The university will suspend contributions to faculty and staff retirement funds for Fiscal Year 2010 in order to help close the university’s projected $8.9 million budget gap. They change will go into effect July 1.
The plan, which will save the university $7.4 million, was approved by the Board of Trustees on May 15.
Any university employee who is over 21-years of age and has worked for the university for over one year is eligible for the university’s retirement plan, Vice President for Human Resources Scot Bemis said.
Faculty Budget Committee (FBC) Chairman Prof. Peter Conrad (SOC) said in a phone interview that it is impossible to determine how much money an individual employee might loose with this move because the university’s contributions to retirement funds are percentages of an individual’s salary.
Conrad did say that the university matches 8 percent of an employee’s salary for faculty and staff members under 50 years-old, and 10 percent for those over 50.
The FBC chose to suspend retirement fund contributions instead of adopting an across the board pay cut. Conrad said the committee chose to suspend contributions because it gave those affected more freedom.
“People can double their own contributions to their retirement funds if they want,” Conrad said. “This is the least unpleasant from a set of unpleasant options.”
University Vice President of Budget and Planning Frances Drolette said while this budget cut “certainly reduces the deficit substantially,” it is impossible to know how many more budget cuts the university will have to undergo to close the FY 2010 budget gap, particularly because the endowment return rate for the upcoming fiscal year remains uncertain.
When the $8.9 million budget gap was projected in the spring, the projected endowment return for the university was at -30, however, since that time the return rate has improved to -20.
“That’s just one factor going into our projections,” Drolette said. “But if they endowment return stays where it is, there will be a positive impact.”
Enrollment revenue and financial aid numbers also contribute to the projected budget gap. Because financial aid is a priority for the university, every year Brandeis sets aside a certain amount of tuition revenue for that purpose.
Drolette said the university will not know if they have accurately projected how much money will be spent on financial aid (or if they have accurately projected the budget gap) until the fall when students arrive on campus.
For now, the university has developed a wait and see approach.
“We have no concrete plans for additional budget cuts at this moment,” Drolette said. “If, in the fall, we discover more cuts need to be made, we will engage in the process with the appropriate committees of determining what those cuts might be.”
