BY MATT HERSH

A state retirement plan may end up costing Salem thousands of dollars in unanticipated separation costs.

The legislation, commonly known as service crediting, allows municipal employees with five or more years experience with any given town to “buy” additional years of experience. These purchased years allow people to retire early with full benefits from the state.

This translates to extra costs this year for Salem because the town must pay retiring employees what they are owed for vacation time and sick leave, according to Finance Director Jane Savastano.

Normally these costs would be dispersed over several years as employees continued to fulfill their contracts. But now, 17 employees have decided to purchase experience and retire early.

At least 14 are expected to retire within the next two months.

This surge in the number of retirees has pushed expenses far past the amount of money set aside at Town Meeting.

In March, $350,000 was approved to offset these costs but Savastano said the town is going to need about $578,000.

As the town prepares to begin its annual budget process, Savastano said the number of retiring employees may contribute to a higher overall figure.

Still, Savastano said the town may be able to recoup some of the expenses when they hire new employees. Several retirees get paid more than a new employee would, she said.

“I’m hoping it will at least offset the costs somewhat,” she said.

When Savastano presented the figures to selectmen at their Monday, May 14 meeting, officials commented about the state’s retirement offerings.

“They may have been thinking about it at the state level and not the municipal level,” Town Manager Henry LaBranche said about the legislation’s impacts. “We’re seeing the fiscal impact.”

Though the town will have to incur the extra costs this year, Savastano said the state is doing away with service crediting in July and employees will no longer have the option of purchasing experience.