Stimulus Funds University…Retirements?

, Bethany Stotts, Leave a comment

Over $43 million in federal stimulus funds will be spent on outgoing Iowa state university employees, reports the Press Citizen today.  University officials claim these monies—directed toward the retiring or those who already took early retirements—will “save jobs” in the end.

Gunnar Olson reports:

More than $43 million of federal stimulus money meant to save or create jobs is being spent on salaries and benefits for outgoing employees by Iowa’s three state universities.

The University of Iowa has directed $33.4 million in stimulus money to the salaries of employees taking early retirement or otherwise leaving the university by June 30. Iowa State University will use $5.9 million and the University of Northern Iowa $3.6 million on the salaries and benefits of employees who took early retirements.

University officials defended their use of the money, saying the one-time cash infusion is wisely spent on temporary costs, as opposed to ongoing expenses that would have to be somehow funded or cut in the future.

“The money truly is saving jobs,” University of Iowa vice president and treasurer Doug True said. “I know that. I believe it to the bottom of my feet.”

According to Olson, the Iowa government allocated $79.4 million in stimulus funds to these three universities, after which Gov. Chet Culver ordered $58 million in cuts from the Universities. Including the retirement incentive payout mentioned above, that leaves a the three schools with a loss of about $21.6 million. This decreases to a $15.9 million shortage after students  next semester are required to pay an additional $100 tuition surcharge.

Was this a wise investment?

“I am quite sure it kept people employed longer than they otherwise would have been,” said Ellen Rasmussen, ISU’s associate vice president of budget and planning.

The universities also are imposing a $100 tuition surcharge next semester that is expected to generate $5.7 million and help them work around state budget cuts. But by using the federal stimulus money, officials said they were spared from having to lay off employees to meet the steep budget cuts from the state, easing the transition to smaller budgets.

“I think it would be safe to say that we’ve saved over 100 positions as a result of the use of these stimulus monies — more than 100,” said Tom Schellhardt, UNI’s vice president of administration and finance.

So…. the University of Northern Iowa (UNI) spent $3.6 million “on the salaries and benefits of employees who took early retirements” and is proud that it saved about 100 positions–at a cost of about $36,000 apiece. Well, at least that’s better than the $160,000 per job cited by ABC’s Jake Tapper, or more.

Among the early retirement incentives was “five years’ [sic] of health insurance,” reports Olson.

Bethany Stotts is a staff writer at Accuracy in Academia.