TVA officials were meeting with employees throughout the TVA system on Monday on reductions in force.

Bill Baxter of the TVA board said, "Managers throughout TVA are communicating with employees today to inform them of the latest information available on program reviews in their specific business units.

"In areas where surplus staffing has been identified, employees are being asked to volunteer for retirement or a reduction in force.

"Employees who are approved for the voluntary reductions and have five years or more of TVA service will receive standard severance benefits, which include five days’ pay for each full year of employment, and extended medical insurance coverage at the employee rate.

"Employees have until March 15 to volunteer, and managers have until March 29 to approve or decline volunteer requests. TVA hopes that much of the necessary staff reductions will be voluntary. Involuntary reductions will depend on the number of volunteers and will not be announced until April 22."

He also said, "As part of a company-wide initiative to reduce costs and improve TVA’s financial flexibility for the future, all business units are reviewing their budgets and programs. That process is still in progress. Results to date have identified $247 million in capital cost reductions as well as significant savings in operating and maintenance and support service costs.

"To continue to reduce debt and improve TVA’s cash flow in the 2005 fiscal year, TVA expects additional savings will be necessary. To obtain additional savings, TVA organizations will complete their remaining program reviews and continue to examine all costs. TVA’s Strategic Plan has set a debt reduction target of $3 billion to $5 billion over the next 10-12 years."

Outcomes of Program Reviews - February 2004
• Through the development of the TVA Strategic Plan, TVA has identified the need to increase its financial flexibility by reducing debt and improving cash flow.

• As a result, actions are under way to reduce costs for this fiscal year and in Fiscal Year 2005, which begins October 1, 2004.

•Necessary budget reductions will be achieved through (1) reductions in capital projects, with resulting reductions in spending for materials and contractors; (2) reductions in contractors supporting ongoing work; and (3) program/staffing reviews to determine whether activities should be continued, eliminated, or outsourced, and where surplus staffing exists.

• So far, $247 million in capital cost reductions have been identified for FY2005. Significant savings have also been identified in operating and maintenance and support service costs. In some of those areas, program reviews are still under way.

• To continue to reduce debt and improve TVA’s cash flow in Fiscal Year 2005, TVA expects that additional savings will be necessary. To obtain these additional savings, TVA organizations will complete their remaining program reviews and continue to examine all operating and maintenance and capital spending on an ongoing basis.

• TVA hopes that much of the necessary reduction in staffing will be realized through voluntary reductions in force.

• Organizations that have completed or made substantial progress in their reviews are asking employees in identified areas to volunteer for reductions in force before any involuntary reductions are made.

• Eligible employees who are approved for voluntary reductions can receive extended medical-insurance coverage at the employee rate, as well as the other benefits for which they qualify. Employees who receive involuntary RIFs will not be eligible for the extended medical-insurance benefit.

• Eligible employees are those with five years or more TVA service and who are working in an organization/functional area identified as having surplus staffing.

• TVA reserves the right to accept or reject offers to volunteer. Offers to volunteer that do not meet business needs will not be accepted.

• No notices of involuntary reductions in force will be issued until April 2004, and outplacement services will be offered to employees who are involuntarily reduced.

• Also, to better manage contractor costs, TVA is revising its policy on former employees and retirees working as TVA contractors. Effective March 10, TVA retirees cannot return as staff-augmentation contractors or enter into personal-services contracts for 12 months from their retirement data. Employees who voluntarily separate from TVA and receive incentives to do so cannot return to work as a contractor at a TVA facility or enter into personal-service contracts with TVA for three years from their separation date. The “Contractor Workforce Management Policy” is posted on TVA’s employee Web site.

• At all times, the reviews of TVA’s programs and functions will take care to preserve the safe and reliable operation of TVA’s core functions.

Here are key dates for organizations that are asking for volunteers for reductions in force:

February 23, 2004: Voluntary RIF process begins for eligible employee (employees who have five years or more TVA service and who are working in an organization/functional area identified as having surplus staffing)

March 15, 2004: Deadline for employees to volunteer for a RIF

March 29, 2004: Deadline for managers to approve/reject volunteers for RIFs

April 22, 2004: Organizations issue any notices of involuntary RIFs, depending on the number of volunteers received

May 28, 2004 (no later): Effective date of termination for employees approved for voluntary RIFs

June 25, 2004: End of the 60-day notice-of-termination period for employees receiving involuntary RIFs

• Some program reviews will be completed later, and key dates for those reviews will be provided as results of the reviews are announced.