Wednesday, March 14, 2007

 

Retirements

IHE and the Chronicle both have articles glossing a new report from the AAUP, “Survey of Changes in Faculty Retirement Policies 2007,” which looks at the ways colleges and universities are dealing with (or not dealing with) faculty retirements.

A key background fact is that tenure, as originally defined in the AAUP's red book, was supposed to expire at the customary retirement age. In 1994, mandatory retirement was banned from higher education, so a work benefit that was supposed to be relevant for a set number of decades morphed abruptly into a lifetime benefit. As health care costs have mushroomed, and life expectancies have as well, this is a meaningful distinction. In unionized settings, where salaries are substantially a function of seniority, the folks who once would have been forced out at 70 are typically the most expensive.

(In a connect-the-dots moment, the same day's issue of IHE featured an article titled “How to Help Adjuncts.” Discerning the cause-and-effect relationship was left to the reader.)

Apparently, only about a fifth of colleges and universities across the country have started to take serious looks at their retirement policies. Having tried to start that conversation at my own college, I can't blame them. The accusations fly fast and furious when you move from generalities to specifics. (Hell, on my own blog I'm routinely – and falsely -- accused of ageism, notwithstanding that the median age of my new hires has been in the high 40's. Anything to prevent an actual conversation, I guess.)

Unsurprisingly, the AAUP takes the position that any new solution should involve more resources. Either straight-up buyouts of tenured faculty, or 'phased retirements' in which people get reduced workloads towards the end, with the institution bearing the cost. (This strikes me as tricky, since a reduced workload for a tenured professor would happen in one of two ways: either hire adjuncts to pick up the slack, or hire a new full-timer. If it's the former, the exploitation continues. If it's the latter, I don't see a cost savings. Since medical benefits are a primary cost driver, and they'd still be paid in full to both the phased retiree and the new hire, any savings to the institution would be marginal at best.) The report correctly notes that when a college gets around to addressing the retirements issue, it's usually in the context of looking for budget savings, which may not always lead to the wisest policy.

I'll add a few factors to the picture.

The great wave of community college building in the United States occurred in the 1960's. When a college is first built, it has to hire a whole bunch of people quickly. After the initial rush, hiring can slow or even stop for extended periods, depending on turnover, enrollment trends, and finances. This is pretty much what happened at a great many cc's – a rush of hiring lasting into the early 70's, with much less after that. Basic arithmetic suggests that much of that founding cohort is now close to, or at, or beyond retirement age. (A 30-year-old hired in 1970 turns 67 this year.) That means that many cc's have weird generational gaps in faculties, and some very top-heavy salary distributions. Those top-heavy salary distributions actually become self-perpetuating, since the only way to cover that many people at the top of the scale is to replace what would have been new hires with adjuncts. More dollars spent in column A (salaries for existing full-timers) means fewer for column B (new hires). The dots connect.

The implications for academic administration are fairly straightforward. If very few faculty were hired to the full-time ranks for a couple of decades (according to the report, the average age of tenured faculty in the US is 54), then the pipeline behind that founding cohort will be predictably thin. Sure enough, average ages of college Presidents and VPAA's have been climbing rapidly for some time. When colleges don't have the pipeline to hire from within, they have to hire from without. Administrators who might once have returned to faculty now move on to other colleges as administrators. Folks who regularly complain about administrators not having faculty backgrounds are invited to connect these dots.

I'm of divided mind on retirement buyouts. Morally, I object to a change in the law amounting to a windfall for some folks who got tenure when it was understood to have an expiration date. The goal in removing the mandatory retirement age was not to vest early hires with a proprietary interest in hanging on forever, or to increase their leverage to blackmail retirement buyouts. I'm also uneasy with the idea of paying for non-work. That said, I see strong pragmatic reasons to try to move out some of the highest-paid employees, especially in cases where the allocation of faculty doesn't match student demand. Replace a few folks at $100k with a few at $50k, and the savings add up. (That's assuming you do full replacements, not phased retirements in which you replace one set of benefits with two.)

There's also a question of eligibility. A retirement incentive, however defined, can be offered either across-the-board (with a few bright line criteria, like minimum x years of service) or case-by-case. If it's across the board, you don't have issues with discrimination, but you do have issues with losing stars and keeping low performers. If it's case-by-case, you need to think long and hard about what, exactly, you're rewarding. “Professor Goldbrick, your decades of parasitic non-performance have resulted in a massive cash payout. Professor Superhuman, you still have to work for a living.” That just doesn't seem right. And of course, anything offered case-by-case will invite the usual charges of favoritism, discrimination, flawed process, etc.

Finally, there's the issue of duration. A one-shot incentive (Special Offer! One Year Only! Jump Now or Forever Curse the Fates!) may work too poorly or too well. It will also condition those who aren't quite ready to jump to wait around until the next 'one-shot' rolls around, which it might or might not. I had one professor who finally retired last year admit to me that he hung around longer than he really wanted to, hoping for a pot of gold at the end of the rainbow. This is perverse all around.

Conversely, a sustained incentive isn't really an incentive; it's an entitlement. Good luck rolling that back!

The old '70 and out' rule may have generated some sympathetic characters, but on balance, it strikes me as preferable to the dilemmas we have now. From an administrative perspective, the great virtue of '70 and out' is that you can predict who will go when. You can plan budgets, make hiring decisions, and foresee those annoying cases in which half of a department goes at once. Instead, we have to fly by the seat of our collective pants, adjuncting-out the few positions that do open up to pay the ever-higher salaries of folks who have no intention of leaving vertically.

Has your college found a sensible and humane way to handle this issue?



Comments:
After the initial rush, hiring can slow or even stop for extended periods, depending on turnover, enrollment trends, and finances. This is pretty much what happened at a great many cc's – a rush of hiring lasting into the early 70's, with much less after that.

"Enrollment trends" seems almost a euphemism, for "the baby boomers came through, resulting in massive barrel-scraping followed by an abject collapse of the academic job market".
 
Actually, I'm a big fan of phased-in retirements. At my school, it takes 2-5 years to replace a tenured member (yes--that's how slooooowlly bureaucratic it is). So, if you have a 3 years of phased in retirment, by year three (ideally), you have the senior faculty in their last year, maybe teaching 1 or 2 courses per term and wrapping up with their doc students, while the "newbie" is starting (1 or 2 courses per year).

It's a much better situation than having a gaping hole in your department, say, for 3-4 years.
 
At my school, people are so exhausted that they try to retire as soon as they're eligible and can figure out how to afford it.

But seriously, in real numbers, how many of your faculty are actually teaching into their 70s? (It can't be so many, since the age expectancy for males born today is only 75 or something.)
 
We have faculty who would make more money if they retired than they do working - but they still work. Can't understand that one.

We have phased retirement and it is a good thing. There is a great deal of institutional memory that is lost with each faculty member who leaves. Having them phase out is a gentler way to lose them as a resource.

I also think it's better for the faculty - to go from full time professoring to no work at all would be such a shock to the system, I think it would kill some of the older faculty. Phasing them out also makes retirement more attractive - they knock themselves out for one semester and then get one semester off. After five years of that, most of them have developed other interests and are happy to stop teaching.
 
"It can't be so many, since the age expectancy for males born today is only 75 or something."

This is too low, but more importantly it's not relevant. The correct question is, what is the life expectancy of men and women who have reached age 65? Those are the ones you want to push into retirement, and their life expectancy is 86, I believe, according to the IRS unisex tables.

Very insightful analysis. But why doesn't Medicare pick up those medical costs for the oldsters?
 
Instead of mandatory retirement, maybe some sort of Logan's Run-esque program can be instituted?
 
What is the real differential in health care costs between an active older employee and the same aged retiree? Or does the accounting change from the college to the state for those retiree health benefits? Or do cc retirees in your state not recieve any health benefits?

I know retirees where I am don't get the same benefits as active employees at the university, but they do get benefits. My father is doing phased retirement in another state (in his late 60s) and he never mentioned reduced health benefits when he was telling me about the pros and cons.
 
Keyser Sose writes:
"But why doesn't Medicare pick up those medical costs for the oldsters?"

Perhaps you mean "why don't the taxpayers pick up those medical costs?"

I am not averse to acknowledging society's debt to those that have provided for us, for so long, but please don't talk about it as if "someone else" (medicare) could pay this bill and we wouldn't have to.
 
I haven't seen (noticed) this being a problem at my high-intensity R1 university. Two observations:

Retirement benefits: Most faculty under 50 are not in a pension/annuity plan, they are in a defined contribution 401K-like plan that vests immediately (the pension plan takes more years to vest than the duration of the tenure clock), so they choose the 401K-like plan).

Phase-out: It is quite common for our faculty, post-retirement, to get rehired and paid on a part-time basis to continue teaching 1-3 courses/year. This is at the discretion of the department chair, but is done quite often and helps smooth the transition. All parties involved are usually happy.

I don't know how our retirement medical benefits work (too young to have looked yet!)
 
When faculty here retire, their health insurance payments are paid by the state, rather than the college. So we see a savings, although the taxpayers don't.

I'm not sufficiently versed in the details of Medicare to address that.

Every year the number of faculty teaching into their 70's increases. We have a huge bubble now in their mid-60's, so I think we're just seeing the tip of the iceberg.

My impression is that top-heaviness in age is a bigger problem at schools lower on the prestige food chain. The R1's have high turnover, which tends to keep young blood flowing in.
 
The life expectancy of professionals is also higher than that of the general public, so you can't use demographic data without attention to such details.

I think the real message is that a major part of the problem is the way we fund health care in this country. The rate of inflation for benefits is far in excess of inflation for salary, and contributes to the decision to hire adjuncts over full-time people.

Also remember that one reason for stretching out the retirement age was to keep those people paying taxes into the system, and thereby delay the drain on Medicare and Social Security.
 
"Perhaps you mean "why don't the taxpayers pick up those medical costs?""

Taxpayers are picking up the expense in any event. So the question becomes, should it be at the state or federal level? If you push it off on the Feds, that may leave more money for education at the state level.

Speaking as a taxpayer, I don't think you should do that. Education expenses should stay in the state. But if I were an administrator I would want to know more about whether it's feasible.
 
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