Paul L. Caron

Monday, July 18, 2016

Harrison:  University Of Florida Cancels Sick-Leave Payouts, Sparking Faculty Retirements

Florida Logo (GIF)Jeff Harrison (Florida), Charity for the Haves and Administrative Stipends:

My university, in a jaw-drooping exercise of hubris, just up and unilaterally terminated payment of part of compensation already due employees. This compensation was in the form of a pay out for unused sick leave.  (As an aside (note the parentheses) there should not be sick leave payouts. It is the ultimate class-based benefit. Why? Guess which folks in the University are least likely to use sick leave? You've got it—elitist professors and high level administrators who are then able to cash in for upwards of 100K while staff people account for every hour.)

Ok, the plan was crazy and designed so the haves get even more. Still, it was part of the compensation package, it vested after 10 years ...

If you retired by June 30th you got the pay out (or is that "pay off") and a small handful of people took the dough who were likely to retire anyway.  But some just were not quite ready to retire. They wanted the dough but they also wanted to keep their humongous salaries for a little longer.

What do to with the obvious deserving-of-more-more-more people?  You've got it. Extra paid leave or special new duties as senior envoy/assistant for the purpose of  . . . . . Well that is kind of the catch. The new higher salary is for doing what they were doing or were expected to do. Yes, it is another situation in which professors who are working at full capacity all of a sudden aren't at full capacity when there is some money on the line. As in, "sure I have time to teach an extra course," or "sure, I can be special envoy to revise the environmental law program." Come on! Hit me with one of those   "administrative stipends."

Of course we know that haves always get more especially when the givers are also haves. So, how do the haves cut side deals to make up for the lost sick leave pay out? Use your imagination but do not doubt for a second that it occurs.

I reached out to Florida Dean Laura Rosenbury, and she provided these comments, which I am posting with her permission:

Thank you for alerting me to Jeff’s post. I am happy to provide more context. The University of Florida, as a whole, had a program whereby eligible employees would receive payment for up to 200 hours of unused sick leave upon retirement. The University decided, several years ago, to end that program on June 30, 2016. At the College of Law, five full-time faculty members retired as of June 30, 2016, and four of those five were eligible for the sick leave pay-out. In addition, five full-time staff members retired as of June 30, 2016, and all five of them were eligible for the sick leave pay-out. I do not know how the expiring sick leave pay-out program affected the retirement decisions of the eligible faculty and staff members, but I assume it played some role.

Of particular relevance to the tax community, Mike Friel was one of the five faculty members who retired as of June 30, 2016 (but he will be continuing in an adjunct capacity). In addition, one other member of the tax faculty has entered into an agreement to retire as of June 30, 2017. (I do not currently have permission to share any identifying details.) As part of that retirement agreement, the faculty member will be paid an administrative stipend, and Jeff has let me know that he opposes that stipend. As of now, no other faculty member has requested to retire as of June 30, 2017.

One final point:  none of the payments approached $100k and the administrative stipend does not approach $100k.  In other words, all of the payments were under $100k.  Indeed, they were all under $80k and most were much less than that.

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I am intrigued by jason's notion that HR can write these benefits so they can be removed. I think he is probably right but it seems to me that it's either a gift which can be taken away or compensation. At UF it has been paid for years. To me it creates a rock and a hard place situation. If there was no binding promise, the University was simply handing out gifts. That would be a odd admission. If it is compensation then it is an amount due just as payment to any supplier or services. I do not understand the in between spot that seems to have evolved. In any case at UF, you have to be here ten years to qualify, Hence the notion of vesting. And, until 15 days ago, the payments had been made. Were the gifts or earned income?

Posted by: Jeffrey harrison | Jul 18, 2016 8:48:06 PM

Let me say one thing up front. Dean Rosenbury is the best dean ever. In the deaning Olympics she gets the gold metal. There are a couple of misunderstandings and one non disclosure. My estimate of 100K was not based on law school payouts. I do not know them other than my own which would be 75K and I am far from the highest paid law professor. I was thinking of the med school and 300K plus administrators. My point on the stipend is that anyone who was fully employed and then takes on additional duties must do less of what they were doing or they were loafing. I am pretty sure the person she speaks of, but cannot disclose, is not a loafer. It just seems like a crazy situation when your employer can offer you an extra part time job without also allowing for what you will no longer be doing. I firmly believe the stipend is partially in lieu of the payout but I could be wrong. I will know I am wrong if Dean Rosenbury discloses that the amount of the stipend is significantly different from the payout that would have been available.

Posted by: Jeffrey harrison | Jul 18, 2016 6:03:52 PM

Interesting. My university has a somewhat similar benefit; when you retire you can use your balance of unused sick leave to purchase health insurance. Of course, faculty rarely use their sick leave (unless they have the misfortune of being struck with a major incapacitating illness), so this benefit is informally pitched to new hires as being of significant potential financial importance. (As an aside, as at many other public universities, our package of fringe benefits is much less creative and generous than at wealthier private universities; in a former teaching position, I received subsidized parking; extra life insurance payouts if I died overseas on university business; and all the flash drives I could use from the supply room). But in this case I never really assumed that I could count on such a (strange?)sick-leave benefit existing by the time I retire in 25 or so years. It seems like such an odd arrangement that it would certainly be “fair game” for administrative or legislative revision or annulment at some time in the future, even “retroactively”—especially since HR is very careful not to officially promise that the program will be in existence in the future, and so I never imagined that I might have a “vested right” to a cash payout. I also really doubt that many people “rely” on the existence of such a benefit at the time of hiring, though perhaps if one is very close to retirement a payout of several 10s of thousands of dollars becomes more salient, and may cause you to delay retirement, or take retirement, or otherwise change one’s position.

Posted by: Jason Yackee | Jul 18, 2016 2:34:34 PM