College preparing employee buyouts, will send notices as soon as next week
MIDDLEBURY — As soon as next Friday, an unknown number of faculty and staff at Middlebury College will receive voluntary buyout offers from the college that will give them incentives to leave their positions.
The offers come after months of deliberation by the college’s senior administrative staff and are the culmination of a workforce rightsizing initiative launched in June 2018.
The college aims to reduce staff compensation costs — before employee benefit expenses — by about 10 percent before the end of the 2018-2019 academic year. In total, the college hopes these staff and faculty buyouts will save the institution $8 million annually.
Changes in staffing at Middlebury College have an effect throughout the community. The college not only brings a wealth of cultural and intellectual resources to the area, it is also the biggest employer in Addison County.
“The college is an economic engine for Middlebury and the outlying communities,” said Middlebury selectboard Chairman Brian Carpenter. “It is an extremely valuable part of our local community economically, culturally, and it is an integral part of the local fabric. We need the college to be healthy and a long-term partner.”
The process was announced by President Laurie Patton on June 19, 2018, as part of an effort to offset an operating deficit that peaked at $22 million in 2016. As of the end of fiscal year2018 last June 30, Middlebury College has an endowment of about $1.1 billion and in January 2018, Executive Vice President for Finance and Administration David Provost reported that the operatingdeficit was reduced to $13.7 million in FY2017. The operating deficit was reduced to $11.3 million in FY2018, and the administration expects a deficit of $7.5 million in FY2019.
According to Bill Burger, vice president of communications and chief marketing officer for Middlebury College, staff compensation accounts for about 70 percent of the college’s annual operating costs, which came to about $278 million in 2018. The same year, the college brought in about $274 million in total revenue.
“It would be difficult to achieve our goals of a balanced budget and moving the college into a place where it has a reasonable surplus without addressing compensation,” Burger said.
Over the course of this past fall, staff vice presidents across the college led discussions within their respective departments about where work could be done more efficiently and where there was need for more staffing and resources. In December, each department submitted two plans to top administrators: one that cut its staff compensation costs by 10 percent and one that cut costs by 15 percent. Senior administrators are currently reviewing those plans and intend to act on them as soon as next week.
Officials are wrapping up efforts to identify departments that can sustain cost-cutting. In early February the college will send all employees in those departments offers to take an “elective staff incentive separation plan.” The finances of each employee’s plan offer will depend on their salary and length of employment at Middlebury. In cases where there are multiple people holding one position, the entire department will receive an offer. In those scenarios, if more staff apply for the plans than necessary, those with the greatest seniority will be made official offers.
Employees must respond to the offers by early March, and final binding decisions are due in mid-April.
INVOLUNTARY JOB LOSS?
If the college does not achieve its financial goals through the voluntary incentive plan, it will consider involuntary separations.
“We have not talked about or designed a process for an involuntary plan because at this time we don’t believe it will be necessary,” Burger said on Monday.
Faculty will undergo a different elective process. On Sept. 13, 2018, 117 eligible faculty members were offered applications for a new Faculty Incentive Retirement program. The program, also a product of the workforce planning process, offers retirement incentives to tenure-track, tenured or termfaculty who have worked in a benefits-eligible position at Middlebury College for at least 10 years and are older than 45. The offer includes a lump-sum payment of up to one year of salary and a Health Reimbursement Account, along with funds to support scholarship and research for up to three years after retirement.
Ultimately, 23 College faculty accepted offers and submitted paperwork to receive them by the Jan. 18 deadline.
“We were pleased with the positive reception of the Faculty Retirement Incentive Program and it accomplished all we set out to do,” Burger said.
This week, administrators are working to determine where costs should be cut among staff.
“A lot will be happening in February,” Burger said. “We don’t know the number of positions that will be eliminated right now, but we do know that about 40 new positions will be created.”
Staff whose positions have been eliminated will be eligible to apply for those new positions, which will likely be finalized in February or March.
Burger said Monday that, in departments where the college determines it can cut costs, employees will be notified before they receive incentive separation plans next week.
“Managers have already had discussions with staff. Everyone who is going to be receiving an application will have had a conversation before the letters go out,” he said.
Burger says the college does not anticipate any changes to class size as a result of this cost-cutting exercise. He says the institution “expects to fill the vast majority of (eliminated faculty) positions within the next couple of years and sees this as an opportunity to hire in areas where there is the greatest need because of shifting course interest.”
Furthermore, “Most, if not all, of those positions will be replaced by new, more junior tenure-track faculty positions,” Burger said, which he acknowledged have lower salaries and less expensive benefits packages.
According to a report the college published in 2014 titled “The Economic and Community Impact of Middlebury College,” the college was then the largest employer in both Middlebury and Addison County, employing about 1,500 faculty and staff, including 1,098 full-time employees.
According to the same report, the college generated $220 million in economic activity through its annual expenditures in 2011, much of which manifested as wages and benefits and local capital construction projects. The same year, the college paid its Vermont employees, many of whom live in Addison County, $60.6 million in wages and $19 million in benefits. In 2018, it spent $129 million on salaries and wages and $44 million on employee benefits.
Middlebury Selectman Carpenter said this week that though he’s always sad to see any business in Middlebury or Addison County cut jobs, he hopes staff who leave the college will consider working for other Middlebury businesses, whom he says are “scrambling to find good staff.”
He said the college has a long history of financially supporting community projects.
“The Cross Street bridge and the new town offices and recreation facility are all examples of projects that hinged upon contributions from the college,” Carpenter said. “The town doesn’t have the size to build projects of that magnitude alone.
“We need a healthy college,” he added.
Burger says the college hopes these staffing reductions will allow it to be a better community partner in the future.
“The stronger we are in our finances, the better community partner we can be,” he said. “If we can operate in a place of financial strength, we will be able to better collaborate with the town and county than we can today.”
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