The Executive Committee of the Board of Visitors met on Monday, January 14, 1991, at 3:00 PM, in the Board Room of the New Administration Building. The following members of the Committee were in attendance:
George Dragas, Jr., Rector
Gene R. Carter, Sr.
James K. Hall
J. Michael Pitchford
Robert E. Washington
Brenda T. Williams
Absent from the Committee were:Richard F. Barry III
Ann H. Kilgore
Also present from the Board of Visitors was:Beverley R. Lawler
Also present were:James V. Koch, President
Dana D. Burnett
Paul J. Champagne
Elizabeth M. Clarke-Heltz
George Coram
Robin Cowherd
Stephen P. Daniel
Myron S. Henry
Ruth C. Jones
Patrick B. Kelly
Donna W. Meeks
Richard A. Staneski
Edward A. Staylor, Jr.
Philip Walzer
APPROVAL OF MINUTES OF THE EXECUTIVE COMMITTEE MEETING OF AUGUST 30, 1990
Rector Dragas called the meeting to order and asked for approval of the minutes of the Executive Committee meeting of August 30, 1990. Upon a motion duly made and seconded, the minutes were approved as distributed.
RESOLUTION TO APPROVE THE RETIREMENT INCENTIVE PROGRAM FOR FACULTY
The Rector called on President Koch to present the resolution. President Koch provided background information on the retirement incentive program. He explained that the University needs such a program in order to provide the University with increased flexibility, to assist faculty members who are nearing retirement, and to generate savings to the University by leaving some positions vacant and replacing others at a lower salary level. The proposed program, as provided by statute, must be voluntary and the participants must be at least 60 years of age and have at least ten years of full-time experience. Further, the program will only be available for full-time, tenured faculty members. The maximum incentive that may be offered for any faculty member may not exceed 150 percent of the faculty member's final year's salary, and it must be paid over a period of at least two years. The total incentive payments made to all faculty members cannot exceed one percent of the University's total general fund appropriations for faculty salaries and benefits in any given year. Currently for Old Dominion University, that would equal approximately $350,000. The program should be designed to appeal to the differend needs of faculty members. For example, one faculty member may be interested in receiving a large cash stipend and retire completely from the University; another faculty member may desire a lower cash stipend, but continue employment at the University on a part-time basis. Part-time employment assumes that the University would not pay the usual fringe benefits package to the faculty member, except for the employer social security contribution.
The President presented three hypothetical scenarios to illustrate how the early retirement incentive program would work. He then distributed a slightly amended version of the program proposal, based on input from Richmond, and asked Mr. Kelly to explain the amendments. Mr. Kelly explained that language relating to health insurance benefits was stricken because it may not be applicable to all program participants.
President Koch indicated that this program is designed as a discretionary one for which all applicants may not necessarily be accepted. The program calls for the development of a set of criteria relating to the University's need to retain certain faculty, it's ability to replace a faculty member and the cost of doing so, and it's future expectations about a particular department or discipline. The President explained that the University will communicate to faculty in advance a well developed set of criteria and will make every attempt to eliminate inequitable circumstances between and among individuals.
President Koch asked Paul Champagne, Chairman of the Faculty Senate, to comment on the proposed program. Dr. Champagne characterized the faculty's response as "a little less than enthusiastic," but commented that he personally thought it to be a good idea.
President Koch emphasized that the University's proposal is designed to complement the Governor's early retirement program for all state employees, including faculty. The Governor's program will be available for state employees who are at least 50 years of age and who have served the State for at least 25 years. However, state employees will only have a limited opportunity to apply for the Governor's program. The University's program, on the other hand, will be available to faculty members on a continuing basis.
Upon a motion duly made and seconded, the following resolution was unanimously approved:
RESOLUTION TO APPROVE THE
RETIREMENT INCENTIVE PROGRAM FOR FACULTY
RESOLVED, that the Executive Committee of the Board of Visitors approves the following Retirement Incentive Program for Faculty, to become effective upon approval by the Governor and Attorney General, as required by law.
Retirement Incentive Program for Faculty
Objective and Intent:
The Old Dominion University Retirement Incentive Plan for Faculty has been designed to provide incentives for voluntary retirement of faculty. It is the needs of the University and not the availability of funds, however, that will determine whether the retirement funds available in any year will be allocated. Only non-classified teaching and research faculty are eligible to participate in the plan, and participation is entirely voluntary. The program will be evaluated annually. There is no assurance that the program will be extended beyond any given year. Moreover, the program is neither to be construed as a fringe benefit, nor as an entitlement. Only the Board of Visitors has the authority to adopt, modify, amend or repeal the plan. No changes, if any are made, shall apply to individuals who retire prior to the action to adopt, modify, amend or repeal.
It is the responsibility of the participant to determine how the election of this retirement plan will effect his or her retirement benefits. Participants should contact the Office of Employee Benefits in the Department of Personnel Services for assistance in retirement planning.
I. Objectives
A. To provide the University with increased flexibility in the allocation of faculty positions among the disciplines in order to better meet enrollment demands.
B. To facilitate the hiring of new faculty members who have credentials and experiences which will best support and enhance the current mission of the University.
C. To help alleviate the financial hardship of retirement which currently prevents some faculty who would like to do so from retiring early.
II. Participation Eligibility
To be eligible to participate in this retirement plan, a participant must:
A. be at least sixty (60) years of age;
C. have at least ten (10) years of full-time service with ODU; and
D. agree to comply with any additional criteria established by the Board of Visitors of Old Dominion University.
Retirement under this plan shall be subject to the above eligibility criteria and shall mean the conclusion of full-time employment with the University by the participant, and such conclusion shall require: (1) the withdrawal from active membership in the Virginia Supplemental Retirement System (VSRS) by VSRS members, or (2) the cessation of contributions to the Optional Retirement Plan (ORP) author-ized by §51.1-126 of the Code of Virginia.
III. Source of Funds and Annual Cost
Each year, an amount up to one percent (1%) of the University's General Fund appropriation for faculty salaries and benefits may be allocated to the Retirement Incentive Plan for Faculty, and the cost of retirement contracts awarded for the year will not exceed this amount.
IV. Selection of Participants
Criteria for selecting participants from among the eligible applicants will be developed for the President's review and approval by the Council of Senior Academic Deans chaired by the Vice President for Academic Affairs, and will be based on the objectives stated in Section I above. Applications for retirement must be reviewed by the candidate's department chair and dean, who may wish to comment and recommend. The Vice President for Academic Affairs will recommend selected participants to the President, who reserves the right to reject an application for any legitimate reason. The President, after his review, shall forward applications to the Board of Visitors for final approval.
V. Retirement Decision Contract
The Retirement Decision Contract permits eligible faculty members to enter into an agreement to retire at a specified age in the future in return for which the University will provide the individual a retirement payment. The contract conditions are as follows:
A. The participant will contract to retire at an age not earlier than age 60. Retirement may take place at the end of an academic term or at a time mutually agreeable to the faculty member and the University.
B. An eligible faculty member should submit his or her application for retirement at least 90 days prior to the effective date of retirement, and the University will notify the applicant within a reasonable time of the action taken on his or her application. Qualified applicants are encouraged, however, to file their applications as early as possible to ensure full considera-tion. (A sample application letter is attached.) The retirement contract must be signed by the applicant within thirty days of the notification of approval. Once the contract is signed it is irrevocable.
C. Applicants who are approved for retirement will receive a retirement cash payment upon retirement at the contracted age.
D. In the event that a faculty member becomes permanently and totally disabled after signing the retirement contract but before actual retirement, the University will be responsible for providing the retirement payments under the contract. However, in the event that a faculty member dies after signing the retirement contract but before actual retirement, the University shall not be liable for any retirement payments under the contract.
E. The maximum allowable amount of the retirement incentive payment will not exceed 150 percent of the participant's base salary during the 12 months immediately preceding the date of retirement. The actual percentage allocated for each participant accepted into the plan may vary depending on the number of eligible applicants, the availability of funding, and the needs of the University at the time the individual's contract is negotiated. The retirement payment will be paid over a minimum of two years. Payments are subject to federal, state, and FICA tax withholding.
F. Subsequent to retirement, under this plan, faculty members may wish to continue their active affiliation with the University, but with reduced responsibilities. For them, part-time employment may be available. Part-time employment may be negotiated with the department chair, subject to department needs, budgetary considerations, programmatic needs and the dean's approval. Part-time employment may take many different forms. For example, retiring faculty may desire to continue teaching, but discontinue serious research service. For those faculty, perhaps a one-third time commitment would be appropriate. On the other hand, perhaps the faculty member would like to devote a portion of his/her time to research, but to discontinue teaching and service. An appropriate contract for this activity may be possible. The variety of part-time arrangements possible would be dictated by the University's needs, the faculty's availability and interest, and the financial resources available to the University for this purpose.
VI. Collegial Privileges
A retiree remains a respected member of the University community retaining many of the collegial privileges that were available while still employed full time. For example, faculty would retain their academic title(s), library privileges, entitlement to purchase a parking decal, use of university facilities requiring a valid university identification card, university identification card reflecting their retired status, and other non-pecuniary benefits.
VII. This policy must be reviewed by the Office of the Attorney General and approved by the Governor as authorized by the Code of Virginia, §23-9.2:3.1.
SAMPLE LETTER OF APPLICATION
Sample letter from faculty member to department chair giving notice of application for consideration to the Retirement Incentive Plan.
Dear _______________:
This it to notify you that I wish to apply for the University's Retirement Incentive Plan. The effective date for my retirement would be Month/Date/Year. I have reviewed the plan as stated in the University Policy and I meet the participation requirements as outlined in Part II.
I have, or will have, determined how the election of this voluntary retirement plan will effect my retirement benefits by contacting the University's Employee Benefits Office, in the Department of Personnel Services, or some other counselor of my choice.- -
Should you wish to discuss this request, please let me hear from you.
Sincerely,
cc: Academic Dean
Vice President for Academic Affairs
RESOLUTION TO APPROVE THE ESTABLISHMENT OF ADDITIONAL OPTIONAL RETIREMENT PLANS TO THE VIRGINIA RETIREMENT SYSTEM
The Rector asked President Koch to present the resolution. President Koch explained that the resolution would make available optional retirement plans in addition to VSRS and TIAA/CREF. It would not cost the University more money, nor would it disadvantage faculty members in any way. It simply provides the faculty member more options from which to choose.
Upon a motion duly made and seconded, the following resolution was unanimously approved:
RESOLUTION TO APPROVE THE ESTABLISHMENT OF ADDITIONAL
OPTIONAL RETIREMENT PLANS TO THE VIRGINIA RETIREMENT SYSTEM
RESOLVED, that the Executive Committee of the Board of Visitors amends the optional retirement plan to include the offerings of the following companies for its eligible employees as described in Title 51, Chapter 3.2, §51-111.28 of the 1950 Code of Virginia, as amended, effective April 1, 1991.
1. T. Rowe Price
2. The Great-West Life Assurance Company
3. Fidelity Investments Institutional Services
4. Teachers Insurance and Annuity Association/College Retirement Equities Fund
5. Metropolitan Life Insurance Company/METLIFE Resources
6. The Variable Annuity Life Insurance Company (VALIC)
The plans will be administered in accordance with the guidelines promulgated by the Virginia Retirement System and approved by the Secretary of Administration for the implementation and administration of optional retirement plans.
BE IT FURTHER RESOLVED, that the Board of Visitors does not, by this resolution, make any assurances or assume any responsibility regarding any plan's financial condition or the plan's provision of benefits.
RESOLUTION TO APPROVE THE TEACHERS INSURANCE AND ANNUITY ASSOCIATION/COLLEGE RETIREMENT EQUITIES FUND NEW ACCOUNTS, WITHDRAWALS, AND ROLLOVERS
The Rector asked President Koch to present the resolution. President Koch explained that TIAA/CREF, the largest private pension system in the United States, has the greatest proportion of faculty members nationwide as members; approximately 80 percent of the ODU faculty are members. The plan is a "portable" one in that it can be moved from one institution to another. It also gives the faculty member the ability to direct their investments. Recently TIAA/CREF has offered opportunities to invest in different kinds of funds, to roll over funds into different areas and to make withdrawals as allowed by the law. The resolution would grant Old Dominion's faculty to take advantage of such options. Again, it would incur no liability on the University or the Board.
Upon a motion duly made and seconded, the following resolution was unanimously approved:
RESOLUTION TO APPROVE THE TEACHERS INSURANCE AND ANNUITY
ASSOCIATION/COLLEGE RETIREMENT EQUITIES FUND NEW ACCOUNTS,
WITHDRAWALS, AND ROLLOVERS
RESOLVED, that the Executive Committee of the Board of Visitors approves any and all TIAA/CREF investment accounts, the provision for lump sum or partial withdrawal of funds on termination or retirement, and the transferability of accumulated TIAA/CREF funds to another optional retirement plan.
BE IT FURTHER RESOLVED, that the Board of Visitors does not, by this resolution, make any assurances, or assume any responsibility regarding the plans' financial condition or the plans' provision of benefits.
RESOLUTION TO APPROVE A NEW BOARD COMMITTEE STRUCTURE
Action on this issue was postponed until the April board meeting. Pursuant to the Bylaws, 30 day's notice will be given that the Board intends to revise its Bylaws.
RECTOR'S REPORT
The Rector announced that Mr. J. William Howell has verbally expressed his intention to resign from the Board of Visitors as of February 1, 1991. He is reluctantly resigning because his he has been assigned to Japan for three years. The Rector asked Board members to recommend, either to him or to Mr. Washington, in-dividuals to nominate as Mr. Howell's replacement on the Board. Mr. Dragas will forward nominations from the Board to the Governor.
PRESIDENT'S REPORT
TIAA/CREF - The Rector called on President Koch for his report. President Koch reported on recent issues relating to the TIAA/CREF optional retirement system. He explained that VSRS is a defined benefit system, whereby the individual is entitled to a specific benefit based on the number of years served at a given salary. TIAA/CREF, on the other hand, is a defined contribution system, whereby the benefit received is based on how well funds are invested. This difference has become a critical issue in the last six months.
Governor Wilder, as part of last year's budget and the more recent budgetary cutbacks, changed the assumption that the Commonwealth makes about the rate of return earned on investment dollars in the VSRS from six percent to eight percent. Consequently, the Commonwealth is no longer obligated to contribute as many dollars to VSRS. As a result, the amount of money being placed in TIAA/CREF was also decreased since, historically, both funds received the same contribution amount.
Because of the difference between the two retirement programs, contributing less money to VSRS should not affect the retirement stipends of individuals enrolled in that program. However, it could affect the retirement income of individuals enrolled in TIAA. Many TIAA participants have protested and, as a result, the Governor has agreed to restore the state's contribution to TIAA for the remainder of this fiscal year. However, he also said that he would study the issue to determine the appropriate percentage contribution.
Tuition and Fee Comparisons - President Koch commented that Old Dominion University has the lowest tuition and fees, as of July 1, among the six doctoral institutions in the Commonwealth.
NCAA Conference - President Koch indicated that he, along with almost 250 other college presidents, attended the National Collegiate Athletic Association meeting. The convention voted to impose rules that would reduce time demands on student athletes, length of competitive seasons in more sports, the number of coaches in many sports and the number of dollars spent on recruitment. Several academic issues, such as setting the minimum grade point average for eligibility, were deferred until next year. One development which the President said gave him cause for concern, however, was the vote to give Division IA schools, 106 in number, legislative autonomy. Such autonomy would allow these institutions to increase the number of scholarships they offer and the value of those scholarships. Although the schools' representatives say that this is a freedom they will not exercise, one proponent of the resolution was overheard saying, "Let the big dog eat."
Program Elimination and Financial Exigency - The President commented that he was charged by the Board at the November meeting to revise the current policies dealing with financial exigency, program elimination and severance of faculty. Provost Henry was directed to devise a process, including the input of faculty, that would produce revised policies in a timely fashion. He asked Dr. Henry to provide an update of the Committee's progress.
Dr. Henry indicated that he has received an interim report from Dr. Grif McRee, Associate Dean of Engineering and Technology and chair of the committee appointed to revise the policies. The interim report suggests that the Committee has made progress in shortening the time frame and simplifying the guidelines associated with program curtailment. At the same time, the revised policy calls for reviewing programs in a rigorous, timely and fair manner. The Committee is in the process of reviewing the severance policy which, based on Dr. Henry's conversations with individual committee members, has provoked "challenging and spirited discussion." He hopes to have all policies ready for the Board's approval at the March 11th Executive Committee meeting.
Paul Champagne, who serves as a member of the Committee, commented that he would like to have an opportunity to share these policies with the Faculty Senate before the Board of Visitors formally adopts them. He will present them to the Senate in February so that they are ready for the Board in March.
Budget Update - President Koch briefed the Board on the current budget situation. He distributed a handout which illustrates that the Commonwealth has the largest budget deficit among the fifty states. Current estimates indicate that Virginia's deficit stands at approximately $2 billion. He asked Mr. Staneski for a more detailed briefing.
Mr. Staneski commented that the University last year began with a $55 million general fund budget. Governor Baliles submitted to the legislature a budget which included "management savings", or budget reductions, of approximately $2.6 million. When Governor Wilder took office and Virginia's revenues began to shrink, the University experienced another budget cut of $3.6 million for each year of the biennium. During the fall the University was asked to submit a contingency plan for another 5 percent cut, or $2.4 million. Now, included in the Governor's budget which has been submitted to the General Assembly, is another 3 percent reduction, or $1.4 million, which the Governor may exercise depending on year-end revenues. The University will be informed whether this will happen by August. The cuts amount to a 15-20 percent reduction in the University's general fund support during one year.
There are additional reductions that one could say are hidden in the budget. One is the early retirement plan, to the extent that the University will not benefit from the early retirement of our faculty since those funds will return to the state. In addition, inherent in the Governor's budget is a furlough plan which, as submitted, requires 12 days of furlough for each state employee. An amendment will be submitted that will reduce that to six days for each employee. Savings from furloughs will also revert to the State.
With no further business to be discussed, the meeting was adjourned.
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