Correction appended: An earlier version of this story incorrectly identified retirees’ health care premiums.
University administrators recently announced changes to the retirement health care plan for faculty and staff that will alter when University employees will become eligible for retirement and the contribution to retirees’ health care premiums that the University makes on the date of their retirement.
With the new plan, which is expected to be implemented in 2013, faculty and staff members will become eligible for retirement through a points system that takes into account their age and number of years at the University. Additionally, the University’s financial contributions to retirees’ health care premiums will gradually increase based on the length of service of the faculty or staff member.
According to a Feb. 14 University press release, the new plan will save the University about $9 million by 2020 and $165 million by 2040.
Laurita Thomas, the University’s associate vice president for human resources, said the University has an obligation to be as careful as possible with its funds, while ensuring quality service to community members.
“The University is under significant fiscal and resource constraints,” Thomas said. “We have goals to be as fiscally prudent with the resources we have as possible.”
The University’s Committee on Retiree Health Benefits made recommendations last summer for the change in health benefits during the summer of 2010, according to the press release.
For the new plan, the committee made suggestions that faculty and staff members said were especially important including decreasing financial strain on current retirees, continual coverage for retirees’ dependents and providing increased retirement contribution based on length of service, according to the press release.
The CORHB also proposed to offer as much time as possible before the change was enacted, the press release states.
The changes suggested by the CORHB were to be made within 15 years, but revisions accelerated the plan to take place in an eight-year span, Thomas said. Though the plan was accelerated to immediately put less pressure on the University’s budget, Thomas said the concern to allow enough time for adjustment wasn’t ignored.
“It is still a significant amount of notice to our staff about the change and time for them to plan for that change,” she said.
Thomas also said the University held forums last year that were open to faculty, staff and current retirees to offer their input on the priorities in the new retirement plan.
“Nobody wants to make these kinds of changes,” she said. “but we had lots of input about how to make them.”
Ed Rothman, chair of the Senate Advisory Committee on University Affairs and a professor of statistics, served on the CORHB that developed the plan. In an e-mail interview, Rothman wrote that faculty members understood the need for the change.
“This is not very welcome for many of us, but a necessary evil of a poor economy,” he wrote. “Other campuses have cut retirees’ health care for new employees entirely.”
Rothman added that he thought the committee that put the proposal together did the best it could given the state of the economy and prohibitive health care prices.
“The constraints were real — our economy is not terrific and the cost of health care is what it is,” he wrote.
When examining comparative health plans at other, similar universities, Thomas said administrators found that the University is more liberal with their plan.
“We have been significantly generous in (our retiree health plan) compared to our market peers,” she said. “So we have an opportunity to continue a quality benefit for our faculty and staff in their retirement, but to preserve it, we needed them to share more of the cost.”
Thomas added that the retiree benefits for some staff is paid for by tuition and that University is trying to control the recent increase in tuition, which was 1.5 percent for in-state students and 3 percent for out-of-state students this year.
Thomas said though the plan was only announced last week, she has already received mixed reactions through e-mail responses.
“They’re disappointed that we have to make a change,” she said. “but they recognize that it’s a sound approach to making the change.”