Faculty Senate Benefits Advisory Committee

Issues considered by the committee in 2008-9.

LSU’s most paltry benefit:Retirement

– Most institutions have 2.5-3 TIMES LSU’s State Contribution to ORP Retirement

– The Faculty Senate Benefits Advisory Committee has felt that this is the most egregious example of parsimonius faculty benefits at LSU.

– In 2009, the retirement benefits for Optional Retirement Plan (ORP) employees was arbitrarily lowered by 20%, which translates to the ORP faculty taking about a 1% total Pay Cut vs those in the teacher’s retirement system. Even Chancellor Martin was not pre-warned about this pay cut.

– Why should only the ORP faculty take a pay cut?

Principal Issues, LSU Benefits• Retirement Benefits:

– Teachers Retirement System,– (LSU Employee Contribution of 8% is high with respect

to comparable institutions)– Alabama, 5%; Kentucky, 5%; Georgia, 5%– Arkansas, 6%; South Carolina, 6.5%– Auburn, 5%; Mississippi State,7.25% (State=9.35%)– Iowa State, 4.5%; Texas,A&M, Texas Tech, 6.4%;– Kansas, Kansas State, 5.5%;– Michigan, 5%; Penn State, 6.25%– Oregon, 6%; Oklahoma, Oklahoma State, 7%.

• Average is 5.75%,• LSU employee contribution is 28% higher.

State Retirement Benefits, ORP

– LSU State Contribution to Retirement WAS 6.77%– In 2009, the State Contribution was LOWERED to

5.62% by the State Teachers Retirement board.– 5.62% is 2% lower than standard employer

contributions to Social Security of 7.65%– LSU has no contributions to Social Security– Preliminary examination of comparable Institutions

shows Most institutions to have Social Security contributions of 7.65% matching Employees, plus a significant contribution to a retirement fund.

– Some institutions have ORP State Retirement System contributions as much as 11%, making the total State Contributions 17.5% of salary,

Why the cut to 5.62%?• The State Teachers Retirement System

has “unfunded liabilities” that need to be paid, thus, the ORP faculty have been tapped to help bail out the TRS!

• Every month, retirement funds allocated for each faculty at LSU are sent to the TRS, including significant allocated funds from the ORP members, to cover “unfunded liabilities”!

• ORP deserve a >% of state retirement.

Why choose ORP?• In the 1980’s,there was double digit

inflation for 5 years.

• Those who had retired, for example, after 25years of service, at 2.5% of final salary for each year of service would have had 62.5% of their final salary as a retirement income. With 40 years, 100%.

• In 5 years, they lost half of their buying power, 31% salary equiv., because there was no significant inflation adjustment.

Why choose ORP?• Therefore many faculty (including myself)

switched to Optional Retirement Systems (TIAA) in the 1980’s because there is no guarantee that the state will adjust for inflation. (and I had a generous TIAA from Kentucky Medical Univ., Lexington)

• The state subtracted all prior state contributions for those who switched to ORP, some got 5-6 years of only employee contributions to their ORP when transferred.

Why Choose ORP?• High profile senior faculty hired to boost the

quality of their departments, or administrators hired from the outside usually choose ORP because their time in job may be limited.

• This includes Chancellors, Vice Chancellors, etc.

• In 2009 all of them had their total pay package discriminately reduced by 1%.

• Can we depend on the State to play fair?

State Teachers Retirement• If you plan to stay at LSU your entire

career,

• And there is no possibility of rampant inflation some time in the future,

• Then the State Teachers retirement system is comparable to other State Institutions.

• But there will be inflation, and retirees need contractual protection!

Social Security• Social security benefits at retirement can

range from $20,000-24,000/year

• This can add 20% or more to retirement income.

• Put it in perspective about retirement:– 1000-1200 bottles of $20 red wine/year– 5-10 vacation trips per year (new car, boat)

• Ohio State has no social security, but, has a 14% state contribution to retirement! We have 5.62!

• LSU needs to add 7.65 SS equiv. to the 5.62

Retirement Benefits

• It was clear from comments of those on the committee who had come to LSU from other institutions that they took a big cut in benefits, including LSU’s no state contribution to Social Security.

• One member who transferred from the Univ. of Iowa some years ago, calculated $1,000,000 less than if she stayed in Iowa.

• This is a serious concern for new hires!

Retirement Benefits• Draft Statements from Senate Benefits

Advisory Comm. to the LSU Administration:• “It is imperative, for recruitment and retention

of Quality Faculty, and fairness to long term employees, that LSU take immediate steps to increase the State Contribution to retirement benefits to be in line with comparable State Universities.”

• “At a minimum, the usual state contribution level for Social Security, 7.65%, should be added to the current 5.62% to equal 13.27%.”

Sick Leave Conversion to Leave with Pay.

• Currently there is allowed only conversion of 300 hours of sick leave to salary when retiring.

• The committee recommends that the total of sick leave be converted to salary at the time of retirement. (Some individuals accumulate more than 1 year of sick leave.)

Issues: Health Benefits• LSU Health Insurance Benefits seem to be low to

average with respect to comparable institutions.• But: Long Term Care Insurance needs attention.• Changes in Insurance Benefits have been made this

year to increase benefits and lower premiums. RAL was a member of the committee in the Systems Office that made proposals and selected a vendor.

• This Systems Office Committee, Chaired by Kenneth Krogstad, LLD, has also recently obtained new, more beneficial contracts for life insurance and dental. The committee is currently working on Vision.

• Due to Kevin Cope’s suggestions to the Systems office, we now have representation on the committee that submits proposals and chooses best vendors.

Issues, Insurance• Mr. Ken Krogstad, LLD, and System

Benefits Director Michelle Zeber invited the Chair of the Senate Benefits Advisory Committee, to participate in a committee to recommend a better Life Insurance option for the faculty. An RFA was issued and several companies submitted proposals, which we reviewed.

• The Hancock had a far superior plan than currently available to faculty.

Issues: Equity and Raises• Significant equity discrepancies in intradepart-

mental salaries need to be addressed for Faculty.• Raises are recommended by Department Chairs,

and approved by Deans. (inadequate oversight)– Significant political or personal input from the Chair,

outside the relevant considerations of professional stature and performance can be problematic in these decisions. Deans rarely turn over a Chair’s recommend.

– Committees of members of related departments (Basic Sciences, Humanities, for example) could be established to either 1) review the chair’s recom-mendations or 2) submit parallel recommendations to be considered by Deans to guard for discrepancies.

Issues: Patent Royalties• In the early 90’s, patent authors received 50%

of royalties and payments and LSU 50%. However, Patent and Legal costs were subtracted before any distribution to inventors

• This was supposedly changed in mid-90’s when a new policy was initiated to give 40% to the Authors and 60% to LSU, but not subtract any costs,with immediate distributions.

• This policy was conceived to raise the incentive for patenting, with inventors sharing first dollars.

• Now, LSU is again subtracting legal and patent costs before distribution. This abrogation of the 40/60 split agreement needs revision.

Issues: Legal Benefits• Legal insurance: No legal insurance is available as

a benefit to Faculty.• Particularly problematic to the committee was LSU’s

administrator’s use of State Funds in some known instances of Legal actions against faculty.

• In this case, faculty do not have access to State Money to use a competing firm for defense, or for bringing issues to the Administration not resolvable by the “grievance route”.

• One committee member found that the Univ. of Colorado has a $20,000 fund available for any individual faculty member.

• The committee recommends that a fund of State Dollars be available to faculty through the Ombudsman or other mediation venue.

Tuition for Dependents• LSU has no provision for providing Tuition for

Dependents of Faculty• This is a significant benefit for retention of high

quality faculty, who may be mobile in their careers when they have college-aged children.

• Upon preliminary research, the committee found many Universities provide Dependents’ tuition, and some have exchange tuition programs with other similar institutions.

• This significant benefits issue needs attention!

Parking Benefit?• Most LSU Faculty commute to school

via private automobile.

• This is due to a lack of a workable public transportation system in the city.

• Why, then, if the faculty are obligated to commute to LSU by auto, should they pay for parking? It should be a benefit!

• Many universities do not charge for faculty parking. (Michigan State, e.g.)

Reasons to Address Benefits• Fairness to long term employees.• Recruitment of high quality new faculty

– (some faculty have complained that they were not apprised of LSU’s comparably low State Contributions to retirement when being recruited)

• RETENTION of highly successful faculty.– These are the mobile faculty, those whose careers

are top notch and who can easily obtain offers from competing institutions. They are high profile faculty whose reputations enhance the stature of LSU.

• For higher salary, concomitant with success.• Better Benefits, retirement, health, tuition for dependents

– The proportion of tenured, mediocre (not mobile) will increase with time if the successful ones trend to leave for better benefits.

Members who had input:• Lillian Bridwell-Bowles <lilbrid2@lsu.edu>,• "Dr. Muhammad Wahab" <wahab@me.lsu.edu>,• Frank Cartledge <fcartledge@lsu.edu>,• John L Protevi <protevi@lsu.edu>,• Barbara L Dutrow <dutrow@lsu.edu>,• rogerlaine@gmail.com,• Douglas Carlson <dcarlson@lsu.edu>,• Denise Egea-Kuehne <dekueh@lsu.edu>,• Tara Z Laver <tzachar@lsu.edu>,• Leigh Clemons <clemons@lsu.edu>,• Cecile C Guin <cguin@lsu.edu>,• Robert K Doolos <rdoolos@lsu.edu>,• Radhey S Sharma <rsharma@lsu.edu>,• Vincent J LiCata <licata@lsu.edu>