Retirement Options for Contract Faculty
Walk into your department office or service center any day of the week, and you're likely to hear faculty talking about retirement. As the State's budget problems take on greater significance, AFA receives more and more questions about two important retirement options for contract faculty—the Early Retirement Option (ERO) and the Pre-retirement Reduction in Workload Program (also known as The Willie Brown Act). These are extremely valuable options, but many faculty members have expressed confusion about how they work and the differences between the two.
The Early Retirement Option — Another Kind of Golden Handshake
What is the ERO?
In 1990, AFA negotiated the Early Retirement Option (ERO)—an option that many faculty members at other community colleges regard with great envy. Essentially, Article 24.01 allows a regular faculty member to retire at a minimum of age 55, and the District will pay for the same medical/dental benefits package that currently employed full-time faculty members receive, until the retiree reaches age 65.
An alternative to receiving these benefits would be a monthly payment option equal to the cost of the premiums that would otherwise be paid for medical and dental benefits. In either case, upon reaching the age of 65, the retiree would then be eligible for a monthly medical/dental stipend (currently, $84 for the retiree only and $136.50 for the retiree and spouse or dependents).
Depending on the age at which an individual retires, this ERO benefit can total as much as $120,000 over a ten-year period; the amount of the unfunded liability must be calculated and set aside in a special reserve fund (GASB). This fund will be used to pay for this ongoing future liability and may not be used by the District for any other expenses. This is why faculty must apply and be approved by the Board of Trustees in order to receive this potentially costly benefit.
Who is eligible?
The requirements for eligibility are outlined in Article 24.01.B of the AFA Contract. Here is a summary:
• Regular faculty who have completed the equivalent of a minimum of fifteen (15) years of full-time employment with the District, five (5) of which must have been as a regular faculty member. Probationary or regular service (including classified service) at less than 100 percent and adjunct faculty service is computed and accumulated on a pro-rata basis;
• Fifty-five (55) or a maximum of sixty-four (64) years of age on, or before, June 30 of the final year of service (or January 31 in the event of a mid-year retirement);
• Satisfactory completion and submission of the necessary Retirement Application and Agreement Forms by the applicable deadline.
Can I work someplace else?
The simple answer is "yes, you can," but, if you become re-employed, some serious restrictions might apply. For example, if the early retiree subsequently becomes employed elsewhere, the benefits provided by the District under the ERO provisions become secondary to those provided by the new employer.
What about my benefits?
Should the early retiree terminate his/her medical/dental benefits package with the District in order to use the stipend elsewhere, the District cannot guarantee that the early retiree will be reinstated by the insurance carrier under SRJC group coverage being provided to the currently employed faculty. For instance, if you moved to Arizona, were insured under another carrier there, and subsequently moved back to California, the District could not guarantee your approval for any currently existing SRJC health plans.
What should I do if I'm interested in the ERO?
If you are interested in taking advantage of this option, contact Louise Burke in Human Resources at ext. 4304. The submission deadline for each academic year is the first working day of October (for this year, the deadline is Tuesday, October 1, 2013), and faculty considering a mid-year retirement in the 2013-14 academic year must apply in the first week of the fall semester. In special cases, exceptions to these deadlines can be made, but the final decision lies with the Superintendent/President and the Board of Trustees. A detailed description of this retirement option is located in Article 24 of the AFA/District Contract: http://www.santarosa.edu/afa/Contract/Articles/art24.pdf.
The Pre-Retirement Reduction in Workload Program — Easing into Retirement
What is the Pre-retirement Reduction in Workload Program?
When we have discussions about retirement, we realize that many faculty members have confused the ERO with the Pre-retirement Reduction in Workload Program. They are two entirely different programs that provide very different benefits to faculty. The Pre-retirement Reduction in Workload allows eligible faculty members to make a contract with the District to reduce their workload assignments to a specified percentage and for a specified period of up to ten (10) years. Other requirements under Ed Code Section 87483 are:
• The employee has to have reached the age of 55 upon the effective date of participation in the reduced workload program;
• Employment on a full-time basis performing creditable service subject to coverage under the CalSTRS Defined Benefit Program, with a minimum of ten years of credited service, of which the immediately preceding five years were full-time employment without a break in service (sabbaticals or other approved leaves of absence do not constitute a break in service);
• The option of the reduced load shall be exercised by the employee but can only be revoked with mutual consent of the employee and the District;
• Pro rata salary based on amount of load elected by the employee (amount must be no lower than 50 percent);
• Employee receives same health benefits package as currently active employees;
• The period of reduced load shall not exceed the employee's 70th birthday.
Essentially the individual would choose a period of up to ten years and designate a pro rata load. Some faculty members believe that this means 50%, but each individual may choose a specific percentage of load (at a prorated income). The reduced load may not be less than 50%. Many faculty members with a 50% load choose to work only one semester of the academic year, but others have chosen 60% or 70% as a way to gauge the feasibility of actual retirement. Choosing a 60% load would mean working a pre-determined load combination that averages 60% over the academic year (e.g., 80% in the fall and 40% in the spring, or 60% in both semesters). The District and the employee must mutually agree to any changes to the load over the course of the reduced-workload contract.
What about my benefits?
Another area of confusion pertains to payment of benefits. Should you choose the Pre-retirement Reduction in Workload, you will be required to contribute to CalSTRS as if you were working a 100% load, and the District will continue to pay its full contribution. The District will also pay your premiums for medical, dental, and vision benefits at the same level as if you were working a 100% load. The great advantage is that, during this period of reduced workload, you accrue 100% of credit toward your CalSTRS years of service and receive health benefits paid at the same level as if you were working at 100%. Many of our colleagues have worked this pre-retirement reduced load until they reached the magic 25- or 30-year mark, where CalSTRS incentives are so important.
What should I do if I'm interested in the Pre-Retirement Reduction in Workload?
If you have questions or would like to request a packet of forms and materials, contact Louise Burke in Human Resources at ext. 4304 or firstname.lastname@example.org.
In looking toward retirement, you may be eligible to choose either or both of these options, depending on your length of service in the District and years of service in CalSTRS. Those decisions are yours to make, but AFA recommends that you consult with a CalSTRS counselor and your tax advisor before you forge ahead. You can make an individual telephone appointment with a CalSTRS counselor in Sacramento by calling 1 (800) 228-5453. CalSTRS will set up an hour-long teleconference to discuss your situation—you may choose the location (home, office, or anywhere else) and time that works best for you. Or, you may make an appointment with a counselor at a CalSTRS regional office. You can schedule a session with the Santa Rosa CalSTRS office, located in the Sonoma County Office of Education building on Skylane Blvd., by calling 1 (800) 228-5453 and selecting option 3.