NORMAN – To address serious fiscal constraints resulting from deep funding cuts, University of Oklahoma President David L. Boren today presented a $20 million budget reduction plan for the University. The proposal was approved by the OU Board of Regents.
Of the total, participation by eligible OU faculty and staff in a Special Voluntary Retirement Incentive is expected to yield $10 million in savings. In addition, another $10 million in cost savings is estimated to be realized through elimination of vacant faculty and staff positions and reduction of department budgets, which includes decreases in purchasing and travel.
The budgetary outlook for the University – both near and long term – is the most critical it has been in many years, Boren noted. The University has absorbed more than $80 million in cuts and unfunded fixed cost increases since 2008, he said.
“It is only prudent for us to take steps now to prepare for likely budget cuts due to the almost $1 billion state budget shortfall,” Boren said.
Because one of the largest drivers of cost is personnel, OU Administration explored a number of alternatives for seeking cost reductions in this area. After thorough analysis of and research into best practices of other institutions, a Special Voluntary Retirement Incentive was determined as a significant element in the overall solution to reduce costs and maintain a balanced budget. University Administration developed OU’s Special Voluntary Retirement Incentive plan after exhaustive research and detailed analysis of similar incentives implemented at other institutions across the country.
The program will help the University realize much-needed savings, optimize the operational efficiency of administrative and academic units, and provide a one-time opportunity for eligible University employees to receive a financial incentive to voluntarily retire from service at an earlier date than might otherwise have been planned.
The program is designed to provide departments and academic units with an effective vehicle to address fiscal constraints, achieve a long-term reduction in payroll and benefits costs, and minimize involuntary terminations.
Those who qualify for the program are full-time benefits eligible faculty and staff on the Norman payroll who are age 62 or greater and meet normal University retirement age and service requirements as of the effective date of December 31, 2015. Depending on the department or unit of the eligible employee, effective retirement dates are expected to occur between June 30, 2016, and December 23, 2016, although institutional objectives and organizational priorities may require certain participating employees to extend their retirement date beyond December 23, 2016. Approval must be obtained from the President or his designee to extend a participant’s retirement date beyond December 23, 2016.
Participants will be paid in a single lump sum, less all deductions for local, state and federal taxes legally required to be withheld, no later than one month following their date of retirement. Full-time benefits eligible faculty and benefits eligible salaried staff will be paid an amount equal to 75 percent of their annual base salary in effect on their retirement date not to exceed $100,000.
Full-time benefits eligible support and service staff who are not exempt from overtime rules will receive their current hourly rate in effect on their retirement date times 1,560 hours not to exceed $100,000.
No portion of the lump sum payment is eligible for salary deferral under OU’s retirement savings plans or considered compensation for purposes of calculating the University's contribution to the Oklahoma Teachers Retirement System.
The University will fully subsidize medical insurance premiums for current retirees and employees eligible for retirement prior to January 1, 2016. The University will subsidize medical premiums for employees who become eligible for retirement on or after January 1, 2016, at the percentages previously established for retirees as outlined in the OU retiree medical insurance subsidy matrix.
Special Voluntary Retirement Incentive participants will not be eligible for reemployment in a benefit eligible position at OU for three years after retirement. However, they may return to work at the University in any part-time (10 hours or less weekly), non-benefits eligible position 60 days after retirement.
Those who are paid with external grant or contract funds or who were given notice of their involuntary separation from the University prior to the effective date will not be eligible for the program.