The City of Toronto is approving only 230 staff buyouts, about one-third of the 700 forecast, which were supposed to yield big savings to help plug the city’s budget hole.

A city spokesperson said Wednesday that senior managers rejected 810 of the 1,040 applications for the voluntary separation program.

Applicants are being notified this week. Those accepted will get confirmation letters next week and leave the payroll this year.

City manager Joe Pennachetti launched the buyout offer July 12, offering up to six months’ salary, depending on years of service, to about 17,000 permanent city staff, excluding firefighters.

Pennachetti told councillors Sept. 19 that, assuming 700 buyouts were approved, the city would save $41 million in salary and benefit costs in 2012, and $59 million the following year.

But buyouts would be accepted only for staff who would not have to be replaced.

The buyouts will result in a one-time cost of $13 million, with an annual savings of about $20 million each year thereafter.

Richard Majkot, head of the association representing non-union managers and supervisors, said the buyout flopped for two reasons.

First, because the offer — a lump sum of three weeks per year for union members, four years for managers — wasn’t rich enough to entice many staff.

Second, because the service and core reviews didn’t cut as deeply into city functions as expected, so fewer staff could be allowed out the door, he said.

Councillor Paul Ainslie, chair of the government management committee, said however that, while the buyout program didn’t achieve the desired results, it will still save taxpayers millions of dollars each year.

“We tried something I don’t think has been tried before and it was a worthwhile part of putting everything on the table.”