Inside Iowa State

June 11, 2004

Council's early retirement study goes to administrators

by Anne Krapfl

A report that logs early retirement options at Iowa State's "Peer 11" universities will be shared with university administrators and serve as a starting point for discussion this fall by the Professional and Scientific Council. The report was completed by the council's compensation and benefits committee and submitted to council members June 3.

While the eligibility requirements vary, a cost-absorbing option used at several schools is to convert retirees' unused sick or personal leave to credit to pay health and dental premiums.

The report notes that Iowa State "provides the least competitive retirement benefit" of the Peer 11 members. Iowa State's early retirement program ends this June 30, although those who apply for it had to be qualified as of June 30, 2002. There are no proposals for another early retirement incentive program. Iowa State does have a phased retirement program.

"During a time of downsizing and major restructuring plans, early retirement programs can be a win-win situation for the employee as well as the employer," reads the report. "Iowa State should not be without a retirement incentive in its workforce management tool set."

Acceptable health care coverage is a key consideration for employees looking at early retirement, according to the report's authors. However, a sticking point for providing coverage came in a 2000 appeals court interpretation of the federal Age Discrimination in Employment Act. The court ruled it was discriminatory to coordinate health care benefits with Medicare eligibility. An April proposal this year by the U.S. Equal Employment Opportunity Commission being studied by federal agencies may undo that interpretation.

The report also recommends that any future proposals avoid the "entitlement" reputation of the out-going Iowa State plan. Early retirement is a useful management tool, it says.

System-wide study on hold

In other business, President Kevin Kane said that the council's May request for a comprehensive review of the P&S classification and compensation system in the next two years had been turned down, for now, by university administrators. Following a preliminary review of the system this year by a Wisconsin consultant, the council sought a more in-depth review that would include recommendations for corrective actions.

In a May 27 memo to Kane, vice president for business and finance Warren Madden said university leaders would "defer committing" to such a review next year. He cited several reasons:

• Cost. Under current budget restrictions, the price of such a study (estimated $200,000 to $300,000) likely would have to come from funds that otherwise would be used for salary and benefits increases.
• Timing. The Board of Regents, State of Iowa, will announce later this summer study topics for possible regent-wide collaboration. If human resources is on the study list, pay and classification systems at the separate schools could be affected. Madden wrote that it makes sense to wait and see what's on the list before committing to a major study.

Madden noted that additional resources for salary increases would allay some of the expressed frustration with the P&S system. More state money for salaries is a goal of President Gregory Geoffroy and the Board of Regents, State of Iowa.

He said staff in human resource services have made several suggestions about the P&S system that will be looked into, including a formal plan for building career ladders around classifications with a history of progression by employees, the feasibility of adding pay grades to the existing classification system, and a plan to do exit interviews with P&S employees and gather other data that would help measure ISU's competitiveness in relevant markets.

Council members elected in March were seated at the end of the meeting. The council's next meeting will be its annual planning retreat in early August. A date has not been set.

Summary

A P&S Council report looks at early retirement options offered by Iowa State's "Peer 11" universities and notes Iowa State provides the "least competitive retirement benefit." The report will be sent to the administration and discussed by the council.

"During a time of downsizing and major restructuring plans, early retirement programs can be a win-win situation for the employee as well as the employer."