IPFW March 29, 2010 Sustaining New Synergies Initiative. March 29, 2010 France A. Córdova
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1 Sustaining New Synergies Initiative March 29, 2010 France A. Córdova
2 Regional Campus Challenges for 2010 Strategic planning in an era of budget cutting Review of roles and missions (ICHE, Trustees) Review of compensation/benefits
3 Commission for Higher Education (ICHE) Regional Campus Roles and Missions March 2010 With increasing admissions standards at the Indiana University and Purdue University flagship campuses, and exploding enrollment at the community college level, Regional Campuses will play an increasingly important role in serving Hoosiers with high quality, low-cost baccalaureate degree programs, filling a vital niche in Indiana s system of higher education. Policy paper gives direction for a more efficient and effective role for campuses, as well as expectations.
4 Defining Characteristics of Purdue and IU Regional Campuses (From IPFW ICHE Regional March 29, 2010 Campus Roles and Missions) Profile Primary educational responsibility Primarily serve commuting students 4-year baccalaureate degree programs Graduate programs Primary geographic responsibility Governance Admission Remedial education Research focus Student residences Selected masters programs to meet regional needs NE Indiana/Greater FW (IPFW) Board of Trustees; Purdue WL administration encouraged to develop accountability measures Core 40 in Fall 2011 Defer to Ivy Tech Related to teaching or regional needs Limited to 10% of enrollment (primarily serve commuter students)
5 Expectations of Regional Campuses (From ICHE Regional Campus Roles and Missions) Degree completion: Should significantly improve completion rates Affordability: Decisions about resource allocation should improve affordability Synergy with two-year sector: Collaborate with Ivy Tech Eliminate duplicative associate degrees Eliminate remediation programs Develop seamless transfer programs Develop systematic dialog to increase effectiveness and efficiencies of campuses Increase synergies with main campus (Purdue WL) Meet needs of regional economies put these at forefront of success agenda
6 Purdue University System Response Agreement among Chancellors and Presidents on value of Purdue brand to campuses and value of campuses to Purdue WL: Access Success Demographics Public support Legislative support Workforce development Economic development
7 Purdue University System Response Campuses agree to work more in concert with each other and with WL ( Northern Corridor Consortium ) Educational opportunity (e.g., shared core curriculum for ease of transfer) Technical workforce development (with Ivy Tech and Purdue extension) Economic development (utilizing technology centers, certification programs) Press release about concerted effort among the Purdue campuses to grow the economy of Northern Indiana (announced upon approval of ICHE s white paper on campuses, 3/12/10)
8 Sustaining New Synergies Initiative March 29, 2010 A.V. Diaz
9 Governor s Challenge Governor s cut of $150 M from Indiana public higher education institutions $45.5 M from Purdue system-wide (6% of overall appropriation) Distribution (percent of appropriation) 6.7% West Lafayette 6.1% Calumet 3.5% IPFW 0.4% North Central 6.0% Other Line Items
10 Strategies to Achieve Savings Strategic Sourcing Energy Conservation Information Technology Workforce and Compensation Adjustments Administrative Assessments
11 Workforce and Compensation Assessments Retirement contribution Health care program Overtime policy Early retirement incentive Benefits for part-time employees Furlough process
12 Retirement Contributions IPFW March 29, 2010 INSTITUTION EMPLOYER REQUIRED CONTRIBUTION EMPLOYEE REQUIRED CONTRIBUTION Purdue (TIAA-CREF only) 15% 0% Minnesota 13% 2.5% Ohio State 10.5% 10% Michigan State 10% 5% Iowa 10% 5% Michigan* 10% 5% Indiana 10% 0% Penn State 9.3% 5% Illinois 7.6% 8% Wisconsin 5.6% 5% *Voluntary 2:1 match until age 35
13 TIAA-CREF Contribution History IPFW March 29, 2010 YEARS EMPLOYER EMPLOYEE SS WAGE BASE Rate up to SS base Rate over SS base Rate up to SS base Rate over SS base % 10% 3% 5% $ 3, % 10% 3% 5% $ 3, % 10% 3% 5% $ 4, % 15% $ 4, % 15% $ 6, % 15% $ 7, and > 11% 15% $9,000* * Capped at $9,000, currently $106,800
14 Regional Faculty and Staff Salary Comparisons JOB CATEGORY Index to Mean CALUMET IPFW NORTH CENTRAL Number Employed Index to Mean Number Employed Index to Mean Number Employed Faculty Faculty Mid-Level A/P Mid-Level A/P Data Source: Office of Institutional Research July 8, 2009
15 Trustees Position IPFW March 29, 2010 Current university retirement contribution is unsustainable, must be reduced to peer benchmark: 10% employer contribution and, ideally, 5% employee contribution. (Saves $13 M/year on WL campus alone.) Can do this for new employees and be in line with peers. Challenge: Continuing employees value retirement contribution. Yet, in general, salaries are too low compared to peers. Hurts recruitment, national position. Variety of options include: Trustees option: Create 3% merit pool from benefits savings (save remainder for next budget cut) WL administration option: Rebalance to increase salaries, and provide flexibility for employee spending or employee contribution to retirement
16 Benefits of Rebalancing Benefit to the University More sustainable model More competitive salaries Improved recruiting opportunities Benefit to the employee Provides flexibility Provides income opportunity The level of total compensation remains the same.
17 Rebalancing Example* IPFW March 29, 2010 CURRENT PROPOSED DIFFERENCE Salary $ 30,000 $ 31,036 $ 1,036 Retirement contribution $ 4,140 $ 3,104 ($ 1,036) Total compensation $ 34,140 $ 34,140 $ 0 Salary $ 60,000 $ 62,400 $ 2,400 Retirement contribution $ 8,640 $ 6,240 ($ 2,400) Total compensation $ 68,640 $ 68,640 $ 0 Salary $ 100,000 $ 104,218 $ 4,218 Retirement contribution $ 14,640 $ 10,422 ($ 4,218) Total compensation $ 114,640 $ 114,640 $ 0 Salary $ 150,000 $ 156,491 $ 6,491 Retirement contribution $ 22,140 $ 15,649 ($ 6,491) Total compensation $ 172,140 $172,140 $ 0 *Before taxes
18 Annual Tax Implications of Rebalancing* Option 1: Non-Tax Deferred (As Pay) Option 2: Tax Deferred Account SALARY LEVEL NET INCOME INCREASED TAX NET INCOME INCREASED TAX $ 25,000 $ 566 $ 243 $ - $ 62 $ 50,000 $1,362 $ 584 $ - $149 $ 75,000 $2,157 $ 925 $ - $236 $100,000 $2,953 $1,265 $ - $323 $125,000 $3,748 $1,606 $ - $ 78 $150,000 $4,544 $1,947 $ - $ 94 $175,000 $5,339 $2,288 $ - $111 $200,000 $6,135 $2,629 $ - $127 *Based on 30% marginal rate TIAA-CREF eligible employees only
19 Decision Timeline April 8-9 Present balanced operating budget plan for FY 2011 to Board of Trustees SNS proposal will be presented as an information item May Report results of compensation assessments and present implementation plans for SNS initiatives to Board of Trustees Trustees will vote on proposal
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