Pulaski Tech alters early retirement

Savings put at $2M a year to deal with enrollment decline

Trustees for Pulaski Technical College approved changes on Monday to an early-retirement policy that is expected to save the two-year school about $2 million annually.

The changes came after a year of discussions within the faculty and staff senates and the administration, said Sherry Young, associate vice president of human resources and employee relations. The groups had discussed all possibilities, including doing away with early-retirement options altogether, she said.

"We felt that was not the right step at this point," Young said. "We've been making so many changes to remain viable, but we wanted something that protects our employees as much as possible."

Colleges and universities across the state have gone their own routes in offering early-retirement packages. Some have gotten rid of the incentives for tenured faculty, as did the University of Arkansas at Little Rock, which cited falling revenue and enrollment. Others, like Northwest Arkansas Community College, offer a stipend in lieu of an entire package.

Pulaski Tech, based in North Little Rock. has been facing dwindling enrollment since its peak in 2011 with 11,946 students. Northwest Arkansas Community College became the state's largest community college this fall after Pulaski Tech's enrollment dropped to 7,648 students, according to data from the Arkansas Department of Higher Education.

The low enrollment numbers mean that Pulaski Tech isn't seeing as much revenue from student tuition and fees, prompting the school's officials to look for ways to save more money.

And one idea was changing the policy on early retirement to make it more attractive.

About 26 Pulaski Tech employees are currently eligible to enlist in the voluntary plan, Young said, adding that they were "dedicated employees" who would "literally have to be carried out."

At Northwest Arkansas Community College, trustees offered for the fourth consecutive year a $10,000 buyout to full-time faculty and staff members who are at least 55 years old on or before June 30 and have worked with the college for five years, said Steven Hinds, the college's executive director for public relations and marketing.

Such an employee must be paid from state funds -- not a grant -- and has until April 15 to apply for the incentive, Hinds said.

The Bentonville-based college started offering the retirement incentives in July 2012, in part because of slower enrollment, he said. The school tallied some 8,528 students in fall 2011 and 7,709 in fall 2015, according to the Higher Education Department. The incentives helped to balance the budget, Hinds said.

About 10 employees have taken the incentive annually, which has saved the college $500,000 since its start, Hinds said. The incentives don't include payment for health or life insurance premiums, he said.

Within the University of Arkansas System, an administrative memorandum lays out the rules for voluntary early retirement for tenured faculty and nontenured faculty and staff members. The systemwide policy allows campuses to choose which payout method is a better fit.

Under the policy for tenured faculty members, the employee must be at least 55 years old with 15 years of continued service on the tenure track or in a tenured position. A university must then calculate its net savings in personnel costs and can then offer benefits, including a stipend or reimbursement for major health and life insurance.

The policy for staff and nontenured faculty members is almost the same, requiring that the employee be at least 55 years old and have 15 years of continuous full-time employment.

The UA System board takes up each employee's early-retirement agreement in executive session during its quarterly meetings.

Pulaski Tech's revised policy allows a full-time employee to choose between two options should he decide to retire early. Both options -- which start July 1 -- call for the employee to have worked at least 10 years of continuous service with the college.

Under Option A, retirees who are 55 and older can stay on the college's group health policy until age 65, the age the employee would be eligible for Medicare, documents show. The board allowed the age limit to drop from 70 to 65.

In that plan, employees will pay the full amount of their health premiums, along with those for their dependents. Employees can also opt for basic group life insurance and must select all coverage within 31 days of retirement, according to the board documents.

Under Option B, all full-time employees age 60 and older are eligible for early retirement with basic health and life insurance premiums paid by the college if the age and years of service to Pulaski Tech total at least 70. The college will shell out for the premiums until the retiree turns 65, and the savings come from the five-year difference.

This second option raised the age requirement from 55 to 60 but added the years-of-service provision.

Option B allows the inclusion of spouses and dependents, but the retiree will be responsible for paying those insurance premiums. Should the retiree die, spouses can continue to buy coverage until eligible for Medicare, according to the board documents.

The Arkansas State University System has a similar policy, but it allows retirees to have health insurance for themselves, spouses and unmarried dependents at half of the total combined employee and employer premium costs. Life insurance and accidental death and dismemberment benefits are also available to the leaving employee and spouse equal to the amount at the time of retirement at no cost until Medicare eligibility, according to the ASU System.

On Monday, Pulaski Tech's board also unanimously approved its first-ever retirement policy, requiring employees wishing to retire at the end of the fiscal year or semester to notify the department head and human resources by March 1. An employee who wants to retire at the end of December must notify the department leader and human resources by Oct. 1.

That policy will allow the college to plan for staffing needs and allow employees to get continuous benefits or coverage, said Young, the school's associate vice president of human resources and employee relations

"This is a brand-new policy that's being put into place just to cover our bases," said Trustee MaryJane Rebick.

Young had gone before the board's Finance Committee earlier this month to present the changes to the early-retirement program, Rebick said. The committee wanted to keep the "extremely lenient policy" intact, she said.

But the committee deliberated on the choice between making the changes to the policy and possibly slashing some of the college's other services, which could have included layoffs, Rebick said.

"This was well within the parameter of what everyone else was doing," she said. "We're like any other starved agency. We're just trying to make do with what we have."

Metro on 01/26/2016

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