The University has announced that a total of 531 staff members chose to participate in its Voluntary Early Retirement Incentive Program, or roughly a third of the 1,628 members that were eligible.
Participation rates throughout the University's schools and units ranged from 7 to 41 percent, according to the figures presented in the June 2009 issue of Harvard Resource, the University's employee newspaper. The majority of staffers accepting the incentives came from the Faculty of Arts and Sciences and the Central Administration, which respectively contributed 156 and 177 workers--acceptance rates of roughly 30 percent and 34 percent. Harvard Business School had the highest rate, with nearly 41 percent (42 out of 103) of eligible staff members accepting the buyout.
University spokesman Kevin Galvin declined to characterize the results of the program in any way, saying that the participation rate speaks for itself. He also declined to comment on the costs or savings achieved by the program, but noted that it was primarily funded through assets set aside for the University's defined-benefit pension plan.
Harvard's financial report for fiscal year 2008 showed an apparent surplus of nearly $300 million in the University's pension-plan assets after subtracting away benefit obligations of roughly $600 million, suggesting that the University may have been able to pay for the retirement incentives without its increasing near-term costs.
The Program was a key cost-cutting initiative devised by the University this past year in response to a planned 30 percent drop in value of the endowment over the fiscal year, which has also caused an 8 percent drop in the amount paid out from the endowment to the University's schools next year. Because compensation costs comprise nearly half of Harvard's annual $3.5 billion operating budget, University officials have long alluded to the need for further layoffs, which have been rumored to take place by the end of the summer.
Galvin said that it is "premature" to predict when workforce changes will take place. He also said that discussions are continuing about the feasibility of a similar early retirement incentive for faculty members, but said that creating such a program is "a complex proposition that will require extensive deliberation by the deans and University leadership."
Similar staff early retirement incentive programs have been used at Dartmouth and Cornell in recent months as well. At Cornell, 423 staffers applied for and received buyouts out of approximately 1,300 eligible workers, representing a yield of roughly 30 percent--nearly double the 10 to 15 percent that had been anticipated by administrators there, according to the Cornell Daily Sun.
Harvard's Program was implemented in two waves: first for FAS, Harvard Medical School, and Harvard School of Dental Medicine, and then for the remainder of the University's units. While FAS and HMS account for the largest fractions of the University's endowment, Galvin said the two-phase design was purely for administrative reasons. In each wave, eligible staff--participants in Harvard's Defined Benefit Plan aged 55 and over with at least 10 years of service--were given a 45-day consideration period during which they could decide to accept the incentive, followed by a 7-day period during which they could reconsider. The first wave began on Feb. 17, and the second began on March 16.
Galvin said that in addition to Harvard's normal pension benefits, staff members who accepted the buyout packages received a one-time retirement lump-sum payment equal to one year's annual salary, a "bridge benefit" of $750 per month until Social Security eligibility at age 62, and a waiver on the "rule of 75"--which stipulates that an employee's age plus service must equal 75--for retiree medical eligibility. He said that while most of the staff would leave the University by the end of June, some may remain for a few extra months in order to ensure a smooth transition.
FAS Dean Michael D. Smith had announced in April that 153 out of 521 eligible staff in his school accepted the buyout packages--a slight discrepancy from the most recent figures possibly caused by the delayed delivery of packages, according to University spokesman John D. Longbrake. But in light of a looming $220 million FAS budget deficit over the next two years, only $77 million of which has been accounted for through the cost-saving measures that have already been announced, Smith and other administrators are now looking to conduct a broad-based restructuring of the University's largest school.
--Staff writer Peter F. Zhu can be reached at email@example.com.