Present: A. Crigler, W. Dehning, M. Dudziak, F. Feldman, J. Gates, T. Habinek, N. Hanel, V. Henderson, A. Hendrick, P. Heseltine, B. Jansson, C. Julienne, H. Kaslow, M. Kinder, B. Kosko, J. Kunc, R. Labaree, T. Levi, S. Lund, J. Manegold, A. Mircheff, J. Morse, P. Nosco, J. Nyquist, D. O'Leary, W. Petak, N. Petasis, A. Pope, G. Salem, G. Schierle, H. Schor, M. Schuetze-Coburn, W. Thalmann, W. Tierney, W. Weber, M. Weinstein.
Absent: G. Davis, W. Dutton, M. Kann, D. Kempler, B. Knight, R. Koda, L. Laine, N. Lutkehaus, M. Mazon, K. Price, N. Stromquist.
Guests: J. Aronson, J. Ball, K. Chu, T. Dickey, E. Glogow, S. Golomb, P. Gordon, P. Hadley, H. Hansen, N. Kanal, M. Levine, D. Raish, H. Slucki, W. Wolf, J. Zernik.
President William Tierney called the meeting to order at 2:55 p.m.
Agenda Item #1: Approval of Minutes
The minutes of the November 17, 1999 Senate meeting were approved unanimously.
Agenda Item #2: Announcements
President Tierney said that the Provost was unable to attend the Senate meeting due to a conflict with another meeting. He then made the following announcements:
(a) Senate web-site: Due to difficulties in getting help from the ISD for the Senate web-site upgrade, it was recently decided to seek outside help. As a result, a research assistant from the School of Engineering was recently hired and has already made significant progress. The new web-site should be ready by the beginning of the year.
(b) Compensation and tenure at the Medical School: The draft report of the Task Force should be available soon and it will be posted on the web-site. This report has implications for all faculty and will be considered at the January Senate meeting. Prior to the Senate meeting there will be a special informational meeting to discuss this report. On behalf of the Medical Faculty Association, Senator Kaslow announced that there will be a meeting on January 4 to discuss this issue and that Professor Thalmann, the chair of the Task Force was invited to participate.
Agenda Item #3: Proposed Retirement Policy (Consideration of tabled motion about Resolution 99/00-02)
In reintroducing Resolution 99/00-02 about a Proposed Retirement Policy, President Tierney said that the Executive Board has made one amendment to the resolution that was presented at the Senate meeting of November 17, 1999. In order to address possible problems with recruiting senior faculty, the number of years required for qualification has been reduced from 15 to 10.
The amended resolution distributed at the meeting was as follows:
Resolution 99/00-02: Proposed Retirement Policy
WHEREAS, an academic community should treat its faculty with respect and dignity, at the time of retirement,
BE IT RESOLVED HAT, the Academic Senate authorizes the Executive Board to work with the
Benefits Committee on the draft of a policy that reflects these principles, and requests
that any significant changes be brought before the Senate, and
1. endorses the principles proposed for a USC Retirement policy,
2. recommends that these same principles be extended to all faculty who have worked
for 10 years and reached the age of 59 & 1/2; and
3. requests an annual report on the costs and benefits of the plan.
President Tierney then introduced Professor Jim Manegold, chair of the Retirement Sub-Committee of the University Benefits Committee to discuss the proposed plan. A number of hand-outs describing some enhancements to the proposed plan, several illustrative potential examples and other related information were also distributed to the senators. Referring to these hand-outs Professor Manegold summarized the plan as follows:
Section I: Healthcare for all retired faculty. All faculty with a minimum of 10 years of service upon retirement would be eligible to purchase for themselves and eligible dependents any university-offered health-care or dental-care plan at COBRA rates from age 59 & 1/2 until age 64. From age 65 and older the retirees will receive the Retiree Health Stipend, currently $50 per month, and would be eligible to purchase Medigap insurance at USC group rates for life. As an example, these benefits calculated at the pre-tax rate for a faculty member retiring at age 62 with a spouse age 60 and an assumed life span of 20 years, would have a value of $83,007.
Section II: Flexible Transition Period. In order to facilitate the retirement process and offer flexibility during the transition period, retiring faculty with a minimum of 10 years of service and age 59 & 1/2 or older would be eligible for a position of "Senior Professor", having a reduced workload. They will also be provided with of a Flexible Retirement Option, taking up to two years to transition from full work to full retirement. Retirees will also be able to apply for research funding on a competitive basis.
Section III: Additional benefits for tenured faculty. All tenured faculty with a minimum of 10 years of service upon retirement would be eligible to purchase for themselves and eligible dependents any university-offered health-care or dental-care plan at employee rates from age 59 & 1/2 until age 64. From age 65 and older the retirees will no longer receive the Retiree Health Stipend of $50 per month, but would be eligible to purchase Medigap insurance at half the price of USC group rates for life. Eligible dependents would be eligible for Medigap insurance at
USC group rates for life. In a similar example as above, the overall benefits calculated at a pre-tax rate for a tenured faculty member retiring at age 62 with a spouse age 60 and an assumed life span of 20 years, would have a value of $134,441.
Professor Manegold then invited comments and questions from the senators. One senator said that there are many aspects of the plan that are not well defined and it is not possible to vote for a "likely" senario without all of the details. The senator also raised the issue of continued vs interrupted service and suggested that the eligibility should be based on the total number of years served, regardless of whether it was continuous or non-continuous. Another senator replied that the plan actually does not specify that the years served need to be continuous and suggested that it is not necessary to include all possible details in such a plan. However, after additional suggestions were made for the need to clarify this issue in the plan, a friendly amendment on this point was accepted.
A senator asked about the possibility of negotiating individual retirement deals with the university if this plan is adopted. Professor Manegold replied that the university cannot have multiple retirement plans. Since the proposed plan is based on health-care, it will be the same for all eligible faculty. Vice Provost Levine, made additional clarifications of this issue saying that this would indeed be the only retirement plan of the university and that most people would retire under this plan. He also said that once this plan is adopted it would not be possible to make any other special retirement deals. He further noted, however, that in some cases the administration may allow early termination of faculty outside the retirement process under terms that are satisfactory to both the faculty and the university.
Another senator pointed out that the Senate and the Committees dealing with this issue have only an advisory role. Based on these recommendations the actuaries and lawyers will then determine the final details of the plan. He then thanked Professor Manegold for his efforts and urged the approval of the proposed plan.
Referring to the fact that the resolution does not require that the final plan be brought back to the Senate for a final consideration, another senator suggested that it is likely that the plan would be changed significantly, particularly as the actual costs are calculated for all retirees. He made the observation that as proposed this seems like an unstable plan and requested that the resolution is amended to require another review of the final plan by the Senate.
A senator from the Medical School suggested that some aspects of the plan, such as the eligibility of clinical faculty, require further study and that there was inadequate time for the proper consideration of the proposed plan. For this reason he asked to postpone the final consideration of the plan by the Senate for fixed amount of time to allow a more detailed review. Another senator responded that if there is additional delay in voting for this plan this would mean that the plan would not be adopted for another year, since there will not be sufficient time to finalize it and present it to the Board of Trustees. Meanwhile, faculty that have to retire without this plan may face difficult health-care coverage problems resulting from pre-existing conditions, etc. He then urged the endorsement of the plan, characterizing it as "humane".
Additional support for the proposed plan was expressed by another senator that compared it to the previous proposal by the Retirement Task Force, which included a buy-out plan based on faculty salaries and which he characterized as "inconsistent with reality". He noted that while such features may be possible at universities with large endowments, like Chicago, Stanford or CalTech, such buy-outs are no longer needed due to a dramatic increase in the valuation of retirement stock market funds. As an example he pointed out that during the past six years some funds like TIAA/CREF had returns of over 170%. Therefore, faculty that choose to retire no longer face a dramatic loss of income. Responding to these comments a senator noted that the only plan under consideration by the Senate is the one presented by Professor Manegold. Another senator added that while the current values of the stock market are high, some people believe that this is a bubble and it may burst in the future. The same senator asked about the legal details of the plan that are said to be over 250 pages and he indicated that we should not vote for this without looking at the final plan. The university’s counsel, Todd Dickey, replied that these details are not available since the actual plan is not drawn yet.
Some reservations about the plan and the process involving its development were expressed by a senator that said that the Retirement Task Report never came before the Senate. Presumably a decision was made not to deliberate on the Task Force recommendations. Since the present plan is not considered complete, it was further suggested to have the Task Force members work with the legal representatives to develop the final proposal. Professor Thalmann, Immediate Past President of the Senate replied that discussions of the Task Force proposal had taken place in the University Benefits Committee and noted that some aspects of the Task Force proposals were incorporated in the current plan.
Expressing support for the proposed resolution, another senator pointed out that unlike other recommendations of the Senate this one is more complex and requires extensive negotiations as well as input from lawyers and financial advisors of the university. Indeed, a rather long deliberative process already took place that took into account the proposals of the Task Force and the Benefits Sub-Committee, resulting in the current proposal. The senator further noted that the new draft of the proposed plan and the accompanying documents clarify the potential value of this plan to the faculty. The only major component of the Retirement Task Report proposal missing from this plan is the buy-out option. The senator noted that while a buy-out plan may have merit particularly in some Schools, it may still be possible to provide incentives to certain faculty to retire under the early termination circumstances mentioned by Vice Provost Levine. He further pointed out that in terms of overall value, the proposed plan seems to be similar with the buy-out plan, being in the range of 1-2 times the faculty salary. However, since the proposed plan is based on health-care, something that everyone needs, it is more fair and the pre-tax nature of these funds allows for the essential use of tax dollars as part of the value to the faculty.
A senator asked the administration representatives what would happen if the plan is not adopted by the Senate. General counsel Dickey replied that if the faculty do not want such a plan, there will be no plan presented to the Board of Trustees.
Additional senators took the floor to express support for the resolution as well as the need to amend it. Disagreeing with one part of the resolution, one senator expressed his support for retaining a distinction among tenured and non-tenured faculty, as described in the plan presented by Professor Manegold.
At this time, the questions was called and the debate was ended by a vote of 16 in favor and 5 opposed.
Referring to the changes of the resolution suggested by several senators, President Tierney indicated that these can be accepted as friendly amendments. Consequently, the resolution was amended accordingly as follows:
Resolution 99/00-02: Proposed Retirement Policy
WHEREAS, an academic community should treat its faculty with respect and dignity, at the time of retirement,
BE IT RESOLVED HAT, the Academic Senate authorizes the Executive Board to work with the Benefits Committee on the draft of a policy that reflects these principles, and requests that any significant changes be brought before the Senate, and
1. endorses the principles proposed for a USC Retirement policy,
2. recommends that these same principles outlined in Section III of the proposed plan be
extended to all faculty who have worked for 10 years (continuously or not continuously)
and reached the age of 59 & 1/2; and
3. requests an annual report on the costs and benefits of the plan, and that the final
plan be on the agenda of the Senate during the fall term of 2000 for further
consideration.
The resolution was then approved with 20 in favor, 4 opposed, and 3 abstentions.
President Tierney thanked those involved extensively in the development of the proposed retirement plan, including Professors Fleischer, Thalmann, Manegold and Aronson, as well as Vice Provost Levine and Vice President Dougherty.
The meeting was adjourned at 4:05 p.m.
_______________
Respectfully Submitted,
Nicos A. Petasis
Professor of Chemistry
Secretary General of the Academic Senate