TTU expects $3.3 million annual savings from employee buyout
COOKEVILLE, Tenn. (June 12, 2009) – Tennessee Tech University could save as much as $3.3 million annually in salary expenses as a result of its voluntary buyout program offered to employees this spring.
All 58 applicants who met eligibility requirements were accepted and will leave the university June 30.
Campus officials originally set a goal of 40 positions for the program, including 14 faculty, 10 administrative, and 16 clerical and support positions. Response from the campus proved greater than expected with 14 eligible faculty, 12 administrative, and 32 clerical and support staff members submitting applications.
The university’s cost to accept all 58 applicants will be approximately $1.9 million, according to Mike Cowan, TTU’s director of human resources. Annual savings are expected to total about $2.9 million the first two years and $3.3 million thereafter.
“The program offered a unique opportunity for those who felt it was the right time to leave the university to pursue other opportunities or continue their education or training,” said TTU President Bob Bell. “We were fortunate to be able to offer this option as a way to reduce expenses.”
Stimulus funds provided by the federal government will be used to offset the immediate cost of the program.
The decision to accept all of the applicants increases the cost of the program but increases the long-term savings as well. It also gives campus officials the flexibility to fill a few priority positions, Cowan said.
The university offered the voluntary buyout program to help address budget reductions from the state and economic challenges in a way consistent with its vision, according to Bell.
The program allowed employees to voluntarily leave the university with severance pay and benefits. The severance package included payment equal to three months’ base salary, $500 for each year of service, the next scheduled longevity payment, the equivalent of six months’ worth of the university’s portion of health insurance payment, and tuition for up to two years at a qualifying institution.
Fifty-one employees who took advantage of the program are also participating in a retirement program. Approved faculty will be able to participate in post-retirement services, allowing them to teach some classes on a part-time basis for the next two years until stimulus funding is depleted and normal attrition allows university officials to meet class staffing needs.
The budget proposed earlier this year by Governor Phil Bredesen will reduce TTU’s permanent state funding by almost $12 million. Campus officials have been planning to address those reductions in a variety of ways, including personnel cuts through the voluntary buyout program. Federal stimulus funds are expected to offer temporary resources to help with the transition.
Even with stimulus dollars, campus officials are preparing for permanent state funding reductions of $12 million, or 26 percent of state appropriations (13 percent of its current operating budget).
TTU already experienced a budget reduction at the beginning of the current fiscal year ($2.7 million), and then a reversion where more money ($1.6 million) was taken back by the state permanently.