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January 18, 2008

Retirement rush could cost towns, schools; Benefit changes spur some to call it quits early

Some towns and school districts throughout Southern New Hampshire are bracing themselves for a wave of retirements this year, a wave that could cost hundreds of thousands of dollars.

"(It's) a little bit scary," said Jane Savastano, Salem's finance director.

The New Hampshire Retirement System - which serves 53,000 state and local municipal workers, as well as 20,000 retirees - is changing the way it delivers benefits. Anyone retiring after July 1, the start of the next fiscal year, won't receive health benefits for themselves or their families, according to experts familiar with the changes.

That provides an extra incentive for eligible workers to retire before the July 1 deadline.

Salem Town Clerk Barbara Lessard is doing exactly that. Last week, Lessard announced she would leave after 25 years.

In part, she said, it's time to move on. But Lessard said she figured it would be best to move on while still eligible for health benefits.

In Salem, Lessard is one of three employees who have already announced they will depart before July 1. About 20 employees are eligible for retirement this year, said Lynn Rapa, human resources director.

In the Timberlane Regional School District, Superintendent Richard La Salle said he already knows of 16 upcoming retirements. Last year, the district had only seven.

While local towns and schools don't directly pay retirement benefits - the regular pension checks come from the state - the departures still cost local taxpayers.

When employees retire, they are eligible for a payout covering all unused vacation time, sick time and other benefits. In Salem, that averages between $20,000 and $40,000 per retiree.

Salem spent $650,000 in retirement payouts last year, although it only budgeted $350,000, Savastano said. Twenty-four employees retired.

For 2008, the town again plans to ask for $350,000, although Savastano has warned officials the actual cost of the payouts could be much higher.

Preparing for the high cost of a proposed police station and possible school renovations, Salem selectmen have rejected calls to set aside more money in several areas of the budget.

But not every community is bracing itself for a mass exodus, and some towns are better prepared to handle coming retirements if they do materialize.

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