University Times

Pitt's administration will have only itself to blame if the University continues to go without a faculty early retirement program, or if a new program isn't lucrative enough to entice many professors into retiring, Faculty Assembly members said this week.

On June 20, the Faculty Early Retirement Bonus Plan Committee delivered its final report to Chancellor Mark Norden-berg. The report recommends that Pitt offer two plans for tenured, non-medical faculty, faculty librarians, and administrators holding faculty tenure: * A so-called "window" plan that would offer retirees as much as 2.5 times their salaries. An alternative formula would offer a maximum of 2 times salary, but faculty on the bonus plan committee favored the higher buyout. To be eligible, retirees must have completed 15 years of Pitt service and reached age 62 within a three-year enrollment period (or "window") of Sept. 1, 1997, through Aug. 31, 2000. Or, the sum of their years of service and their ages must be at least 90 prior to the end of that period.

* A phased-down employment plan that would allow faculty as young as 59, with 10 years of service, to reduce their workloads by half and receive two-thirds of their pay for a fixed number of months. Faculty would get an additional bonus upon retiring. The report recommends that Pitt offer this plan for five years, beginning Sept. 1, 1997, with retirees guaranteed a minimum two-year contract.

Chancellor Nordenberg said he expects to announce his decision on the proposal this month.

At its July 7 meeting, Faculty Assembly voted 22-0, with two abstentions, to endorse the proposal — but only after an hour-long discussion, in which several professors accused the administration of failing to provide timely and comprehensive analyses of potential costs and benefits, and of doing a poor job of communicating with faculty on the early retirement bonus plan committee.

Physics professor Richard Pratt, who served on that committee and who chairs the University Senate budget policies committee, said both committees repeatedly asked the administration for cost estimates of plan options. Yet the bonus plan committee did not receive the figures until its final meeting, he said. "There seemed to be some hesitation in presenting these numbers. There seemed to be some unwillingness to take them [faculty requests] seriously," Pratt said.

From 1982 until 1994, Pitt offered an early retirement incentive plan for tenured professors under age 70, which was the University's mandatory retirement age at the time. About half of the eligible faculty members took advantage of the plan. But since Jan. 1, 1994, federal law has forbidden mandatory retirement ages for faculty.

In 1995, after a short-term "window" plan had lured just 27 percent of eligible faculty into early retirement, then-Chancellor J. Dennis O'Connor appointed a group of faculty and administrators to make recommendations on retirement policies. Economics professor Jack Ochs chaired the group, which submitted its report in February 1996. The Ochs committee recommended, among other things, that Pitt policies should aim to ensure a regular, predictable pattern of faculty retirements.

Last January, Chancellor Nordenberg appointed the Faculty Early Retirement Bonus Plan Committee and asked it to draft a plan, using the Ochs committee report as a guide.

At Tuesday's Faculty Assembly meeting, Paul Hammond of the Graduate School of Public and International Affairs said Nordenberg should have acted more boldly to ensure progress on the plan. "When he came into office [as chancellor last summer], he should have recognized that this was in the works, recognized that he had a time problem and that the last thing he should do was wait for a committee to come to him with a report," Hammond said.

According to Hammond, Nordenberg should have ordered a comprehensive, empirical study to provide realistic cost estimates as well as predictions of how many potential retirees would take advantage of a plan, and what incentives would be required to lure them into retiring. The University Center for Social and Urban Research could have been called in to work with focus groups and perform sophisticated studies of employee demographics and the hiring needs and expenses of individual academic units, Hammond said.

Instead, the administration produced only a rough estimate of program costs, he said. "What I'm hearing is that the main data [that Pitt's administration is using to judge the plan's value] are the conjectures of accountants concerned only with limiting costs. That's not a study, it's conjecture." Hammond continued: "The analysis has not been done for a major institutional step that the University needs to take…There is every indication, to me, that there will be a non-optimal choice made by the administration." He predicted that Nordenberg, "with almost no information to go on," will either approve the less attractive, 2 percent "window" plan or will reject any kind of faculty early retirement plan for this year.

Hammond further predicted that if Pitt adopts a less lucrative plan, and faculty shun it, they will be portrayed as greedy and selfish. "That's the awkward position all of us will be in, apologizing for the greed of faculty who wouldn't buy off on a 'perfectly reasonable' plan," Hammond said.

In an interview yesterday, July 9, Nordenberg said: "From the beginning of this process, which actually started before I became interim chancellor, faculty and administrators have been working in a collegial, cooperative fashion both to develop alternatives and to generate an information base upon which to make decisions about them. Certainly, that was the approach that was taken by the committee chaired by Jack Ochs, and I think that process has continued during this past year with a new committee. That seems to be an appropriate process. I think each of those committees has generated information that it believes was relevant and useful, and we are now trying to refine that information further." In a June 23 Campus Update, Nordenberg wrote that "the necessary starting point" in evaluating the proposed early retirement incentive program "is the fact that our University has a comparatively generous retirement program in place": the TIAA-CREF and Vanguard retirement annuity plans, through which Pitt matches employee contributions by a 1.5-to-1 ratio.

"Supplemental programs can be justified only on the basis of their contribution to some other institutional need or opportunity," Nordenberg wrote.

While emphasizing that he had not yet made up his mind about the proposal, Nordenberg said that "the [bonus plan] committee's preferred alternative, to the best of my knowledge, would result in the 'richest' plan — in terms of institutional payments made to individual retirees — in American higher education." Economics professor Herb Chesler, a member of the early retirement bonus committee, told the Assembly that one of the committee's goals was to devise a plan that was at least as lucrative as the one Pitt offered in the 1980s. But, in fact, the current proposal would pay a maximum of $250,000. That's about the same as the maximum paid under the old plan — except when inflation is figured in, Chesler noted. Today's $250,000 would be worth just over $145,000 in early 1980s dollars, he said.

Given the advantages for faculty of continuing to receive salaries and amass retirement annuities, the administration must offer generous incentives if it hopes to entice professors into early retirement, said Robert Mundell of the dental medicine school. "If you're only offering me what I would get by staying, or less, you don't understand the situation," Mundell said.

At its July 14 meeting, Senate Council is scheduled to pick up where Faculty Assembly left off in discussing the early retirement proposal. Nordenberg and the two administrators who served on the retirement bonus committee — Interim Vice Chancellor for Finance Art Ramicone and Vice Provost Robert Pack — are expected to attend.

— Bruce Steele