UNIVERSITY PARK, Pa. — In September, based on a specific set of criteria, Penn State will offer retirement-eligible employees University-wide the opportunity for voluntary retirement.
"As part of the University’s strategic resource investment initiatives, Penn State has prepared a Voluntary Retirement Plan to be offered to faculty and staff who meet specific eligibility criteria,” said University President Eric Barron. “Participation in the Plan is entirely voluntary. This Plan will allow Penn State to provide a substantial benefit to eligible faculty and staff who choose to participate, and will allow units across the University to be active in addressing budgetary and ongoing workforce challenges.”
Approximately 1,270 faculty and non-academic staff members who meet the criteria will be offered the opportunity to participate in the Voluntary Retirement Plan (VRP). That total encompasses about 590 faculty in academic appointments, including research assistants and academic administrators, such as assistant deans and department chairs. Approximately 340 eligible participants are from Commonwealth Campuses, including more than 200 faculty and over 130 staff. Those who elect to participate in the program will be offered a one-time, lump sum payment of 100 percent of the employee’s annual base salary.
A letter and application packet will be mailed to the eligible faculty or staff members on Aug. 31 to their home addresses. Once informed of the program, eligible employees will have a 30-day application window, between Sept. 1 and Sept. 30, to make their irrevocable decision.
While the application period is the same for both, there are two effective dates of retirement. Staff who select to participate in the VRP will be able to select a preferred date of Dec. 31, 2016, or June 30, 2017. Faculty will have an effective retirement date of June 30, 2017.
A later effective retirement date for faculty choosing to participate in VRP is being offered to build in the timeframe necessary for the proper vetting and hiring of qualified candidates. If business needs dictate, staff members may be asked to change their preferred retirement date. However, the choice to retire will be irrevocable for all who apply.
The eligibility criteria of the VRP are generally modeled after Policy HR54, which considers years of service as a basic qualification.
Strict eligibility criteria were developed through extensive collaboration between the University’s executive leadership and the academic and business unit leaders based on several factors.
The list of eligible participants was developed following lengthy consultations between the executive senior vice president for Business and Finance and Business and the provost, and academic deans and business unit leaders from across the University. Eligible candidates were selected based on many factors, including the business needs of the University, as well as to ensure that educational and research activities are not interrupted. In certain cases, the eligibility criteria were slightly modified because of the feedback received from academic and business leaders.
- For non-academic staff, VRP participants must be 60 years of age, have 15 years of consecutive regular full-time service as of Sept. 30, 2016, or be any age and have 35 or more years of consecutive regular full-time service as of Sept. 30, 2016.
- For non-academic staff in administrative support positions, regardless of their business unit, college or campus, VRP participants must be 60 years of age, have 15 years of consecutive regular full-time service as of Sept. 30, 2016, or be any age and have 25 or more years of consecutive regular full-time service as of Sept. 30, 2016.
- For faculty, VRP participants must be 62 years of age, have 15 years of consecutive regular full-time service as of Sept. 30, 2016, or be any age and have 35 or more years of consecutive regular full-time service as of Sept. 30, 2016.
Certain academic and business units were given special consideration or have been excluded altogether from the plan. The College of Engineering, for example, has slightly different qualifying criteria based on the staffing needs of the college. Some academic or business units have been excluded, including those positions that are externally funded, such as the Applied Research Laboratory. Technical services positions and the College of Medicine are also excluded.
No plans exist to offer the VRP again. However, scaling back staffing through attrition is not unfamiliar to the University. A voluntary retirement package was offered in recent years in the College of Agricultural Sciences, in Penn State Outreach and in the Penn State Dickinson School of Law, as well as at targeted campus locations. Those instances were strategic decisions based on financial issues, as well as enrollment issues for some areas.
Voluntary retirement offers are not unfamiliar to the University, nor to its counterparts in Pennsylvania and the nation. In fact, some of the 14 state-owned schools have previously offered voluntary retirement packages. As an example, Indiana University of Pennsylvania in spring 2013 offered an incentive program for its faculty and coaches.
Within higher education overall, it's increasingly common. While the details of such plans vary from one institution to the next, they all are designed to lower institutional costs through attrition and to better streamline the use of scarce resources.
In June 2012 the University of Pittsburgh offered a similar program. More than 350 employees took advantage of the early retirement package, saving Pitt $16 million; and Ohio University implemented an early retirement plan during the past academic year. It received an unexpected participation rate of 25 percent, which is expected to save the university about $10 million annually.