University negotiators formulated buyout plan

It looks as though more than just ACE employees will be eligible for the buyout.
By HAROLD GWIN
VINDICATOR EDUCATION WRITER
YOUNGSTOWN -- Youngstown State University's Association of Classified Employees didn't ask for a service-time buyout as part of an Early Retirement Incentive Plan in its new contract.
The union, representing about 400 employees, deliberately tried to stay away from a buyout, because it felt a buyout would be too expensive for the university, said Christine Domhoff, ACE president.
The union had proposed a cash incentive that would encourage employees to retire as soon as they would normally become eligible, she said.
The buyout plan, under which the university will pay the cost of up to two years of service for eligible retirees to allow them to retire early or at higher pensions, was something the university's negotiating team came up with, she said.
The university refused to take the item off the table, despite the union caution about costs, making union negotiators suspect that it was something that administrators wanted to have available to them, she said.
ACE knew that, if the university offered an early-retirement buyout, it would have to be made available to all university employees who contribute to the Ohio Public Employees Retirement System, not just ACE members, Domhoff said.
A draft version of the ERIP negotiated as part of the ACE contract attempts to limit participation in the buyout to only eligible ACE members.
What YSU official said
The buyout proposed by the university is a very good situation for both the employees and the university, said John Habat, YSU vice president for administration.
He told the university's board of trustees last week that the maximum number of eligible ACE employees would be 131 and that the cost of the buyout over three years would be $6.12 million.
But the university will also save $5.96 million over that same time by replacing retiring workers with entry-level employees and restructuring departments. By 2009, the university should be realizing a permanent base annual savings of $2.7 million, Habat said.
However, Michael Denny, supervisor for ERIP programs for the public employees retirement system, told The Vindicator that the university can't just target a class of people.
State law says that any classified or unclassified employee of the employee unit, who contributes to OPERS, must be offered the same benefit.
In YSU's case, the university is considered the employee unit, Denny said.
The law on ERIPs was passed on to university representatives in numerous telephone conversations, he added.
That means that some administrators in the Association of Professional Administrative Staff union, nonunion exempt administrative employees and exempt classified employees also should be eligible for the buyout.
"It could amount to well over 200 people. The financial implications could be tremendous," Domhoff said, predicting the cost could reach $10 million, well above the university's estimate.
The university is awaiting an official OPERS ruling on who will be eligible, but Habat said he doesn't expect the number to reach 200.
However, no matter what the number is, the savings will increase in proportion to the costs, he said.
"It's a good thing for the employees and it's a good thing for the university," Habat said.
Eligibility
A draft version of the ERIP shows that, to be eligible for the buyout being offered between March 1, 2006, and Dec. 31, 2007, an employee must be at least age 55 with 25 years of service, age 60 with at least five years of service or have 30 years of service at any age.
The university said ACE employees have an average annual salary of $40,000. Under OPERS pension rules, a retiree age 65 with 30 years of service and making a final average salary of $40,000 would be entitled to an annual pension of $26,400.
Retiring at an earlier age would reduce the pension benefit. For example, retiring at 55 with at least 25 years of service would cut the pension by 25 percent.
The university said the average salary of APAS staff paid with university funds is about $41,000, which would give eligible employees pensions on a par with ACE workers.
YSU's exempt professional administrators paid with university funds have an average salary of nearly $62,000. Someone retiring at 65 with 30 years of service and that average salary could expect an annual pension of nearly $41,000.
gwin@vindy.com