Paul L. Caron
Dean


Thursday, May 6, 2010

Faculty Pensions on the Chopping Block

Inside Higher Ed, Tough Times For Nest Eggs:

At a time when tenure track jobs are drying up and faculty pay is mostly stagnant, some fear the latest threat to the professoriate will actually be realized years from now. As budgets tighten in states across the country, a number of legislatures are re-evaluating the popular pension plans that have been a key benefit for faculty.

Pension cuts for future faculty have already been approved in Illinois, where recent legislation raised retirement ages and reduced the maximum payouts available to future program participants. ...

Under Illinois’s former system, faculty members at all public institutions and other state workers could retire between the ages of 55 to 62 with full benefits, provided they had worked at least 8 to 10 years, depending on their age. The new law will raise the eligible age for full benefits to 67 with 10 years of service. ... [B]enefits will be based on the average salary of the highest eight consecutive years, as opposed to four. The highest wage earners will be most impacted by a new pensionable salary cap, which will be placed at $106,800, the same as the current cap on Social Security. ...

In New Jersey, college officials are similarly scrambling to figure out exactly how a recent change in pension benefits will affect them. Gov. Chris Christie signed into law a series of pension-cutting measures in late March, but a Rutgers University official said last week they’re still digesting the details. ...

Unsurprisingly, the crippled economy in California has generated renewed debate about whether the state can sustain its three largest pension programs, which cover the University of California, California State University and the California Community College systems. ...

Universities with defined contribution plans have also been reducing benefits. About 13 percent of colleges reduced contributions to retirement plans last year by at least 0.5 percentage points, an AAUP survey found. ...

In the court of public opinion today, there's precious little sympathy for those at the top of the salary pyramid in any industry, and academe is no exception. ... More than 3,500 state workers [in Illinois] have annual pensions of more than $100,000, and the highest pension is $391,000 a year,

https://taxprof.typepad.com/taxprof_blog/2010/05/faculty-pensions.html

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Comments

Switch government pensions to 457 plans, the private sector figured out that defined benefit plans were unsustainable long ago. It's long past time for governments to follow suit.

Government workers are about to find out that governments can spend themselves into insolvency too.

Posted by: LarryD | May 6, 2010 10:11:52 AM

Prof,

Considering that in my field, material science, faculty jobs pay roughly 85% of industrial ones and give you a much better lifestyle, I don't see this as an bad thing. However, my time as an adjunct probably has embittered me as I am strong supporter of abolishing tenure.

Posted by: Kevin | May 7, 2010 7:52:39 AM

One fact that is forgotten in this debate is that the "perks" of academia (tenure, good working environments, pensions) are intended to compensate for the higher salaries that similarly qualified individuals earn in the private sector.

Some would argue that these perks make academics overpaid and that this is just the market adjusting. I think we are about to embark on an experiment to test this hypothesis.

Posted by: Bob | May 7, 2010 8:07:53 AM

Tell that to the people in Greece, LarryD. They want the status quo so bad that they're willing to destroy the government to get nothing out of it.

Posted by: Kaitian | May 7, 2010 8:17:36 AM

It's ironic that the intelligencia is finally waking up to reality.I guess the
ivory tower might yet save itself.but I doubt it.

Posted by: Milwaukeebill | May 7, 2010 8:40:41 AM

The correction in the market isn't going to help the funding of the overgenerous pensions in California with their built in 8% growth assumptions.

Here in Los Angeles Villaigarosa and the City Council have increased city employment by 5,000 while we have lost 600,000 private sector jobs. The future pension obligations are going to be the worst part of this for taxpayers.

Posted by: Army of Davids | May 7, 2010 8:54:35 AM

Gasp!

Next thing you know, those Nazi taxpayers will require profs to spend more than 6 hours per week in class.

The horror, the horror!

Damn those alumni - see what happens once they've seen the scam from the inside!

Posted by: cas127 | May 7, 2010 8:56:38 AM

I wonder how the Ivory Tower will view capitalism after they have finished slaughtering their own sacred hawg. They rail against the very instrument that provides for them. Seriously, in a bad economy, when most families are struggling to keep a roof over their heads, who really gives a crap about gender or ethnic studies.

Posted by: the Colonel | May 7, 2010 11:29:49 AM

Those humanities professors should just be thankful that us engineers subsidize them with our tuition.

Posted by: myth buster | May 7, 2010 12:44:16 PM

My son attends college at University of California and half of his classes are taught by grad students, although there are professors assigned to his classes. I wonder - do you think the profs get pension credit that reflects actual hours worked?

Posted by: Jan | May 7, 2010 6:08:07 PM

All workers that serves his countrymen in any way are worthy enough to have pensions. Government officials should not have a second thought to give away what they deserve. On the other hand, during the time that they are still working, they have taxes and now its the time to reward them.

Posted by: Vicky | May 20, 2010 8:29:27 AM