Early-retirement savings to cover YSU bond debt

By Harold Gwin

The university plans to borrow $40 million to finance a variety of projects.

YOUNGSTOWN — The numbers have been revised, but Youngstown State University officials say savings realized from an employee early-retirement incentive program will still pay for a bond issue to finance the centennial master improvement plan.

The university is looking to borrow $40 million, primarily through a bond issue, to help pay for some $80 million in campus improvements over the next four or five years.

The plan is to use base salary savings created by the early-retirement plan to cover the annual debt service on the bond issue.

The program was expected to save the university about $2.6 million in annual salary costs, according to a report issued in February. An update on the program reported to the YSU Board of Trustees this month showed a slight downward revision in that projection to $2,526,777 in annual base savings.

Base savings are the difference between a retiree’s actual salary and the pay grade minimum or replacement’s salary. It’s an ongoing annual savings that can be allocated to other uses, according to YSU’s Office of the Vice President for Administration.

Dr. David C. Sweet, university president, said that money is sufficient to pay the annual debt service on the $40 million bond issue which is expected to be about $2.5 million.

The early-retirement program has produced the desired results, he said.

The incentive program was initially negotiated as part of the 2005 contract with the university’s Association of Classified Employees but was eventually offered to all university employees.

YSU said as many as 185 people were eligible to take the incentive, which required the university to buy up to two years of service time to allow employees to retire early or with larger pensions.

If all those eligible had taken the incentive, the annual base savings would have been $3.6 million, according to university estimates.

As it turned out, the number signing up was considerably lower, but still sufficient to generate enough savings to cover the debt service on the bond issue.

The university paid the Ohio Public Employee Retirement System nearly $5.5 million to cover the buyouts and about $470,000 more to retirees who cashed in their unused sick time at half of its face value.

Sweet said he is satisfied with the results. The university didn’t get the number of retirees projected, but it did get the savings needed, he said.

Other funding sources for the $80 million centennial project list include $34 million in state capital funds, $3.4 million in philanthropic gifts, $2.8 million in internal funds and $1.2 million in federal grants.

The largest project on that list is the $34 million Williamson College of Business Administration building.

gwin@vindy.com