The University of Minnesota may look less attractive to prospective faculty in 2012 should a proposal to slash University contributions to retirement get approval.
In an attempt to generate long-term savings, the University is considering cuts to retirement funding for all the new faculty and professional and administrative employees — something that could create recruitment challenges and a chasm between new and existing employees.
The current proposal is to decrease the money given by the University to 10 percent, raising employees’ input to 5.5 percent. Employees would get the same amount for retirement each year, but more would come out of their own pockets.
Currently, in addition to salary, the University pays 13 percent of each faculty and P&A employee’s salary for retirement while the employees contribute about 2.5 percent directly from their paychecks.
Under the proposal, a professor making $100,000 a year would get $10,000 for retirement benefits from the University instead of $13,000. To fill the gap, $5,500 would be deducted from the professor’s salary instead of $2,500. The total yearly retirement benefits — $15,500 — would stay the same.
The proposal would bring the school in line with other large public universities, many of which spend less on retirement benefits.
If passed by the Board of Regents at its July meeting, the new plan could save the University $3 million the first year and increase to $10 million annual savings by the fourth year. It would take effect in January 2012.
“The idea is that we want to stay competitive, but we want make sure that our plans are similar to what’s being offered by other institutions,” said Lori Ann Vicich, spokeswoman for the Office of Human Resources.
Compared to schools like the University of Michigan, where the school’s contribution is 10 percent of a salary, or the University of Texas’ 6.4 percent, the University of Minnesota’s current 13 percent sticks out.
Vicich said the change will be a chance for the University to “align itself with the market.”
With decreased benefits, some units within the University might find it necessary to increase salaries, Jacqueline Singer, OHR’s retirement director, said.
But that’s highly unlikely in the current budget crunch.
If salaries do go up, it will help recruitment, said law professor Fred Morrison, a member of the University Senate Benefits Advisory Committee and one of many people consulted about the proposal. But he said if the salaries are not “equivalently changed,” prospective faculty will look elsewhere.
The ability to recruit, and even to retain, faculty is a major concern, said Dan Feeney, chairman of the University Senate Retirement Subcommittee.
“We just came out of a very extensive planning exercise in order to be a top public research institution,” he said, “and then all of a sudden now we’re starting to have pay freezes and retirement cuts.”
Changing benefits for existing employees was also considered, but Feeney said that with the current wage freeze and previous reductions, the cut could be too much.
It’s common for such policy changes to only affect new hires, which can create a distinction between employees — and some resentment, said John Curtis, director of the Office of Research and Public Policy at the American Association of University Professors.
Combined with a growing gap in benefits and compensation between private and public universities, some prospective faculty are starting to favor private schools, Curtis said.
“I definitely think it’s going to be a continuing challenge for public colleges and universities to be able to hire the best faculty — and keep them.”
UMN students have traveled to Florida colleges to collaborate with students on various projects.
When UMN students plan for a vacation, having trip cancellation travel insurance is a worthwhile commodity to check out.
Minneapolis Used Cars
Give back to the Minnesota community with a boat donation at boat4causes.org.
If you have been involved in a car accident call a Philadelphia Car Accident Lawyer for a free consultation.