Federal unemployment extensions are not being renewed, nor, I believe, is the reduction in COBRA that I was able to take advantage of. 26 weeks goes fast; COBRA is expensive. Even more expensive is health insurance coverage on your own.
Staying put is what I’d do. By the way, I didn’t have a choice. My company closed all their locations.
Yeah, I’d stay and get on the SROA list. That eye-popping 42% tax rate you mentioned devalues the severance package considerably, and it sounds like you’d have a pretty good chance of landing another state job eventually, while remaining eligible for unemployment.
I’d take the priority consideration for future employment over the earlier out. Even if there are a lot of other SROAs (or potential SROAs) there’s still an advantage to be had from the priority consideration (compare competing with fewer than 1600 other people with competing with every other person interested in the job; I like the first set of odds better.)
How soon can you start job hunting using your SROA status? Can you make use of it immediately to try to get a replacement job, or do you have to wait for the actual end of the current job in April (or May)? If you can start the hunt immediately, I say there’s no contest.
Hm. I’m not sure - I know that I can’t retire unless I’m 55 and have at least 5 years’ service, and the longer I stay past that the more I get, but I haven’t looked into vesting.
I know that whatever I have in there can be 1) left in to accumulate interest 2) rolled over into a 401k at my next work 3) transferred into a reciprocal pension at another public agency 4) rolled over into an IRA or 5) cashed out at considerable tax penalty.
I can start the hunt as soon as I get my official SROA letter, which will be in late December they think. (the layoff plan still needs to be OK’d by the DPA).
I will be unemployed ~180 days after the date of that letter.
She’s already fully vested in PERS. You will be asked if you want to withdraw the money from PERS. If it is even a remote possibility to return to State service, leave the PERS money alone. Here’s why:
(1) Since you are already vested, no matter where you go, or where you work, you are still eligible to “retire” at 55 and receive a monthly check from PERS. I think it’s now a minimum of 10 years service to be eligible for health insurance benefits, though.
(2) Should you return to State service, you can have your seven years seniority restored to you as far as retirement benefits go, if the money is still on account with PERS. If you take the money out of PERS NOW, you can get the seniority restored at a later date by paying back the money plus the interest. I can tell you from personal experience that paying back that money is not easy.
Continue to check the State Personnel Board website daily, and now is the time to talk to everyone you’ve ever known. All State agencies are suffering horrendous cutbacks, but most of them are relying upon natural attrition to handle the cuts. You might luck out by finding an agency that has lost more people than necessary, and now have positions to fill.
Be open to relocation. Also be open to a reduction in job classification.
I voted Stay. My oldest son (in Washington State) was laid off from his first County job five or six years ago. He didn’t have a lot of seniority (maybe five years) but he’s managed to work fairly steady (if temporarily) in other County jobs since the layoff, because he’s on the list. That list is definitely a leg up, in this economy. This also gave him the opportunity to check out other departments, for when something permanent comes up.
The only reason to take the payout is if you were going to use it to relocate to North Dakota. I hear the unemployment rate is very low there. But it’s North Dakota.
[ul]
[li]Stay.[/li][li] Immediately start to cut back on all non-essential spending. Yes, all.[/li][li]Cut up your credit cards and begin paying for everything with cash. Everything. If you can’t afford it with cash, you don’t buy it. Period.[/li][li]Save all the money you are not spending. It’s not about saving and drawing measly interest. It’s about building an emergency fund.[/li][li]Start looking at and applying for similar federal jobs.[/li][/ul]
If you take the money and run, as a then former government employee, and your age, (there’s no polite way to cushion these words) you run the risk of never being employed to your potential again. Many private employers actively do not consider the unemployed, the generation gap deems you too old already, and as a then former government employee you will have a unfair stigma you could never be a real worker in private industry.
FWIW, I think that a CA state pension is a riskier retirement plan than a well-managed 401(k). CA has some serious structural fiscal problems, and doesn’t appear to be getting any closer to handling them.
That said, unless you have a clear plan for what other sort of job you’re going to get, or career you’re going to move into, a preferential chance to get a future government job is likely worth more than the severance.
The biggest unknown for me is whether or not you’re going to be in the 3 highest-seniority slots for a job you apply for. Do you know how many state jobs open up per year on average, how many people apply for them, and how many people on SROA have more seniority than you? See if you can find out the answers to those. It could make a big difference.
This would not prevent you from looking for other jobs in the interim (private or public). Possibly you could even look for other state jobs in the interim - maybe you wouldn’t have the same SROA status but you could still look.
The salary+bonus option only really gives you an extra 3 months (or possibly less) of salary beyond the stay-in-place option. Plus you have to go on COBRA for health insurance that much sooner. And the tax hit is the real kicker.
Now, if they agreed to have you on the payroll (and covered by insurance) during that time, that might make it a slightly more appealing option - no one-time tax hit, a small bonus at the end.
You’d have a better chance at getting another state position if you can move. And since your husband isn’t working, it may be easier for you to relocate than someone else. So you should be able to find something, although perhaps not in “Beijing, California”, wherever that is.
I believe it was Gov Pete Wilson who did a one-time raid (it was called a “loan”) on PERS funds for the California General Fund.
And I think the action got stomped to death in court.
PERS funds are completely independent of the General Fund (or even any of the Special Funds) of the State of California. PERS is managed by a Board of Directors that reports only to PERS membership. While PERS has had some stupid investments in the past (who HASN’T?), it has always shown a profit, and is in much better shape than everyone else.
~VOW
I voted for staying until you are officially laid off. Don’t throw away your years of service—that’s if the state will rehire you and count your past years for seniority.
And who knows? The layoff might be cancelled before it gets to you.
It used to be that you only kept your State classification for three years after separating from State employment. That is no longer the case: you keep your classification indefinitely.
This means, should you be re-hired at the same job, you slide right back in where you left off. Your seniority is still there, your step level for merit increases is where you were, it’s like you never left.
I left State of California service in 1984, and didn’t return until 1990. Before I left, I had only one month to go until my next merit increase. When I came back in 1990, one month later, I received my next merit increase in pay.
Unfortunately, I wasn’t able to leave my retirement money in PERS when I left, so I ended up paying that back so I could put myself back to where I was retirement wise. PERS does give you the opportunity to do that on a payment plan.
~VOW