MSU offering early retirement

Little interest shown in plan

By Robb Murray

MANKATO — Minnesota State University is offering an early retirement incentive to faculty members in hopes that it will alleviate impending budget woes and keep them from trying more drastic measures.

The program, called the Board Early Separation Incentive, is being offered as one way the university can deal with what could be a disastrous budget year come 2012.

While it’s still early and the numbers could change, budget projections predict a state deficit of $4 to $7 billion. MSU’s percentage of that would be roughly $5.8 to $10.3 million.

On top of that, MSU President Richard Davenport announced last week that the university is considering a concept known as “retrenchment” that, if ultimately enacted, could lead to faculty layoffs or full-scale elimination of programs.

The retirements are among the first efforts to save money, and so far only three faculty members have applied for the program. About 20, however, have expressed interest in putting together some kind of retirement plan, although it may not be on MSU’s ideal timetable.

If all 20 retire early, the university could save about $2 million. But some have asked about pushing their retirements back a year.

Rick Straka, MSU’s vice president for Finance and Administration, said the university had hoped more employees would opt to retire in May. Don Larsson, MSU’s Inter-Faculty Organization representative, said his understanding was that the university was hoping for 60 retirements.

But Straka said that, even if faculty members wait a year — which would bump them up to the next budget cycle where cuts would have to be made when money is already tight — the university still will save money. It just won’t be as much or as soon. The alternative is having to pay them, which is contrary to the program’s intent.

“If we can incent someone to leave, and they’re leaving of their own decision, that’s a much more positive environment than telling someone who wants to be at MSU that they no longer have a job here,” Straka said.

The BESI program offers different levels of incentive depending on which department a faculty member works in.

In category A — which is made up of programs where faculty cuts are most likely — faculty members who have at least five years of service in the Minnesota State Colleges and Universities system, and are at least 55 years old can retire and receive one full year’s salary and benefits.

Programs in category A include aviation, anthropology, gender and women’s studies, human performance, marketing, music, nursing and theater and dance.

The programs in category A are the most vulnerable to staff cuts. Some have a history of falling short of enrollment goals. Some made the list because of an analysis that factors in the number of credit hours they generate and how many students are enrolled.

Such an analysis can hurt certain programs, however.

“In nursing there’s a lot of one-on-one instruction, so they produce fewer credits,” Larsson said.

Category B includes program where, if people retire, their positions will be replaced. The incentive offers retirees 100 percent of the difference between the salary of the retiring employee and the salary of that person’s replacement (e.g. if the retiring faculty member earned $100,000 annually and a new hire would earn $70,000, the incentive amount would be $30,000.)

Category C exists for other options, and this is where a lot of the activity has been since the administration made its plans known.

Only three people applied for the program as it was presented. Others wished to defer retirement for a year.

The incentive plan was approved by the Legislature and the MnSCU Board in anticipation of next biennium’s financial situation.

Metro State University isn’t using the program at all. Southwest Minnesota State University is offering the retirement plan to all faculty. Moorhead State University has already announced — and is going through — retrenchment.

MSU, meanwhile, recognized years ago that there would be a lot of retirements coming up through its faculty ranks and has been setting money aside to pay severance.

Straka said the university has about $2.5 million set aside and will tap that pool if it must to pay for early retirements through the program.

As for retrenchment, Straka said the university must announce twice that it is considering it. And if programs are to be eliminated, notice would be given in March that a program would be eliminated by fall of 2011.

Straka said he didn’t know of any programs being slated for elimination.

The university has also made cuts in non-academic areas. Every non-academic area, he said, made cuts of 10 percent or nearly 10 percent, including grounds, business office, financial aid, the Campus Hub, University Advancement, student services and athletics.

“The original plan was to save about $8 million,” Straka said.

A lot could happen between now and crunch time. The Legislature could raise taxes to solve the shortfall. And the share of the state budget that goes to higher education could vary somewhat depending on how much the Legislature gives to K-12 education.