PROVIDENCE –– Sheila Ellis waited for nearly an hour inside the stuffy reception area of the state retirement office yesterday afternoon. And she would have waited longer, given what was at stake.

At just 45 years old, Ellis must decide whether to retire from the state job she has held since high school, or risk losing substantial health-care coverage for the rest of her life.

It’s a decision she wanted to talk over with a retirement counselor.

“I’m young enough, it would be nice to work,” said Ellis, who has worked with developmentally disabled adults for the last 28 years.

But really, her mind was already made up. State lawmakers this week pushed Ellis and probably thousands more state employees into retirement.

The House Finance Committee, which largely controls the state budget, voted Tuesday to endorse Governor’s Carcieri’s cost-cutting plan to reduce the state’s contribution for health benefits for state workers who retire after Sept. 30. Current retirees pay nothing or a fraction of the overall health-care cost.

The new plan, which is expected to be approved by the House of Representatives tomorrow as part of a midyear deficit-avoidance package, would require retirees to contribute almost $1,700 each year for health care and includes new age standards. After Sept. 30, a retiree must be at least 59 years old and have worked for the state at least 20 years to qualify.

That means that if Ellis retires on Oct. 1, she would have to wait another 14 years to receive state-subsidized health coverage. A majority of the 3,100 state workers currently eligible to retire with pensions are in similar positions.

Most are expected to leave.

The state retirement office expects as many as 2,500 employees to retire by the end of September, according to office director Frank Karpinski. That’s roughly twice as many employees that typically retire each year.

Labor unions have lobbied hard against the change, which may force out roughly 15 percent of the state’s workforce over the next five months.

“I think it will be devastating if they empty out the state,” said Lucie Burdick, president of Local 580, the social workers’ union. “The public doesn’t understand that these are the kinds of services they rely on. And they’re going to be gone. And we’re losing a tremendous amount of institutional knowledge that won’t be replaced.”

The governor’s spokesman, Jeff Neal, meanwhile, said that many retirees would be replaced.

“In many cases, critical positions will need to be filled,” Neal said. “In other cases, we may be able to consolidate functions among remaining staff. We will take whatever steps are necessary to ensure that critical services are maintained.”

The new policy will reduce taxpayers’ contribution to the overall cost of retiree health-care benefits — estimated at $700 million –– by $120 million, according to the governor’s budget office. The change will save state taxpayers $6.1 million for the coming fiscal year, according to the governor’s analysis.

The intent of the original proposal, Neal said, was to cut health-care expenses, not to force hundreds of workers out of their jobs.

“That said, we were aware that some employees might choose to retire before the reform was enacted in order to preserve their access to the current benefit structure,” Neal said.

The director of the business-backed Rhode Island Public Expenditure Council, John C. Simmons, said that Rhode Island’s retirement benefits have been out of line with the private sector for some time. “This is an issue that needed to be addressed,” he said.

A 2007 national study by the Kaiser Family Foundation and Hewitt Associates showed that just 33 percent of private firms that employ more than 200 people offer retiree health benefits.

House Finance Committee member Thomas Slater, D-Providence, however, said the measure passed by his committee had more to do with reducing the size of government.

“This wasn’t so much a budget-savings issue for this year as it was a forced retirement issue,” Slater said. “The governor firmly believes we have too many state workers. So what are you going to do? You’re going to force them to get out.”

The state retirement office is already feeling the pinch of the expected exodus, according to Karpinski. State retirement counselors are meeting with twice the normal number of potential retirees each day. And there’s currently a waiting list that extends into July for one-on-one counseling sessions.

The retiree changes to be considered by the House tomorrow do not affect pension benefits.

And state employees who submit retirement applications before the end of September will qualify for the current retirement health-care arrangement, which allows some longtime workers to pay nothing, after they retire, toward their health-insurance premiums. Others pay as much as 50 percent of the rate the state is charged for an “active” employee.

The plan would require retirees after Sept. 30 to pay 20 percent of the actual $8,461 anticipated cost to the state of a single health plan, or $1,692 a year.

Like Ellis, longtime state worker Deborah DiPietro doesn’t have to think too hard to decide what to do. The 52-year-old taxpayer service specialist already crunched the numbers with a retirement counselor.

“I actually love my job. I love the people I work with. It’s to the point where I got people saying, ‘You can’t leave,’ ” said DiPietro, who has spent the last 34 years working for state government. “But when I do the numbers, I have to leave. That’s not a good way to feel.”

—With reports from Katherine Gregg of the Journal State House Bureau

speoples@projo.com