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Draft approved by the Executive Committee on December 9, 2002. Final version approved by theSecretary of Education on January 6, 2003.
University of Virginia Separation Incentive Program For Faculty
 
 
 
 
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Draft approved by the Executive
Committee on December 9, 2002.
Final version approved by the
Secretary of Education on
January 6, 2003.

ATTACHMENT B

University of Virginia
Separation Incentive Program For Faculty

I. Preamble


The University of Virginia Separation Incentive Program for Faculty (the "Program") has been established to meet institutional needs created by reductions in the University's 2002-2004 biennial budget. The program is designed to reduce or reallocate positions in keeping with budgetary and programmatic needs.

In order to reap budgetary savings during Fiscal Years 2003 and 2004, this program will apply only to separation contracts executed in the Spring of 2003. Applicants to the severance portion of the program may separate no later than May 2004 for nine-month faculty, and June 2004 for 12-month faculty. Applicants to the phased retirement portion of the program must begin their phased retirements no later than August 25, 2003, for nine-month faculty and June 25, 2003, for 12-month faculty. The total cost in any fiscal year of the Separation Payment Contract portion of the Program may not exceed $2 million. The Board of Visitors of the University of Virginia reserves the right to modify, amend, or repeal the Program at any time.

The Program has been designed to meet the management needs of the University and the needs of the faculty. Eligible faculty members may apply for, and if selected, participate in this program. A faculty member's election to participate is irrevocable seven days after the faculty member signs a separation contract. There are no penalties for declining to participate; however, failure to obtain significant budgetary savings as a result of this program could exacerbate budgetary shortfalls and require the University to pursue other more drastic measures.

II. Definitions

Annual Salary: the basic contracted nine-month salary for faculty members with academic year appointments, and the basic contracted twelve-month salary for faculty members with fiscal or calendar year appointments; only salary dollars paid through the University payroll system prior to application to the Program are to be taken into consideration

FRP: The Defined Contribution Retirement Plan for the General Faculty of the University of Virginia, also known as the Faculty Retirement Plan

Faculty Member: each full-time faculty member who is tenured, or serves under a contract with expectation of continued employment pursuant to the University's Policy on the General Faculty

Fiscal Year: the twelve-month period beginning July 1 of each year
Full-time: 40 hours per week, or the equivalent in workload
Program: The Separation Incentive Program for Faculty

Separation: the conclusion of employment with the University, requiring (1) withdrawal from active membership in the Virginia Retirement System (the "VRS") by VRS members; or (2) cessation of contributions to the FRP


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Separation Agreement: the binding and irrevocable contract for separation entered into between the faculty member and the University

Separation Payment: an amount to be paid in periodic installments over not more than 12 months

VRS: the Virginia Retirement System, the defined benefit pension plan for employees of the Commonwealth of Virginia

Workforce Reduction Target: the University's business goal for implementation of this Program

Workload Reduction Period: the period during which the Faculty Member's workload reduces in anticipation of Separation

Year of Service: a year of creditable service, as that term is defined by the VRS, not to include service purchased or granted

III. Objectives

A. To provide a financial incentive for immediate Separation for Faculty that will facilitate the release of resources to the Provost and Executive Vice President for budget reallocation or reduction in accordance with the University's overall budget reduction plan, changes in enrollment, and other University needs.

B. To provide a flexible separation plan that will facilitate Separation by meeting faculty members' changing needs and professional interests in the latter stages of their careers through a gradual disengagement from the Full-time duties of their positions while maintaining retirement contributions.

C. To provide the University more flexibility in hiring new faculty members without completely losing the talents and experience of senior faculty.

IV. Eligibility

A. Participants must be Full-time Faculty Members, as set forth in the definitions above.

B. Participants must have at least 15 years of continuous Full-time service with the University prior to applying for a Separation Agreement.


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C. Participants must be at least age 55 at the time of Separation.

D. Participants must fall within the University's Workforce Reduction Targets.

E. Participants must complete all forms and paperwork required by either the University or the Commonwealth of Virginia, including but not limited to an application and a Separation Agreement.

V. Separation Payment Contract Conditions

A. FRP Participants

  • 1. In exchange for a Faculty Member's agreement to retire or separate from Full-time employment immediately (e.g., by the May 25 following the date of application for nine-month faculty), the Faculty Member will receive the Separation Payment equal to 100% of his/her Annual Salary plus an amount equal to 12 months of the University's contribution to the UVA Health Plan for the level of coverage selected at the time of application or separation, whichever is less.

  • 2. The Separation Payment will be paid in 12, substantially equal monthly [or 26 substantially equal bi-weekly] installments, and will be subject to state and federal withholdings, as appropriate.

  • 3. Separated Faculty Members will not be precluded from seeking employment with the University on a part-time basis in a position that is not eligible for retirement benefits. Conditions of such part-time employment include:

    • a. There must be a bona fide break in service of no less than 30 days.

    • b. The re-employed Faculty Member's part-time duties must be substantially different than the Faculty Member's duties prior to Separation.

    • c. Part-time employment may not be negotiated prior to Separation.

    • d. The Provost's Office or its delegate must approve proposals for re- employment prior to the completion of any re-employment agreement.

B. VRS Participants

1. In exchange for a Faculty Member's agreement to retire or separate from Full-time employment immediately (e.g., by the May 25 after the date of application for nine- month faculty), the Faculty Member will receive either a Separation Payment, or, in accordance with the terms of Virginia Code Section 2.2-3200,


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known as the Workforce Transition Act of 1995 (WTA) and summarized herein at Sections V.B.1.b and c, a WTA Separation Payment or WTA Enhanced Separation.


a. Separation Payment

  • i. In exchange for a Faculty Member's agreement to retire or separate from Full-time employment immediately (e.g., by the May 25 following the date of application for nine- month faculty), the Faculty Member will receive the Separation Payment equal to 100% of his/her Annual Salary plus an amount equal to 12 months of the University's contribution to the UVA Health Plan for the level of coverage selected at the time of application or Separation, whichever is less.

  • ii. Separation Payment will be paid in 12, substantially equal monthly [or 26 substantially equal bi-weekly] installments, and will be subject to state and federal withholdings, as appropriate.

  • iii. Separated Faculty Members will not be precluded from seeking employment with the University on a part-time basis in a position that is not eligible for retirement benefits. Conditions of such part-time employment include:

    • A. There must be a bona fide break in service of no less than 30 days.

    • B. The re-employed Faculty Member's part-time duties must be substantially different than the Faculty Member's duties prior to separation.

    • C. Part-time assignments may not be negotiated prior to Separation.

    • D. The Provost's Office or its delegate must approve proposals for re-employment prior to the completion of any re-employment agreement.

b. WTA Separation Payment

  • 1. Faculty Members who sign a Separation Agreement for immediate separation may elect to receive a Separation Payment based on Years of Service and Annual Salary, in accordance with the schedule below, plus be permitted to

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    continue participation in the UVA Health plan and group life insurance for 12 months after the date of Separation, during which time the University will continue to pay its portion of the premiums for those programs.

  •            
    WTA Separation Payment Schedule 
    Years of Service  Amount of Severance 
    2 or less  4 weeks of salary 
    3-9  4 weeks of salary, plus 1 additional week for every year of service over 2 
    10-14  12 weeks of salary, plus 2 additional weeks for every year of service over 9 
    15 or more  2 weeks of salary for every year of service, not to exceed 36 weeks  

  • 2. Because Faculty Members do not accrue sick or annual leave, WTA Separation Payments will not include any amount for leave payout.

c. WTA Enhanced Separation:

  • Faculty Members who sign a Separation Agreement for immediate separation may elect to convert the cash value of the WTA Separation Payment plus the value of benefits described in section V.B.1.b into VRS Years of Service, subject to VRS requirements. The conversion formula is: WTA Separation Payment plus Value of Benefits divided by 15% of Annual Salary, rounded to the next whole number equals the number of years that can be purchased.

  • 2. The decision to elect a Separation Payment, a WTA Separation Payment or a WTA Enhanced Separation must be made prior to the execution of a Separation Agreement, and is irrevocable.

VI. Phased Separation Contract Conditions

A. FRP Participants

This set of conditions applies to faculty members who are enrolled in the FRP. The option provides for phased reduction in workload and salary with the consent of the Provost or Executive Vice President/Chief Operating Officer, as described in Section VIII. The conditions of the agreement are as follows:

  • 1. Participation may not be for a period exceeding two years.

  • 2. Separation must take place at the conclusion of the agreed-upon Workload Reduction Period. The Workload Reduction Period cannot be extended by subsequent agreement.

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  • 3. Salary will equal fifty (50) percent Annual Salary as defined above.

  • 4. During the Workload Reduction Period, the Faculty Member's workload shall be fifty percent of that required immediately before the beginning of such period.
    The workload may be renegotiated only at the initiative of the Provost or Executive Vice President. An increase in the workload will be granted only at the convenience of the University. Increased effort supported by external funding is also subject to approval by the Provost or Executive Vice President, as appropriate. If a change in workload is approved, salary will be adjusted proportionately.

  • 5. Benefits will be continued in the following manner:
    • a. Retirement: Faculty Members will receive retirement contributions on their pre-Workload Reduction Period salary, subject to the limitations of the Internal Revenue Code. The contribution rate shall be the same as the Faculty Member's pre-Workload Reduction Period contribution rate, subject to the Virginia Code. No distributions are permitted from the FRP during the Workload Reduction Period.

    • b. Health: Medical benefits will continue in full during the Workload Reduction Period. Faculty members will be required to continue to pay their portion of the monthly premium, and the University will continue to pay its portion.

    • c. Other Welfare Benefits: Coverage provided by group life and disability plans will continue with disability coverage based on the full-time equivalent of the proportional salary.

    6. During the Workload Reduction Period, administrative support, such as office space, secretarial support and travel funds will be available to the Faculty Member, subject to departmental policy and funding availability.

B. VRS Participants

This set of conditions applies to faculty members who are enrolled in the Virginia Retirement System.

  • 1. Participation may not be for a period exceeding two years.

  • 2. Separation must take place at the conclusion of the agreed-upon Workload Reduction Period. The Workload Reduction Period cannot be extended by subsequent agreement.

  • 3. Salary will equal fifty percent Annual Salary as defined above.

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  • 4. During the Workload Reduction Period, the Faculty Member's workload shall be fifty percent of that required immediately before the beginning of such period.

    The workload may be renegotiated only at the initiative of the Provost or Executive Vice President. An increase in the workload will be granted only at the convenience of the University. Increased effort supported by external funding is also subject to approval by the Provost or Executive Vice President, as appropriate. If a change in workload is approved, salary will be adjusted proportionately.

  • 5. Benefits will be continued in the following manner:

    • a. Retirement: The VRS member will be placed on Phased Separation Leave, as that term is defined in the Faculty Policies maintained by the Provost. VRS contributions will be made on the Annual Salary and the member will earn full service credit, subject to VRS rules. Average Final Compensation, as that term is defined by the VRS, will be based on actual salary earned. No distributions from the VRS will be permitted during the Workload Reduction Period

    • b. Health: Medical benefits will continue in full during the Workload Reduction Period. Faculty members will be required to continue to pay their portion of the monthly premium, and the University will continue to pay its portion.

    • c. Other Welfare Plans: Coverage provided by the VRS group life plans will continue during the Workload Reduction Period. For VSDP participants, disability coverage will be based on the full-time equivalent of the proportional salary. For non-VSDP VRS members, leave benefits will be paid on the proportional salary.

    6. During the Workload Reduction Period, administrative support, such as office space, secretarial support and travel funds will be available to the Faculty Member, subject to departmental policy and funding availability.

VII. Workforce Reduction Targets

A. Business Justification for Program

The University of Virginia was directed by the Governor to reduce its General Fund appropriation for the 2002-2004 Budget Biennium by 16%, followed by another 12% in Fiscal Year 2003 and 14% in Fiscal Year 2004, for a total of $93.5 million as of December 1, 2002. Further, the Governor has warned state agencies that more cuts may be necessary, particularly for 2003-2004. As a result, the University is


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investigating all means available to reduce operating expenses and meet budget targets, including faculty separations.

  • 1. Each Vice President was required to develop a plan to meet projected reductions in his or her areas.

  • 2. Budgetary units within each Vice President's reporting line underscored that their ability to meet reduced targets may depend on a reduction of personnel, especially at the faculty level.

  • 3. The University strongly favors meeting reduction targets through the use of voluntary separations; however, the University reserves the right to pursue involuntary separations in accordance with University and Commonwealth policies in the event that sufficient savings cannot be obtained through this voluntary Separation Program.

B. Criteria

In the event that funding or other constraints limit the number of applicants who can participate in the Separation Incentive Program, a priority system has been established to choose among applicants. The criteria may include:

  • 1. The impact of the loss of that employee on the University based on the University's strategic plan for the applicant's department;

  • 2. For administrative faculty, the critical nature of administrative duties and the feasibility of other employees assuming those duties;

  • 3. For instructional and research faculty,

    • a. Impact on education, including course load, excellence in teaching, and graduate advising load;

    • b. Impact on scholarship, including publication record, excellence in research, ability to obtain external funds, ability to be replaced on continuing research

    • c. Impact on University service, including service on University or departmental committees

VIII. General Procedures

A. Each eligible Faculty Member who wishes to be considered for either a Separation Payment or Workload Reduction Period must file an application with his or her Dean or Department Head by February 14, 2003. A copy of the application must be sent to the University Human Resources Benefits Division.


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B. The applicant's Dean and/or Department Head will review the application, and mark it either "Recommended for Approval" or "Not Recommended for Approval". The Dean and/or Department Head will forward all applications to the UHR Benefits Division by no later than February 28. The UHR Benefits Division will direct applications from within the Provost's areas to the Provost for approval, and applications of administrative faculty within the areas reporting to the Executive Vice President/Chief Operating Officer to the Executive Vice President for approval. The Provost /EVP review will take into consideration whether the proposed Separation meets the Workforce Reduction Targets, is consistent with the University's overall goals, and is supported by budgetary restrictions. The decision of the Provost or EVP is final, and is not subject to appeal. The University reserves the right to reject any application.


  • 1. No central University resources will be set aside to fund Separation Agreements. Funds to support the program must be identified from the resources currently allocated for the position of the retiring faculty member.

  • 2. All Education and General fund resources freed by Separation Agreements will be returned centrally to the Provost or EVP for reallocation or reduction. To the extent that savings are needed to meet the department's budget reductions, the department will get credit for the savings in the year the savings will occur.

C. If approved by the Provost or Executive Vice President/Chief Operating Officer, a Separation Agreement will be forwarded to the Faculty Member for his/her signature by April 1. The final Separation Agreement will include, among other things:


  • 1. The specific terms of the Separation Payment or Workload Reduction Period,

  • 2. The benefits that are associated with each program, and

  • 3. A General Release and Covenant Not to Sue.

D. All Separation Agreements are irrevocable seven days after they are signed by the Faculty Member.

E. In the event that a Faculty Member becomes permanently and totally disabled after a Separation Agreement is signed, but before the Separation date, the University will provide payments for which provision is made in the Agreement. In the event that the Faculty Member dies after a Separation Agreement is signed, but before the Separation date, the University will not be responsible for any payments under the Agreement and such Agreement shall be considered null and void.