Fact Checker here.
OK so a professor has an IRA that has shrunk.
Is Duke GIVING the professor money, in effect becoming the insurer of the success of his investments?
No matter how risky an investment strategy the professor elected?
Or is this incentive to retire a LOAN to the professor? If a loan, at what rate? When does it have to be paid back?
What's the maximum any one professor can get?
How is the maximum determined? Is it tied to the highest value ever in the professor's IRA? How do we determine the amount of the shrinkage?
Suppose we give the professor money, but then the value of his IRA bounces back. Now what?
Will professors who properly channeled their late-in-life investments into conservative choices that have not lost their value just have to stand by while their colleagues enjoy this program?
As I understand other details, the provost is taking money held for the university as a whole and giving it temporarily to individual budget units to distribute -- that is, to the Law School, Fuqua, Trinity College and so forth.
I assume this money will come out of "funds functioning as endowment," which is to say reserves that have built up that the Trustees could have designated as permanent, untouchable endowment but have not yet done so. We include "funds functioning as" in Duke's overall dwindled total of $4.4 billion endowment. I assume therefore, that we will lose annual earnings on the amount devoted to this incentive program.
Each of these units must pay any money it gets back within five years. This means two and possibly crimps on the operating budget of each unit in the years ahead:
A) their annual operating budget must be shrunk by a percentage determined by the Provost to meet President Brodhead's goal of a budget in 2011 that is $125 million per year less in the 2008-09 school year.
B) they must pay this incentive money back, meaning they have to take it out of their annual operating budget over a five year span.
C) will the budget units also have to pay interest on their loans?
Loyal readers, I do not see how the individual schools are going to pull this off. It will be difficult enough to achieve the cutbacks in A) much less adding B) which is amortization of the loan and possibly C) which is interest on the loan.
Loyal readers, have you ever heard of anything like this? I try to keep abreast, but I have heard of no other college or university with such a scheme. I am aware of no corporation with such a scheme -- nor local, county, state or federal government with their overly generous pensions.
We are owed far more details than we've heard from the Provost. And far more than appear in today's Chronicle.
As for the statement from Financial Guru Trask that the turnover of faculty has dropped from 15 percent to 8 percent annually, Fact Checker must tell you this is most misleading. A principal reason there is no one leaving is that there are no jobs elsewhere -- the entire process is frozen. This has nothing to do with a professor's delaying retirement because his IRA has gone to hell.
I would like to hear from Trask his estimate of the number of professors who might conceivably be eligible for this scheme; come to think of it, Tallman, you can ignore this request too because your estimates on everything else have been so far off.
Some readers may be saying, "Fact Checker, c'mon, what do you mean his estimates have been off?" Readers, fish out his annual report for the 2007-08 fiscal year and read his introduction. I'd tell you more, but then my shallow readers would say that I am drifting and also being tedious.
In sum, Fact Checker is just shaking his head. Early on, I wrote that Duke's response to the fiscal crisis -- what the new Trustee chair Dan Blue has properly called Duke's "dire financial strait" -- must spread the pain.
The burden cannot be borne alone by employees on the lowest rungs, 600 of whom are now staring at the prospect for lay-offs. Unfortunately this scheme to help professors retire seems like it will lard the coffers of Duke's highest paid people, further tilting the scales against the low paid. Is immoral too strong a word?
OK people, that's today's essay. Now today's challenge:
-- 14 academic deans of Trinity College (plus non-academic deans)
-- 10 deans in the Arts and Sciences
-- at least 10 Vice Provosts (so many it's hard to keep updated, which is why we need an Executive Vice Provost to keep count).
By December 1, how many of these people will Mr Brodhead shed? Seems to me that so far, with the single exception to an executive assistant to the VP for PR, I have heard of no one from the administration affected.
Oh yes, I used the word shed. It's popular now in the academic world when someone loses the extra stipend that the title of Dean or Department Chair brings, to continue the extra stipend for several years and then phase it out.
Look, if you are no longer doing the extra job and extra work, you aren't entitled to extra pay. Enough is enough!
√Thanks for reading.