A little-noticed change in the University of Wyoming’s retirement plan will cut millions in employee health insurance benefits for future retirees.
The action affected a provision that allowed staff to bank unused sick days, which could then be applied toward payment of state health insurance premiums at retirement. The payments could cover up to three years of the university’s share of insurance, a value of upwards of $50,000, depending on an employee’s health plan.
The UW Board of Trustees’ action reduced the number of sick days an employee was allowed to accrue from 960 to 480. It also converted it to a one-time cash payment, based on salary.
The board made the decision at its June 15 meeting. It provided a two-week grace window for employees who could retire with full benefits by July 1.
UW President Laurie Nichols noted the benefit was more than what other state employees received.
“This change, which aligns the university with other state agencies, is a prudent move during this time of financial uncertainty,” Nichols said. “Overall, our benefits package is still a strong one. Employee morale is always a concern during budget reductions, but this is a necessary step to put the university in a stronger position for the long term.”
UW law professor Robert Sprague, of the Faculty Senate, said there was no notice that the benefit was being considered for elimination, and little to no mention of it after the decision was made, with many employees only recently learning about it.
The shift to a wage-based payment likely reduces the value of the benefit for many staff and particularly affects those near retirement, along with employees on the lower end of the pay scale.
“It didn’t matter what job you had here — as long as you qualified, you were paid the insurance premium based on your health insurance plan. Now the amount of your benefit depends on your salary at retirement,” Sprague said.
The amount the university will save was not reported, nor was the number of employees affected. Sprague said he was told the decision was made without a cost-benefit analysis.
UW spokesman Chris Boswell said the benefit change was budget-driven and necessary to reduce the uncertainty surrounding what could be a substantial expense to the university.
“Budget constraints prevent the university from continuing with open-ended liabilities of this type,” Boswell said.
Boswell said it was undetermined how many employees would be affected, largely because there was no way of knowing how much sick leave a person had accrued until they actually retire.
The cost savings was equally uncertain, according to Boswell.
“Significant over the long run, but indeterminable until the payout is made,” Boswell said.
Meanwhile, Sprague said he would be presenting a resolution to the Faculty Senate requesting the board reverse its decision and, at a minimum, have it apply only to new employees hired after the July 1 cutoff date.
The decision was part of a broader $26 million budget-reduction package approved by the board at the June meeting. In that plan, 70 vacant positions were cut, overtime was eliminated, faculty was asked to carry more classes and likely research less, and an early retirement plan was offered that was anticipated to reduce as many as 50 more positions.
The Legislature this past session had already trimmed the university’s spending by about $3 million a year in addition to not funding some $13 million in costs for a new financial and reporting system, increased utility expenses and other needs.
The board action followed Gov. Matt Mead’s call in May for an additional 8 percent cut to the state’s $3 billion two-year budget because of declining revenue stemming from the energy slump. Mead told the UW trustees that the university would see its state support reduced by about another $35 million.
Overall, UW is facing some $40 million in budget reductions in the next two years.