University officials have announced that Duke will offer a cash incentive to salary employees as it tries to reduce its human resources expenses even more.
Although the University has already offered retirement incentives to 825 bi-weekly employees, the retirement package alone does not provide enough money for retirees to live on.
As the next step to reduce its $125 million deficit and cut $50 million from the budget this year, University officials plan to offer an undecided amount of cash to some or all salaried employees who meet Duke's requirements to retire-the Rule of 75, said Kyle Cavanaugh, vice president for human resources.
An employee meets the Rule of 75 when his or her age and consecutive years of service sum to 75 or greater. Cavanaugh said more than 800 Duke employees meet the rule, adding that University officials are "in active discussions" about which positions they might offer an incentive to and how much money an incentive might include.
"It would be a completely voluntary program, and the whole goal of these programs is to reduce the head count so we don't have to do any involuntary separations," Cavanaugh said.
He added that he expects administrators to decide on a package in July following a final acceptance rate from the staff early retirement program. Eligible employees will likely receive an offer in August.
The retirement incentives follow several other efforts to reduce the budget, including last academic year's limited, one-time compensation for employees and the partial hiring freeze. The incentives also come as Harvard University announced June 23 that it would lay off 275 staff employees and 40 more employees will have their hours changed or reduced. Executive Vice President Tallman Trask said "there's no immediate jeopardy" of job loss at Duke.
Still, Cavanaugh said he could not rule out layoffs in the future.
"I think it's still a little too early to tell," he said. "We're working very, very hard to avoid having to do anything like that, but again, whether we have to do anything along those lines is contingent on how successful those other steps are."
So far, the early retirement incentive has exceeded administrators' expectations.
The package was available to staff employees paid on a bi-weekly basis who are at least 50 years old and have worked for 10 or more years at the University. The program has an approximately 17 percent acceptance rate, Cavanaugh said, which is well above the original 10 percent estimate.
Trask said the more than 150 employees who have accepted the package as of June 24 puts the University on track to meet its goal of 200 acceptances. If 200 employees accept the incentive, it will cut $15 to $20 million from the operating budget, Trask said.
Still, according to several staff employees both eligible and not, the package does not provide retirees with enough money to live on. Bi-weekly employees receive a basic pension plan upon retirement, and the monthly payment from Duke is "not enough to make ends meet," said Gary Corona, a postal clerk who is not eligible for the incentive.
Employees feel cutbacks
Staff members said the people who accept the incentive will likely be those who are 62 or older and can draw social security benefits, those who are willing to work part-time or those who have an external source of income.
Georgia Terrell, a senior lead food service worker who is eligible for the early retirement package but has decided to refuse it, said she would have to find an additional source of income if she took the incentive because she is not yet eligible for social security benefits. She said she would not willingly leave a job in this economy.
"We think Duke is trying to make 'a smaller Duke,' we understand that. But there's still the same workload going on," she said. "I just can't see a smaller Duke over here where I work in Dining Services. We have to cook all that food from scratch, and these students come through here for a hot meal, and you're going to need that labor."
Although the University is trying to shrink its staff size, Joe Martin, a security officer who will take the incentive, said he does not think Duke is targeting any specific individuals or groups.
"I don't think the University wants to go to any extreme measures," Martin said. "But unfortunately like in any business... they'll eventually have to make changes if this doesn't work."
Even on a departmental level, the University is already making changes. Duke University Police Department Chief John Dailey said DUPD is losing some staff members to the early retirement incentive, but plans to replace them.
Academic departments are preparing to cut back, too. Michael Munger, chair of the political science department and former Libertarian candidate for North Carolina governor, said all departments are currently working on a "revised strategic plan."
The political science department plans to cut faculty excesses such as visiting professors, research and travel money as well as new technology, copying and extra phone lines, Munger wrote in an e-mail. The department is not cutting academic and instructional resources, he added.
Instead, the department is putting more faculty in classrooms to make up for the loss of adjunct and visiting instruction staff. Munger said the department added two new faculty members, including Sunshine Hillygus, associate professor of government and director of the Program on Survey Research at Harvard.
Munger said he is optimistic about the administration's ability to make long-term changes that will benefit students and Duke.
"If we have trouble for two years, we can make this work," Munger said. "The problems are going to come as we find out what new constraints, and financial challenges, the department and the University are going to have to meet in the longer run.... It remains to be seen if things are going to be anything like they were. I expect that things will be different, though I am not sure just how."
Preparing for the long-run
For other universities, changes resulting from budget cuts are not only imminent, they will directly affect students.
If North Carolina approves a state budget today that includes an 11 percent budget cut across the University of North Carolina system, students at the University of North Carolina at Chapel Hill will feel effects that would be "severe and long-lasting, especially for students' access and for the quality of the education they would receive," UNC Chancellor Holden Thorp wrote in a formal notice to faculty and staff June 2.
Cuts would include eliminating 500 class sessions and admitting 500 fewer students in Fall 2010, Thorp said.
At Duke, academic programs are relatively safe for the 2009-2010 academic year. Steve Nowicki, vice provost and dean of undergraduate education, said academic cuts will be "negligible to none in the coming year." Next academic year may prove different, however, as the University's endowment returns are calculated on a three year average and the 2010-2011 year will have lower returns than this year.
Trask said this year he is focused on cutting excesses in spending and increasing efficiency in the central administration.
As the University works to cut its budget and its $125 million deficit, Nowicki said everyone at Duke needs to change their attitudes as well as their budgets.
"Flat is the new up, and people have to get used to that. No one is used to that."
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