Salary Modification Proposal

Background

• Budget reduction for UF – need funding for the 3% to come from some source

• Proposed changes in sick and vacation leave benefits to fund the 3% raise

• This process is really about buying the current stated benefits with a 3% salary increase paid for by reduction in benefits!

• Words in italics and underlined were added to the presentation from the Faculty Senate presentation by UF HR

• Words in Blue are not from Faculty Senate presentation by UF HR.

Current Structure

• 12-month faculty accrue vacation and sick leave; 9 and 10-month faculty only accrue sick leave

• Vacation – Accrue 4 ½ weeks per year, maximum per year 480 hours, payment at 352 hours

• Sick – Accrue 2 ½ weeks per year, no maximum per year, payment up to ¼ of 1,920 hours (480)

• Faculty and staff hired after 4/1/2010 not eligible for payment of unused sick leave.

• http://regulations.ufl.edu/chapter1/1201w-notations.pdf page 5 discusses payout

Shared Governance

• Faculty never given an option to vote on changes and should be part of shared governance

– Only presented as informational item at

• IFAS Faculty Assembly

• UF Faculty Senate

• Neither body voted on the proposal!

Two Options As Presented

Option 1 (as presented in September)

• All faculty paying 3% retirement contribution receive a 3% salary increase in January 2012

• Eliminate payment of unused sick leave – Faculty who formally retire by June 30, 2016

would keep current leave structure and eligible payment of unused sick leave

– Faculty enrolled in DROP who retire by June 30, 2016, would keep current leave structure

Option 1 (continued)

• Keep vacation accrual rate the same 4 ½ weeks per year

• Reduce payment for unused vacation hours to 200 hours (staff changed in September 2011)

• Reduce maximum annual accrual to 352 hours from 480

Option 2

• Allow faculty paying 3% retirement contribution to choose between 3% salary increase and current leave structure

If select Yes for 3% salary increase:

• Vacation payout reduced to 200 hours

• Vacation annual maximum reduced to 352 hours

• Sick leave payment eliminated

Leave Change Proposals

Option 2 (continued)

If select No for % salary increase:

• No change in sick or vacation leave payments

• No change in maximum accrual of vacation

• Faculty enrolled in DROP who retire by June 30, 2016, would keep current leave structure

• Source of Slide 1-8 Faculty Senate Meeting Presentation except as

noted in bold and underlined on slide 2

Salary Modification

Salary Modification

Annual Leave Sick Leave

Currently paid at departure 352a 480b

Proposed payout at departure

200 0

Reduction in hours paid at departure

152 480

a maximum carry forward from year to year is 480 hours of annual leave

b 480 hours is 25% of 1920 hours for the maximum of sick leave that can be carried forward

• Loss of 152 annual leave hours + 480 sick leave hours = 632 hour reduction in payout at departure of employment • 632 hours divided by 2,080 hours per year = 30.385% of year

Calculations of Lost Wages to Employee (Option 1 vs. 2)

A B C D E F

Annual salary from UF

Maximum loss from proposal 1

Value of loss in benefit (A x B)

3% Salary raise (A x 3%)

Difference between current benefits and proposed (C – D)

Years to make up change in benefits between current and proposed option 1 (C ÷ D)

$20,000 30.385% $6,077 $600 $5,477 10.12833

$40,000 30.385% $12,154 $1,200 $10,954 10.12833

$60,000 30.385% $18,231 $1,800 $16,431 10.12833

$80,000 30.385% $24,308 $2,400 $21,908 10.12833

$100,000 30.385% $30,385 $3,000 $27,385 10.12833

Salary Modification

• New proposal will benefit recently hired employees or those who have low number of annual and/or sick leave by providing 3% raise.

• Those who carry forward low number of hours of sick leave and/or annual leave (i.e. those who use lots of annual leave and sick leave) will benefit from 3% raise. Their payment at time of retirement would be low under current benefits plan and the 3% would be a better option as that would result in increase salary.

• Proposal is really about reducing future payout at retirement for stated benefits. Under this proposal, UF is really buying these benefits with a 3% raise.

Salary Modification

• Proposed salary modification plan impacted by: – Years to retirement – Number of annual leave hours that are carried forward on yearly basis – Number of sick leave hours carried forward

• The proposal will increase the use of sick leave. Since it would have no value to the employee at retirement, employees should use the time. UF is only paying for 25% of the balance up to 1920 hours and as employees use the benefit it will now cost UF the other 75% when used.

• Proposal will increase salary compaction for long-term employees. Those who elect the proposed 3% raise will see income rise, whereas those who choose to remain on the current benefits package will see a net reduction in salary of 3% due to retirement contribution.

Motion

• “The IFAS Faculty Assembly recommends the reinstatement of Option 2 for faculty in the proposed UF salary and benefit modification plan”.

• This action will provide fairness and allows those that have earned stated benefits to keep what has been promised and earned.

http://regulations.ufl.edu/chapter1/1201w-notations.pdf

Note: The motion was unanimously approved by the Assembly.