A merit-based salary increase approved by the University of Missouri Board of Curators last week will cost the MU campus about $10 million, most of which will be born by individual academic units and departments.
The board unanimously agreed to a 2 percent increase in the salary pool at its annual meeting in Columbia, despite Gov. Jay Nixon’s decision to trim an additional $4.4 million from the UM System’s fiscal 2012 budget, which goes into effect July 1.
Tim Rooney, MU’s budget officer, said the flagship campus will fund $3.1 million of the increased salary and benefit costs. That means department managers will have to work with their existing budgets to cover the other $6.9 million.
“The campus doesn’t have the funding to cover it all,” Rooney said. “So the units will be asked to cover most of it, by cutting positions and reallocating other expenses within their own budgets to find the money.”
MU has been anticipating a $12.7 million cut in state appropriations for 2012. Increases in tuition and enrollment, coupled with continuing to defer needed buiklding maintenance and repair, were enough to cover a projected $20 million deficit.
Rooney said it’s not clear yet if the System’s four campuses will have to cut their budgets further in light of Nixon’s last-minute reduction in the state’s allocation. Curators were presented with a list of options to consider, including capping enrollment and eliminating the Enterprise Investment Program, which supports the creation of new businesses in the state. None of the $5 million allocated to the program has been spent.
In the end, the board charged interim UM System President Steve Owens with balancing the budget. “I hope we will find a method in which the board can stay engaged and understand what we’re going to do about those additional cuts,” said board Chairman Warren Erdman.
Curators also approved a proposal to create a new “hybrid” retirement plan for UM faculty and staff who are hired after Sept. 30, 2012. While details of the plan haven’t been determined, it would include elements of the current defined-benefit plan, which guarantees employees some level of retirement income, and a defined-contribution plan, which requires employees to invest on their own for retirement. Current employees would not be effected by the change.
Two curators — Don M. Downing and Wayne Goode — voted against the hybrid concept. Downing said the current plan, which guarantees vested retirees a pension equal to 2.2 percent of their salary for every year of employment, remains in good financial shape.
“I don’t think we have determined the viability of the existing plan, and I think we should do that first,” Downing said.
Goode said a hybrid plan would shift more risk to employees, who may not have the knowledge to invest wisely toward adequate retirement income. “That risk should be minimized,” he said.
Erdman said administrators and employees have had extensive discussions about the future of the retirement plan for the past two years. Those conversations, he said, convinced him that future employees should share the risk of pension investing with the university. Owens echoed that view.
“I think it’s been studied thoroughly and in good faith by everybody involved, and it’s been a very good example of shared governance,” he said. “I think today we take a step toward moving forward.”
Curators said they expect a detailed plan by fall, with a vote likely in October.