Description of The Voluntary Separation Plan
(As It Applies to Reductions in General Fund Budgets)
April 13, 2000
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Overview
The primary purpose of the Voluntary Separation Plan is to enable the University to achieve targeted budget reductions through voluntary separation of faculty and staff in general fund positions. It is not designed or intended for non-general fund budget reductions nor elimination of research funded positions, non-general fund positions, or formula funded positions.
Availability of this Voluntary Separation Plan will not apply to staff represented by a collective bargaining unit unless a mutual agreement to do so is reached between the University of Vermont and the respective bargaining unit.
This document does not address the procedures to be followed or the content of Voluntary Separation Agreements for positions in the College of Medicine. A special communication will be prepared by the College of Medicine Dean’s Office to chairs and directors. Other colleges and departments may also choose to distribute separate communications to their faculty and staff.
Elements of the Voluntary Separation Plan
A Voluntary Separation Plan will be available for eligible employees to apply during the period April 13, 2000 until October 1, 2000. To be considered, applications must be postmarked, or received in the Human Resources or Provost’s Office, by October 2, 2000.
Basis Upon Which Applications Will Be Approved or Denied
Faculty and staff may initiate a request for consideration of a Voluntary Separation Agreement on their own behalf. Approval by the University will be dependent upon the strategic and organizational need of the faculty or staff member’s college or department and that of the University as a whole. Except a noted below*, for a separation agreement to be approved, the employing unit must identify a position funded from the general fund budget to be permanently eliminated along with its budgetary source of funding. In eliminating a position, either the position occupied by the requesting employee or a position of greater or equal FTE and salary commitment, will have to be eliminated from the general fund budget.
Recommendations to approve voluntary separation applications will be made by the dean, director, or Vice President, with final approval by the Provost, with the following exception:
*An exception to the above will occur when tenured faculty who have reached age 50 on or before October 1, 2000 apply for a Voluntary Separation Agreement. All requests from eligible faculty members in this category will be approved upon the faculty member, dean and provost
determining a mutually agreeable date for the separation of employment, which must occur within a three year period beginning July 1, 2000. In most instances, requests for separation should occur within a two year period because of the need to reduce budgets at the beginning of FY 2003 rather than the end of the fiscal year. Voluntary Separation Agreements for tenured faculty in this category will not be dependent upon elimination of the position for budget reductions. The employing department or college will have to obtain authorization from the Provost before initiating the process for filling the vacant position.
Special Notes
Grandparenting of post retirement medical premiums:
Faculty and staff approved for Voluntary Separation, who are age 50 on or before October 1, 2000, and whose application for Voluntary Separation is postmarked by, or received in the Human Resources or Provost’s Office, on or before June 30, 2000, will qualify for post retirement medical premiums at a grandparented rate equivalent to the premium they would have paid had they retired on June 30, 2000.
Special one-time bridging leave:
Faculty and staff approved for Voluntary Separation, who reach age 50 on or before October 1, 2000, will be offered a special one-time bridging leave until age 55 is reached, and the individual qualifies for the normal post retirement benefits as outlined for retirees in the respective Faculty and Staff Handbooks or if the Plan becomes applicable, their respective bargaining unit agreement.
During the period of bridging which will occur between ages 50 and 55, individuals may choose to purchase UVM medical and dental coverage at 50% of the total COBRA premium cost. Life insurance coverage, including dependent coverage, can continue with the University paying its share of the premium and the insurance amount remaining as when the employee began the leave. Tuition remission benefits will be the same as those of active employees during the leave period. UVM retiree ID privileges will remain in effect during the leave.
Upon reaching age 55, the individual will qualify for post retirement benefits as outlined in the respective handbooks for faculty and staff.
During the bridge, the employee may waive medical and/or dental coverage and reduce life insurance coverage to the noncontributory $6,000 level. However, life insurance cannot be increased later and medical and dental can only be elected during an annual open enrollment period.
Possible Phase-Out Period:
If recommended by the appropriate dean, or Vice President, an eligible faculty or staff member approved for Voluntary Separation may have a period of phased employment reduction before entering either full retirement or an unpaid bridging leave. During the phase-out period the employee may work at 50% to 100% effort with special phased employment benefits. Negotiation of the actual features of the phase-out period, which may extend until June 30, 2003, will occur before an Agreement is signed. In most instances, vice presidents and deans may approve requests for phase-outs which will result in separation of employment within a two year period because of the need to reduce budgets at the beginning of FY 2003 rather than the end.
Benefit Entitlements and Compensation During the Phase-Out Period:
Re-employment:
Faculty and staff members who leave the University under the terms of the Voluntary Separation Plan may be re-employed after separation. Return to employment in the unit will be at the sole discretion of the department chair or unit manager. In addition, faculty and staff who leave the University through the program are not prohibited from applying for other UVM positions following their departure. Former employees who have separated under this plan will neither receive preference for positions by virtue of their status as former employees, nor will they be credited for prior UVM service.
Sunsetting of the Existing Faculty Early Retirement Plan:
Beginning October 1, 2000 the current Faculty Early Retirement Plan will no longer be available to faculty. To be considered for the Early Retirement Plan, eligible faculty members must have their application, with accompanying dean and department head endorsement, postmarked or received in the Provost’s Office by October 2, 2000. To be eligible for the Faculty Early Retirement Plan a faculty member must have 15 years of full time University service as an Officer of Instruction, Research, Library, or Extension and have attained age 55 on or before October 1, 2000, but must be younger than 64 on June 30, 2000. Eligible faculty may apply for either the Early Retirement Plan, or the Voluntary Separation Plan, but they may not take advantage of both.
1. Basic Qualifications for Application and Financial Incentive by Employee Groupings
Note: Overtime payments, extra assignments or payments and other forms of hourly premiums will not be taken into account in calculating the following financial incentives.
Group I: Tenured Faculty
To qualify:
The faculty member must have 10 complete years of service during which the faculty member qualified for benefits as a full time employee. Years of service for qualification purposes will be calculated as of October 1, 2000. Eligible faculty may apply for either the Early Retirement Plan, or the Voluntary Separation Plan, but they may not take advantage of both.
Financial incentive:
One academic year’s or fiscal year’s salary taking into account the faculty member’s appointment, FTE and base salary for FY 2000.
Group II: Officers of the Library
To qualify:
The officer must have 10 complete years of service during which the officer qualified for benefits as a full time employee. Years of service for qualification purposes will be calculated as of October 1, 2000. Eligible faculty may apply for either the Early Retirement Plan, or the Voluntary Separation Plan, but they may not take advantage of both.
Financial Incentive:
Officers of the Library will receive a minimum of 50% of their salary/wage based upon their appointment, FTE and base salary for FY 2000 (i.e., equivalent of 26 weeks for a 12 month employee). In addition, they will receive 2.5% (i.e., equivalent to 1.3 weeks for a 12 month employee) of their salary for each continuous complete year of service over 10 and up to a maximum of one academic or fiscal year’s salary.
Group III: Non-Tenured Faculty, Administration and Staff
To qualify:
The employee must have 10 complete years of service during which the employee qualified for benefits as a full time faculty or staff member. Years of service for qualification purposes will be calculated as of October 1, 2000. Eligible faculty may apply for either the Early Retirement Plan, or the Voluntary Separation Plan, but they may not take advantage of both.
Financial Incentive:
Employees in this group (non-tenured Officers of Instruction, Officers of Administration and Staff) will receive a minimum incentive of 50% of their salary/wage based upon the employee’s appointment, FTE and FY 2000 base salary (i.e., equivalent of 26 weeks for a 12 month employee). In addition, the individual will receive 1.9 % of their salary for each complete year of service over 10 (i.e., equivalent to 1 weeks salary for a 12 month employee), and up to a maximum of 67.3 % of salary (i.e., equivalent to 35 weeks salary for a 12 month employee).
2. Benefits, Terms and Conditions under the Voluntary Separation Plan
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Faculty and staff who do not qualify for post retirement benefits: Faculty and staff who have not reached age 50 but have attained 10 years of employment on or before October 1, 2000, will receive the same benefits and terms of separation as outlined for voluntary terminations in the Staff Handbook, Officers’ Handbook or if the Plan becomes applicable, their respective bargaining unit agreement.Ÿ
Faculty and staff who qualify for post retirement benefits by bridging into benefits: Faculty and staff who have reached age 50 on or before October 1, 2000, and enter into a Voluntary Separation Agreement with the university, may bridge into their post retirement benefits. Bridging simply means that an employee may separate their employment as a result of a Voluntary Separation Agreement prior to reaching age 55 and then begin receiving their post retirement benefits upon reaching age 55.If separation occurs before the employee is age 55, the employee may retain his/her medical and dental insurance by paying 50% of the COBRA premium rate for the benefits until age 55 is reached. Tuition remission benefits for the employee and his/her dependents will remain in effect as for active employees.
At age 55, the employee will qualify for post retirement benefits as described in the Officers’ Handbook, Staff Handbook, or if the Plan becomes applicable, their respective bargaining unit agreement. Faculty and staff members who waive medical and dental coverage during the bridging period (age 50 to 55) pick up their post retirement medical plans during the next open enrollment following age 55, i.e., (during November for an effective date the following January 1), provided the insurance carriers at that time allow it. Current carriers do allow this but no assurance can be made that future carriers will.
Those who reduce life insurance during the bridge will not be allowed to increase it at age 55.
If the bridging employee applies for a Voluntary Separation Agreement prior to July 1, 2000, he/she will, upon reaching age 55, qualify for post retirement medical insurance benefits at a grandparented premium rate as they would have had if they retired on June 30, 2000. Faculty and staff members who enter into a Voluntary Separation Agreement involving bridging will pay premiums and have the same terms and conditions of employment as other active employees while they remain actively employed.
3. Timing of Separations and Phasing Out of Employment Over a Three Year Period
At the discretion of deans and directors, faculty and staff may enter into Voluntary Separation Agreements which will phase their employment out over a period of time or delay the time of total separation.
In approving phased agreements, the dean or director will consider phased Agreements which correspond to their need to reduce their general fund budgets and positions as their budgets are progressively reduced.
In phasing out, the employee may enter into an Agreement which reduces their FTE in increments over a period of as many as three years or delay their separation entirely for as long as three years. In most instances, however, phase-outs will have to be concluded within a two year time frame to allow the budget director to meet their budget reduction requirements and timing.
While phasing out, the employee’s benefits and terms and conditions of employment will be as for active employees within their respective FTE with exceptions as included in the following:
a. Faculty and staff who reduce their FTE will receive University contributions to medical and dental insurance based on the employee’s FTE prior to entering into the Voluntary Separation Agreement.
b. The employee may retain their life insurance and that of their dependents at the level they were at prior to reducing their FTE. The University will continue paying its share of the premium.
c. Both employee and dependent tuition remission will remain in effect as before the reduction in FTE.
d. Disability insurance will be based upon actual salary remaining after the FTE is reduced. The University will pay its portion of the premium on the reduced insurance level.
e. Vacation and medical leave will accrue based on the reduced FTE.
f. The number of paid holidays available to the employee will be in proportion to the reduced FTE.
g. The faculty or staff member will continue to receive University contributions to their retirement plan based upon their actual salary paid as a result of the reduction in FTE.
4. Retirement Contributions
The faculty or staff member who participated in the University’s retirement plan prior to their application for a Voluntary Separation Agreement will receive full University contributions to their retirement plan for all dollars paid out as part of the Voluntary Separation Agreement.
Participants in the University’s retirement plan will be required to pay the portion of their retirement contribution, i.e., 2% for staff and 3% for faculty.
5. Alternative for Those Faculty and Staff who Qualify for Grandparenting of Their Post Retirement Medical Premiums
All faculty and staff who separate their employment under the Voluntary Separation Plan and also qualify for grandparenting of their post retirement medical insurance premiums may apply to waive this option and, if approved by the University, receive a one time payment of $5,000 instead. Employees who are approved for this option will be entitled to post retirement benefits but at a cost equal to that paid by retirees who did not qualify for the special grandparented premium rate for medical insurance.
6. Re-Employment After Separating from Employment As Part of the Voluntary Separation Plan
The Voluntary Separation Plan does not prohibit faculty and staff from being re-employed by the University after having separated their employment under terms of this plan. Return to employment will be at the sole discretion of the University. In addition, faculty and staff who leave the University through the program are not prohibited from applying for other UVM positions following their departure. Former employees who have separated under this plan will neither receive preference for positions by virtue of their status as former employees, nor will they be credited for prior UVM service. Faculty who had tenure before separating their employment will return without tenure.
Upon re-employment, in a position for which benefits apply as part of the compensation, medical, dental, life and other insurance premiums will be paid for by the employee as for other active employees.
7. Funding and Disposition of Salaries
Incentive funding for Voluntary Separations will be made available centrally from the general fund budget. Salary savings from positions eliminated through the Voluntary Separation Plan will be returned and held centrally in the general fund budget. An exception to this may occur when the Provost authorizes the position of a tenured faculty over the age of 50 to be refilled. If authorized to recruit for the position, the college may be required to return to the central fund the salary differential between that of the faculty member leaving and that of the new employee.
8. Incentive Payments in the Event of Death or Disability Before the Full Incentive is Paid
For faculty and staff who enter into a formal written Voluntary Separation Agreement but die prior to separation of employment, their estate or designated beneficiaries will be paid the amount of the agreed upon incentive.
Faculty and staff who incur an illness or injury after entering into a formal Voluntary Separation Agreement, and the illness or injury results in a permanent disability as defined by Social Security and/or qualify for TIAA/CREF disability payments will receive this separation incentive despite not being able to work until the agreed upon separation date. However, TIAA and/or Social Security disability payments may be reduced by amounts received as part of the voluntary separation incentive.
9. General Notes
1. Incentive payments will be received by the faculty or staff member after separation of employment. Payment can be in lump sum or spread over a period of two years, but in accordance with prevailing IRS regulations. In all instances the agreement to spread payments out over a two year period must be documented in the written Agreement.
2. Complete years of service will consist of the number of full time years of service the faculty or staff member is credited for in their personnel file as of October 1, 2000, and for which their eligibility for post retirement benefits is based. In all instances, years of service will be interpreted as found in the Officers’ Handbook, Staff Handbook or if the Plan becomes applicable, bargaining unit contract, as appropriate.
3. All dollars received as part of the Voluntary Separation are considered wages. As such they will be subject to Federal, State and Social Security taxes.
4. To the full extent permitted by the tax law, the University will make retirement contributions on all dollar incentives paid to the employee provided the employee agrees to contribute their respective share.
5. The terms and conditions of separation outlined herein will become effective for an employee only if he/she is approved for Voluntary Separation under this plan and the following also occurs:
a. The University during its process of strategic budgeting and reorganization offers the requested separation agreement.
b. Both the University and the employee enter into a formal agreement signed and executed by the parties.
6. The University will review and approve or disapprove voluntary separation applications as soon as feasible following receipt of a complete and timely filed application. It, nonetheless, reserves the right to reject applications in cases of ineligibility or in the exercise of its sole and reasonable discretion in light of program goals. It also reserves the right to defer action on applications until a date no later than the end of FY 2003 pending assessment of institutional progress toward such goals. If the University defers action on an application and later offers the applicant an opportunity to participate in the program, the employee is not obligated to accept the offer at that time.
7. The University will consider and approve requests as soon after receipt as is reasonably possible. Applications for voluntary separation must be postmarked, or received in the Human Resources or Provost’s Office, by October 2, 2000.
8. Compensation received by the separating employee can be fully or partially made as a contribution to the separating faculty or staff member’s defined contribution retirement plan,up to the maximum exclusion amount available as defined by IRS codes for the individual. Generally, this is limited to $10,500 per calendar year. However, the amount can vary based on personal circumstances. The University cannot give tax advice, so individuals should consult with their own tax advisors about tax consequences of the timing and methods of payment.
9. A faculty or staff member will have up to a 45 day period following a formal offer of a separation agreement to consider signing it. During this period of time the employee will be advised to consult with his/her attorney and persons providing tax advice.
After signing the Agreement, the employee may revoke his/her decision to accept the terms and conditions of the Agreement by submitting a written request to Ron Frey, Director of Human Resources, no later than 20 calendar days after the date upon which the faculty or staff member signed the Agreement.
11. Administration of the Plan
The Voluntary Separation Plan will be administered solely by the University. The University will have the final right to interpret its terms including, but not limited to eligibility and benefits. The University may amend or terminate the Plan, but may not adversely affect the rights of any faculty or staff member who has been approved for participation under a formal written Agreement.
A website on the Voluntary Separation Plan will be maintained at: http://www.uvm.edu/~volsep/
Last modified April 21 2000 09:55 AM
