University News

Finances constrain employee benefits

The U. remains behind most of its peers in annual tuition assistance for the children of employees

By
Senior Staff Writer
Thursday, November 14, 2013

In response to an ad hoc committee report, the University will increase tuition assistance for the children of employees by an amount proportional to percentage increases in University tuition starting July 1, said Provost Mark Schlissel P’15.

But some faculty members believe the change is insufficient. “We’re pleased they’re indexing, but they do not go far enough,” said Professor of Religious Studies and East Asian Studies Harold Roth P’17, who chaired the Joint Committee on Employee Benefits.

Schlissel announced the tuition assistance change along with decisions about retirement benefits and incentives at a faculty meeting last week.

In 2002 under then-President Ruth Simmons, the Tuition Assistance Program was expanded to include all employees that have served four continuous years at Brown. The amount was set at $10,000 per child per year, equal to 36 percent of University tuition at the time, according to the committee’s report.

But steady increases in University tuition and inflation rates over the last decade have eroded the tuition assistance value, which has remained constant at $10,000. The amount now covers only 24 percent of University tuition, leaving Brown near the bottom of the committee’s analysis of 19 peer institutions.

Dartmouth and Harvard — the only peer institutions offering lower tuition aid than Brown — make up for their lack of assistance in other ways, Roth said. Both offer eligible faculty members no-interest loans and increased salaries, meaning Brown ranks last among institutions that provide tuition assistance.

“We’ve been pretty ignorant as to what our status is,” Roth said.

 

Raising benefits?

The committee recommended the administration increase tuition assistance to 36 percent of University tuition, a value “minimally competitive” with Brown’s peers, according to the report. With just over 400 children of employees eligible for assistance, the increase would cost the University roughly $2 million.

In a letter to the ad hoc committee members, Schlissel wrote that to fund the increase in tuition assistance, the University would have to “reduce expenditures elsewhere or find new sources of revenue,” such as decreasing faculty salaries by 2 percent or increasing the cost of tuition by 1.3 percent.

Of the University’s three main revenue sources — undergraduate tuition, funds from the federal government and the University’s endowment — tuition is the most flexible, said Beppie Huidekoper, executive vice president for finance and administration.

But with the University already operating under a budget deficit, significant increases to employee benefits would be difficult to implement, she said.

The University is projected to spend roughly $96 million on employee benefits in fiscal year 2014, a record high, Schlissel said at the faculty meeting last week. That increase would be in line with steady growth over the last decade, documented in University financial statements.

Roth suggested the creation of a voluntary fund for employee benefits to which alums could donate as an example of a way the University could raise funds for tuition assistance.

“I would like to see a more creative rethinking of where the funds come from,” he said.

Schlissel said a major consideration was the fact that tuition assistance is only provided to a subset of the employee population. That money could instead be used to raise employee salaries across the board, he said.

But the University recently revised its childcare benefit to be competitive with other institutions, Roth said. Tuition assistance is “not an unfair gift to an advantaged group.”

“Down the road,” he added, tuition assistance will become an issue for recruiting and retaining faculty members.

The “take-home” salary is a larger issue for recruiting faculty members, Schlissel said. “Very rarely is TAP considered.”

If the administration “thought that increasing the tuition benefit would make Brown a better university,” it would have done so, he added.

Professor of Computer Science John Savage P’88 P’95 P’03 P’05 GP’17 said the recent growth in University tuition is more of an issue than aid.

With tuition growing at “twice the rate of inflation,” he said, “I think we’ve overshot.”

“Institutions will have to moderate the rate of tuition for many years to come,” he added.

Savage said providing benefits such as health insurance and tuition assistance to employees is very costly, and “Brown is considered to be a very good employer.”

Health insurance costs in particular will be an overarching concern for the University’s finances in the coming years, Huidekoper said.

“The incremental cost to Brown of the Affordable Care Act could be millions,” she said. “We’re watching that carefully.”

 

Retiring with ease

The ad hoc committee also reviewed retirement benefits in its report.

Initial worries that too few faculty members were retiring under current retirement incentives sparked the committee’s formation, Roth said.

The current incentive program, announced last December, provides retiring faculty members with a lump sum equal to 1.5 times their salary, $20,000 to help offset costs such as health insurance and annual payments of $2,000 for three years after retirement, The Herald reported at the time.

But after the program ends June 30, no other incentives will be offered, Schlissel said.

Instead, a phased retirement plan introduced in 2010 that decreases a faculty member’s workload and salary over three years is still available, Schlissel wrote in his letter to the committee.

Savage said taxes on the retirement incentives are a concern, and phased retirement plans are more appealing.

Roth said for faculty members “to just go to zero overnight” is not a realistic or attractive option.

“We must allow retiring faculty to have continuity and remain within the community,” Roth said.

The committee proposed creating a center for emeritus faculty members, modeled after Yale’s Koerner Center. The University has since provided an area in the Faculty Club for retired faculty members, though “it’s not really a center,” Roth said.

In his letter to the committee, Schlissel wrote, “We are frankly somewhat skeptical about whether (a center) will be possible in light of the many competing demands we face.”

Another recommendation was for retirees to receive the health benefits of full-time faculty members and to establish “health retirement savings accounts” for employees over 55. But the incremental costs of the various options were “out of the range of financial prudence,” Schlissel wrote.

Roth said all the reasons behind the administration’s decisions were “exclusively financial considerations with minimal regard to community impact.”

The University must “strike a balance between salary and benefits,” Schlissel said.

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  • Aloaner

    I’m glad the University is looking at the inadequacy and lack of competitiveness of TAP, but I’m surprised it didn’t also consider the Employee Education Program, which offers a woefully small amount of tuition assistance for employees seeking to further their education. An employee can take classes at Brown for free–if they are accepted into a degree program. That presents challenges since acceptance at Brown is highly competitive and scheduling may prevent the employee from being able to do the job or do the education. It’s a catch 22. For courses outside the University, even those deemed work-related, the subsidy barely covers a single class at the $2,500/FY limit. What a joke.

  • Bobbo

    I am not sure why Brown should continue to assist faculty (who are hardly poor) with tuition assistance for their children to attend other universities. This is another welfare program for folks who are not needy. Let faculty members apply for financial aid like other parents if the cannot afford the full cost of tuition. If this program is cut, Brown could actually improve its financial aid packages to students applying to Brown.

  • Aloaner

    @Bobbo The TAP program applies to all Brown employees, not just faculty. It helps a lot of families with a range of incomes.

    • Bobbo

      If TAP applies to more than faculty, then it should be means tested. Why should a professer with lifetime tenure get this benefit?Or a senior brown admistrator? He/she can take out a loan to send his child to college–just like other hard working Americans. The money should be used to attract students who need financial aid to Brown. Let’s bolster Brown’s financial aid program, hire more computer science professors and keep renovating campus housing. To me these are higher priorities. The pool of talented PhDs is vast. Brown will be able to get talented faculty even with TAP.

  • Anne

    If the administration “thought that increasing the tuition benefit would make Brown a better university,” it would have done so, he added.

    Really? Increasing the tuition benefit would make for happier employees which would make Brown a better university. Giving the tuition benefit to staff without children so that they or their spouse can use it would make other employees happier too. The government continues to screw us over with “middle-class tax cuts” that only affect middle-class people with children, and promised increases to flexible spending accounts turn out to be just for dependent child care and not health care accounts. And Brown discriminates against us by denying us access to a benefit that we have earned just as much as those with children. We work just as hard; sometimes more because we don’t have to leave to pick up children, or attend children’s recitals, sports games, etc. We do just as much as our colleagues with children; why should they receive an extra benefit that we do not? Either give it to everyone or take it away.

  • Brown ’14

    i am so glad they are redesigning the gate and not giving money to these peasants.

  • johnlonergan

    Nipping around the edges. The elephant in the room is that Brown charges $55K/year. Brown employs 4,500 people to teach 8,000 students–that’s $55K/year per student (at $110K cost per employee, including benefits). ALL of Brown’s tuition and fees goes 100% to paying staff costs.

    Brown has 218 departments (look it up on the website) to teach 8,000 students. Does it really need that many?

    Rather than continuously hike too-high commissions, and pad costs, Brown needs to significantly re-think how it educates, and how much it charges. Brown could make significantly more money by educating high school students, international students and alums, and those interested in a Brown course or education.

    Brown needs to do four things well:

    1. Educate people from 8 to 80, including alums and
    those who wish to go to Brown. Charge for it!
    2. Educate millions, not just the 1,600/year who
    choose to live on/near the campus. Charge for it!
    3. Offer a broad spectrum of learning opportunities,
    from Freemium to on-campus. Charge for it!
    4. Offer the best teaching available–not in
    comparison to Stanford or other Ivy schools, but in comparison to Berlitz,
    Google and the best teachers in the world. Charge for it.

    Stop going hat-in-hand to the alums. We’re not your ATM machine. Brown’s endowment is too low, and its costs are too high.

    Time for real strategic planning and a revolution in Brown’s charges and income structure. Until Brown does that, such “strategic
    planning” will simply change buggy whip colors for the next season.

    John Lonergan, BA ’72, Harvard MBA ’76, Medical device
    VC, San Francisco

    Join us in an effort to bring real
    change to Brown at http://www.brownnext250years.com

  • Name withheld for job security

    As usual, the focus of salary and benefits is on the faculty. The rest of us peons who actually keep the place running (without tenure) are afterthoughts at best.

    The cost of college in general has become an absolute insanity. Twice a rate of inflation- why do you suppose that is? Because government-subsidized loans will pay whatever the tuition is, no matter how ridiculous. Colleges have zero incentives to control costs because the money just keeps showing up. Raise tuition and the loans follow suit, no questions asked. It’s like giving someone who already weighs 400 pounds more food whenever they ask for it.