A Benefits Study Group is proposing eliminating retiree insurance benefits for those hired after July 1, and placing restrictions on benefits offered to current employees.
The committee, headed by Vice President for Finance and Administration Mark Rozewski, met with some faculty and staff Feb. 13, and sent a PowerPoint presentation with a breakdown of the proposed changes to all employees.
Under the new plan, eligibility for benefits would be determined by a point system. An employee’s age and years of service must add up to 57 in order for them to receive benefits unless they have been benefits eligible for at least 10 years come July 1.
“The committee was trying to weigh both age and years of service,” Rozewski said.
The university is open to feedback, he said.
“One thing I did notice going out into the campus community is there absolutely is, I think, broad and deep consensus,” Rozewski said. “These are problems that must be solved now. This is one of those difficult problems where you can expect a range of informed opinions. We’re getting those range of opinions and we’re studying them.”
If approved by the Board of Trustees March 6, the new plan is expected to reduce the university’s unfunded liability to about $50 million in 20 years.
“Eventually it declines to nothing,” Rozewski said about the remaining liability. “With no new entrance to the retirement healthcare benefit pool, essentially people age out of the program.”
If the program continued as is, the university would have an unfunded liability of $102 million by 2032. The number of retirees has increased by 52 percent since 2007.
Eligible employees, as well as their spouses and dependents, qualify for reduced medical, dental and life insurance premiums. Employees who have been at the university for 10 to 14 years pay 75 percent while the university contributes 25 percent. Employees with 15 to 19 years under their belt pay 50 percent, which the university matches. Employees who have been at the university for over 20 years pay 25 percent while the university covers 75 percent.
The committee recommends reducing the university’s contribution to its Defined Contribution Plan. Right now, it is 11 percent of an employee’s first $10,800 in salary plus 15 percent of the remaining salary. The new contribution would just be the 11 percent. It also recommends changes to the Public Employees’ Retirement Plan (PERF) for support staff, which includes a new Defined Contribution Plan that will include a 7 percent contribution from the university.
Faculty and staff could opt to receive a one-time salary increase this year if the proposed changes pass.
“It’s a migration from one form of compensation to another,” Rozewski said. “Some more of it – at the employee’s own election – could be spent now. Many people probably wouldn’t do that, but they could if they wanted to. That’s the flexibility we’re referring to (in the PowerPoint).”
He said the committee worked hard to create a thorough document and urges faculty and staff to view the information.
“We’re looking at a path forward,” Rozewski said.
No changes will be made to current retirees’ benefits.