USI trustees approve changes to future retirement benefits

March 07--It has been at least 20 years since employees at the University of Southern Indiana have seen any changes to medical, dental and life insurance benefits for retirees. But change is coming this summer.

The university's Board of Trustees recently approved eliminating medical, dental and life insurance coverage in retirement for all university employees who are hired after July 1, as well as for some current employees.

Mark Rozewski, USI vice president for finance and administration, gave an overview of future retiree changes to trustees at their regular meeting Thursday morning on USI's campus.

Insurance benefits for people already retired will not be affected by the changes, however the trustees approved "three very important and large-scale changes to university benefits in the interest of keeping the institution affordable," Rozewski said.

Medical and dental insurance benefits will no longer be available to any full-time employees whose age plus years of service as of July 1 is less than 57 and whose full-time benefits eligible employment is less than 10 years. But it will be offered to those who reach that threshold.

A life insurance policy will still be offered to employees at retirement or disability retirement for all full-time staff hired by June 30.

These changes are in response to the increasing costs of providing retiree insurance to a growing number of retirees. The university has projected that without change, under its plan, it would incur an unfunded liability of $102 million by 2032.

In 2007, USI had 167 retirees, who accounted for 17.9 percent of its insured. By 2013, it had 254 retirees, who accounted for 23.2 percent of insured.

The goal of the recommendations, which were created by a study group made up of 10 USI employees, is to cut the university's long-term liability in half.

For qualified employees with 10 to 14 years at the university, the employee pays 75 percent and USI pays 25 percent; with 15 to19 years the employee pays 50 percent and USI pays 50 percent; and working 20 or more years at the university the employee pays 25 percent while USI pays 75 percent.

PREVIOUSLY: Health benefits for future USI retirees could change if approved by trustees

The 57-point formula is expected to reduce the university's unfunded liability to just below $52 million in 20 years.

Rozewski said terminating post retirement health care benefits for all yet-to-be-hired employees and those that don't reach the 57 point requirement is "probably the most important" change. About 60 percent of current employees will keep the benefits after the approved changes and about 40 percent lose them, according to Rozewski (cq).

He said changes in benefits are a rare occurrence because employees like to see that consistency.

"After we exit post retirement health care, there will only be one remaining state university in Indiana that offers post retirement health care, Ball State," he said. "The other universities either never offered it at all ever or ended it in the last 10 years because it is a very expensive benefit and an increasingly uncommon benefit. It's really quite rare to have that benefit now from any employer, public or private."

The trustees also approved a recommendation for reducing USI's contribution to its Defined Contribution Plan of 11 percent of employees' first $10,800 in salary plus 15 percent of the remaining salary, to 11 percent. This is compared to other Indiana universities that contribute 10 to 10.5 percent.

Rozewski (cq) said this plan is basically for faculty and administrators and the changes will occur for all current employees, but the total compensation for those employees won't change.

The annual cost for USI to provide the PERF pension plan to support staff has more than doubled in seven years, the current university cost is now 14.2 percent of eligible support staff salaries. The PERF retirement benefits for current eligible support staff hired by June 30 will continue to receive an Annuity Savings Account at 3 percent of their salary, and the PERF pension plan which is subject to change each year.

And for full-time support staff hired after July 1, a new Defined Contribution Plan will be created that will include a 7 percent USI contribution, and other features similar to current Defined Contribution Plan for Faculty and Administrators.

"Those are three major changes, all of which are absolutely necessary to ensure the cost effective operations and continuing affordability of the university moving forward," Rozewski said.

Kindra Strupp, USI assistant vice president for marketing and communications, said in February that meetings with faculty and staff were held to get employee feedback. Strupp said with Obamacare going into effect this year, it's a different environment, and many USI benefits needed to be evaluated for the long-term financial health of the institution.

Since USI was founded in 1965, officials said the cost of insurance and health care has increased significantly, and now a health savings account is offered to faculty and staff where they can save on a pretax basis for current and future medical expenses.

According to its website, USI has 650 full-time faculty and administrative staff and 367 full-time support staff.

___

(c)2014 the Evansville Courier & Press (Evansville, Ind.)

Visit the Evansville Courier & Press (Evansville, Ind.) at www.courierpress.com

Distributed by MCT Information Services