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October 23, 1997

Trustees expected to OK early retirement plan for faculty today

Eligible Pitt professors would receive payment equal to 1.5 times their annual salaries, up to $125,000, under a faculty early retirement plan that the Board of Trustees is expected to approve this morning, Oct. 23.

Tenured faculty members outside the medical school would qualify for the plan:

* If they have completed at least 12 years of Pitt service and will be at least 60 years old prior to July 1, 1998, or

* If the sum of their ages and years of service will total at least 85 by that date.

Participation in the early retirement plan — which trustees and administrators said would be the last plan of its kind at Pitt — would be voluntary.

Faculty who did participate would have to relinquish their tenure rights and agree to retire between July 1, 1998, and May 1, 1999. In return, they would receive payments equal to 1.5 times their annual salaries, but not to exceed a total of $125,000 for each faculty member.

Payments would be made over a 12-month period. Payments to retiring faculty would begin in July 1998 and end in April of 2000.

Given the $125,000 maximum payment, $77,161 would be the maximum salary subject to the 1.5 multiplier.

Because the plan is designed to encourage the retirement of higher paid professors, it could save the University millions of dollars in salary monies, Chancellor Mark Nordenberg told the trustees' budget committee yesterday.

Some 358 tenured faculty members would be eligible, including many who have put off retirement pending approval of the long-awaited plan, Nordenberg said.

A Pitt administration analysis, based on the assumption that 30 percent of eligible faculty will participate, predicts the plan could save the University more than $12 million, at today's cash value, over the next seven years.

The budget committee voted unanimously yesterday to endorse the plan. Nordenberg told committee members that the 358 potential retirees include many "extremely valuable members of the University community, who are making significant contributions to its progress. Nevertheless, we believe that if there was some movement [toward retirement] within that group, it would permit us to reduce faculty in some units. It would permit us to shift faculty resources to emerging areas of priority in other units. It would lead to an infusion of new ideas in all units where there is replacement hiring, and it would, over time, also save the institution money." Since Jan. 1, 1994, federal law has forbidden mandatory retirement ages for faculty.

Following the budget committee meeting, trustees chairperson J. W. Connolly said he expected the full board would formally approve the plan at its 8:30 a.m. meeting today in the William Pitt Union Assembly Room.

"I am not going to get up there and wave the flag and beat the drum" for the plan, Connolly said, "but I hope the board has enough respect for me and for Mark [Nordenberg] that it will agree to advance this program that Mark and [Provost] Jim Maher believe is so important to the University." Connolly said he initially opposed offering faculty a financial incentive for retiring earlier than they otherwise would. "It's such a different concept, to pay somebody a bonus to do what you think they should be doing anyway. I found that quite troublesome at the outset," Connolly said.

"A lot of these people have reached retirement age, and one would think that they would retire, particularly since the University retirement program is, I believe, a fairly lucrative program. It's as good as it gets among all the universities we've looked at. So why do we then have to buy you out when, it would seem to me, in the normal course of events you ought to retire?" Connolly said he eventually was won over by the Pitt administration's arguments about intellectual renewal, enhanced budgetary flexibility and salary savings resulting from the plan.

Connolly joked that Nordenberg and Maher hounded him into supporting the plan. "They wouldn't go away," Connolly said. "They kept on coming back and back and back." Asked whether faculty would have the provost and chancellor to thank if trustees approve the plan, Connolly answered: "It's 100 percent accurate to say that." Connolly emphasized that the new early retirement incentive plan would be the last such plan the University will offer, at least as long as he is board chairperson. The budget committee likewise recommended that this be the final plan of its type at Pitt. If the full Board of Trustees agrees, it would take a board resolution to reverse that policy.

And that goes for a staff early retirement incentive, too — a notion Pitt's Staff Association Council has explored from time to time. "I would not want to encourage any other [University] group to think that there will be a plan of this type waiting for them" when they reach traditional retirement age, Connolly said.

"One difference between this new plan and those that were implemented in the past," he pointed out, "is that there was always, in the past, the expectation that three years hence, or whenever, there would be another plan…What we're trying to communicate in conjunction with approval of this plan is that this is it. This is the last one." The University has offered a series of faculty early retirement plans since 1982. "This pattern," Nordenberg said, "created the sense that, simply by delaying their retirements, tenured faculty members would qualify for retirement payments in addition to the normal retirement benefits." Nordenberg and Maher said response among department chairs and deans to the plan, if it's approved, will vary, depending on how many faculty in those units are eligible for the plan. The sign-up period for the plan is compatible with the faculty recruiting season, the chancellor said.

* * * The plan that trustees likely will approve is less lucrative than the one proposed last summer by the Faculty Early Retirement Bonus Plan Committee, a group of professors and administrators appointed by the chancellor to study early retirement incentive options.

The bonus plan committee had recommended offering faculty two options: * A plan that would have paid retirees up to 2.5 times their salaries (depending on their ages and years of service).

* A phased-down employment plan that would have allowed 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 also would have gotten an additional bonus upon retiring, under the phased-down option.

Herbert Chesler, interim chairperson of the economics department and a member of the now-disbanded bonus plan committee, complained that the plan approved by the trustees' budget committee fails to guarantee continuation of Pitt medical benefits for faculty who would retire before age 65, and who therefore would not yet qualify for Medicare. "Continuation of medical benefits was a key part of our proposal," Chesler said in an interview yesterday.

He predicted that the new plan would not meet its goal of enticing 30 percent of eligible faculty to retire.

"For 30 percent, you would need 115 people, and there are only 111 eligible faculty aged 65 and older," Chesler said. "You won't get 100 percent of those people. And for the faculty aged 55 to 64, the incentives offered by this plan are too low. If you're under 65, this is a very inadequate plan." The plan's major weakness, he said, is that Pitt trustees and administrators failed to consider that many professors love their jobs and need to be lured into retiring.

"I doubt that that ever entered into their thinking," Chesler said. "All they talk about is how the University's TIAA-CREF and Vanguard [retirement annuity] plans are lucrative enough to provide faculty with a comfortable retirement. But many faculty don't want to give up teaching and doing research. They derive a great deal of pleasure from it." Chesler also criticized Pitt's administration for failing to communicate with faculty about the early retirement proposal after the bonus plan committee submitted its final report to Nordenberg in June. "In the more than 20 years that I have been involved with the [University Senate] benefits and welfare committee, this is the first issue that I can recall where there has been a lack of real communication, and even trust, between the administration and the faculty. The administration made no attempt to maintain a consistent dialogue. We handed in our final report, and they [the administration] proceeded to do their corporate CEO thing." Keith McDuffie, who is the immediate past president of the University Senate and who wrote the bonus plan committee report, said: "They [Pitt administrators] are obviously not going to get as big a turnover of faculty as our committee had been shooting for, but they know that and apparently it was part of their planning." McDuffie, a professor in the Hispanic languages and literatures department, thanked Chancellor Nordenberg and Provost Maher "for getting this plan past trustee opposition." In a written statement, current Senate President Gordon MacLeod, of the Graduate School of Public Health, said the backlog of potential early retirees at Pitt had "created a unique opportunity for intellectual renewal, which should be a foremost concern of the University.

"With only 30 percent of faculty members eligible for the retirement benefit expected to accept it, the University will forego saving millions of dollars that could have been used to recruit the academic leadership of the 21st century. Failure to muster resources necessary to compete with other universities in the future could well reduce Pitt's ranking in the academic world."

— Bruce Steele

Filed under: Feature,Volume 30 Issue 5

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