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College Announces Retirement Incentive

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Voluntary program is component of reducing expenses institution-wide

Dartmouth staff members age 55 and older, with 10 years of continuous service, were notified in December of a new, voluntary incentive program under which they can choose to retire between Jan. 1 and Aug. 31, 2009.

The worldwide economic downturn has had a significant impact on financial resources at Dartmouth and other colleges and universities nationwide. In November 2008, President James Wright announced a consultative process to cut projected institutional expenditures by up to 10 percent, or $40 million, over the next two fiscal years.

"We must pay attention to the very human element that is involved," said Provost Barry Scherr and Executive Vice President for Finance and Administration Adam Keller in a Dec. 12 letter to employees. "We value our people and want to pay particular attention to the anxiety over the process. Given that more than half of the College budget provides salary and benefits for Dartmouth employees, we know that compensation will be part of the solution. That means that annual salary increases will not be what they have been in recent years and the number of employees at the College will need to be reduced in the coming months."

Initial cost control measures were implemented in November, including an external hiring freeze for staff positions, meaning that open positions should be filled first by internal candidates to the extent possible. "The College may have to replace some of the retiring employees," says Traci Nordberg, chief Human Resources officer. "More positions may open up for our internal candidates as some employees choose the early retirement option."

Employees eligible for the early retirement plan have until Jan. 16 to make a decision on whether or not to accept the offer. Those who accept will receive a payment equal to an additional six months of salary or wages beyond the date they end their Dartmouth employment, less required deductions.

Dartmouth has a total of slightly more than 3,300 staff positions (full time plus part time) institution-wide. About 600 of those staff  members are eligible for the early retirement plan. The incentive program does not apply to tenured faculty, who have a separate retirement plan.

"This option is completely voluntary," says Nordberg. She notes that employees suggested that Dartmouth implement such a plan as one way to help reduce institutional expenses in an effort to meet current financial challenges.

The value of Dartmouth's endowment dropped 6 percent (or $262 million) during the quarter ending Sept. 30, 2008, for an ending value of $3.39 billion. More than a third of the College's $420 million operating budget (excluding grants) is supported by distributions from the endowment.

Update on budget Process

Barry Scherr and Adam Keller, who are leading the College's cost-reduction efforts, presented an update and answered questions at an employee forum Dec. 11 (a previous forum was held Oct. 23). Elements include:

  • A review of contingency plans to understand the potential impact of significant budget reductions. Discussion of plans extends into January.
  • A review of decisions about new construction projects, major renovations, and compensation plans. Plans will be made on a tentative basis in January.
  • Identify tasks that cross department and division boundaries. Select some for review to determine if they can become more efficient or be scaled back.
     

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Last Updated: 1/4/09