Current Projects - Compensation and Benefits

Total Compensation Review

Hewitt study – The University has asked Hewitt Associates, a company that is very familiar with pay and benefit issues in higher education, to complete a total compensation benchmark analysis.  Purdue also asked Hewitt to provide benchmark data on the benefits provided to part-time employees.  Hewitt is expected to report the results of the studies in early April.

Executive Interview with Luis Lewin, vice president, human resources (04/07/2010)
• Hewitt Study – Total Compensation Market Analysis (PDF)

Retirement contribution - The Board of Trustees has asked the University to assess the rebalancing of its total compensation, focusing on an employer retirement contribution of 10 percent.  The trustees cited rebalancing as a key factor in repositioning Purdue for future competitiveness, improved recruiting and reputation, and flexibility for employees.  Any retirement rebalancing would affect only faculty and staff covered by the TIAA-CREF retirement plan.  Retirement rebalancing does not apply to employees covered by the Public Employees' Retirement Fund (PERF) retirement plan. 

Medical plan costs - The Board of Trustees has also asked the University to review the employer’s and employees’ share of medical premium costs to align our benefit offerings with the market and ensure the appropriate level of cost sharing with employees.  The Board is targeting an 80/20 premium split, with Purdue paying 80 percent of the premium cost and employees paying 20 percent of the cost.  Purdue currently pays 87 percent of the premium cost overall and employees pay 13 percent. 

Recurring Savings Options

Early retirement incentive - Early retirement incentive programs encourage employees who are approaching or at retirement age to voluntarily retire earlier than they might have otherwise. 
Early retirement can accomplish the following:  

Revision to overtime pay policy - Department heads and supervisors authorize overtime when there is an increased workload, an emergency, or work that requires employees with certain skills, training, or experience.  The current University overtime pay policy is more generous than is currently required by the Fair Labor Standards Act (FLSA).  By changing the overtime pay and call back pay policies, employees will be compensated for their work in accordance with the FLSA, and Purdue can realize recurring cost savings.

Non-Recurring Savings Options

Furlough/pay reductions - In forums and discussions across the University community, employees have suggested furloughs as a mechanism to reduce costs and bridge the budget gap.  While temporary furloughs can provide one-time cash savings, they will not lessen or reduce the recurring budget gap.  A potential unpaid three-day furlough during Purdue’s winter break is effectively a 1.15 percent reduction in pay (3 workdays out of 260 workdays per year = 1.15 percent). 

Objectives for implementing a furlough would be to:

Extend constrained hiring

Temporary suspension of retirement contributions - A temporary suspension of retirement contributions is an alternative to furloughs and/or pay reductions that does not immediately impact an employee’s take-home pay.  A one-month suspension of retirement contributions is effectively an 8.3 percent reduction in the University’s annual retirement contribution (1 month out of 12 months = 8.3 percent).