Dear Contract College Faculty Colleagues,
Due to the dramatic cuts in categorically funded programs, and as a cost savings measure as part of the District’s budget reduction goals, the District will soon be proposing an early retirement incentive to all contract college faculty members. We have agreed with the District’s proposal, and final approval of the program will be considered by the Board at its September 24th, 2009 meeting.
The value of the Early Retirement Incentive will equal 85% of your base salary if you retire prior to December 31, 2009, or will equal 70% of your base salary if you retire between January 1-June 30, 2010.
Here is an outline of how the program will work:
The average base salary for a contract faculty member within the target demographic (55 years or older, 225 faculty members in this cohort) is currently $86,800. If this average faculty member were to elect to retire prior to December 31, 2009, said faculty member would receive an annuity with a value of 85% of $86,800 = $73,780. There are several options this faculty member could “purchase” with this value of annuity:
1) A lifetime monthly benefit of $448.90;
2) A lifetime joint benefit with 50% survivor income of $417.27;
3) Lifetime or ten years option, whichever is longer, of $435.84;
4) Five year monthly payments of $1,231.57;
5) Six year monthly payments of $1,054.16;
6) Seven year monthly payments of $927.79;
7) Eight year monthly payments of $834.79;
8) Nine year monthly payments of $761.69;
9) Ten year monthly payments of $703.49;
OR, faculty can use part (or all) of their annuity value to purchase District health insurance benefits for a certain length of time, and then apply the balance (if any) to buy a smaller annuity. Any amount of mix and match between health benefit purchase and annuity value will be allowed. Taking the example above, the annuity value of $73,780 would enable the faculty member to purchase up to 76 months of medical benefits. If the faculty member chose to only purchase half that amount of benefits (38 months), then the annuity value balance (1/2 of $73,780 = $36,890) could be applied to purchase one of the annuity options listed in 1-9 above, but at a pro-rated value.
Now for the more complicated (but still good) part: We currently have language in our collective bargaining agreement (cba) that allows faculty between the ages of 60-65 to qualify for District paid health insurance. This will still apply to all faculty who retire under this incentive, regardless of your age, provided you have 20 years of District service at the time of your retirement, and you elect to purchase medical benefits with part of your annuity until you reach age 60 (in other words, you can’t have a break in coverage). Let’s look at two examples:
a) You are age 58 with 20 years of service at the time of your retirement. You can elect to use part of your annuity to purchase two years of health insurance, and then when you turn 60 the District plan will kick in until you reach age 65 (at no cost to you), thus allowing you to use the remainder of your annuity value to purchase one of the annuity options listed in 1-9 above.
b) You are age 62 with 20 years of service at the time of your retirement. You will receive District paid benefits as per the cba until your 65th birthday (at no cost to you), at that time Medicare coverage will begin, so you can apply the full value of your annuity to purchase one of the annuity options listed in 1-9 above.
So what’s the catch? There are a few conditions which must be met in order to participate in this program:
i) You have to have five years of service in the District.
ii) You must be at least 55 years of age at the time of your retirement.
iii) You will lose you eligibility for any other post-retirement benefits which are currently in the cba such as pro-rata, reduced workload, etc.
iv) You must be in paid status with at least a 0.50 FTEF load.
v) You will not be eligible to be re-employed in the District as a contract employee (you may come back as an adjunct faculty member, but you will not have adjunct priority of assignment rights).
vi) Your retirement notice must be submitted within the period September 21, 2009 – December 18, 2009, with a retirement date of December 31, 2009 or earlier in order to qualify for the 85% annuity value.
vii) Your retirement notice must be submitted within the period December 19, 2009 – January 31, 2010, with a retirement date of June 30, 2010 or earlier in order to qualify for the 70% annuity value.
viii) Medical coverage will be at the Kaiser rate for active employees. However, your future costs will be pre-determined by the current value of your annuity. You will know up front exactly how many months of medical coverage your annuity value will purchase if you choose to do so.
What happens next?
The Board of Trustees will be asked to give final approval of this program at this Thursday’s Board meeting. Subsequent to Board approval, the District will be contacting all eligible faculty with details regarding informational seminars conducted by the insurance carrier to cover the details of the program, in addition to scheduling individual appointments with interested faculty in order to determine the precise amount of your annuity value based on your current base salary.
Although we will definitely miss the contributions of the faculty who elect to retire under this program, we are pleased the District was able to offer these benefits at this time. If you have any questions regarding the foregoing, please do not hesitate to contact me.
Jim Mahler, President
AFT Guild, Local 1931