URBANA — With her husband already enjoying retirement — happily reading the newspaper with coffee every morning while she goes off to work — University of Illinois administrator Carol Livingstone has been thinking about retiring for quite some time.
A change in the formula used to calculate her future pension payments, scheduled to take effect July 2, sped up her plans.
"I would have had to stay on another two years to get back to the same level of pension that I will earn this June," said Livingstone, 58, who plans to retire June 30 after 28 years as director of the campus Division of Management Information.
The actuarial change in the state's "money-purchase factor" appears to have prompted a flurry of retirements at the UI — just two years after hundreds of employees took advantage of a retirement incentive intended to trim payroll costs. And talk of further pension cuts to address the state's huge unfunded liability has only added to the anxiety.
"Folks are very concerned with what's happening in Springfield with pensions," said Jack Dempsey, executive director of UI Facilities and Services. "Whether it's true or not, people believe if they retire they secure their benefits. Folks who are on the fence, they're making the choice to go now."
Figures provided by the State Universities Retirement System as of June 12 show the number of people planning to retire before July 2 at the UI's Urbana campus doubled this calendar year over the same period in 2011, from 223 to 491. The university's overall numbers showed a similar trend, with 1,008 employees planning to retire before July 2 this year compared with 507 during the first six months of 2011.
"The numbers are definitely up across our employee categories," said Barbara Wilson, UI vice provost for academic affairs at the Urbana campus.
Month-by-month comparisons don't show a major increase except for one. A total of 49 Urbana employees officially retired on July 1, 2011, but 271 people are planning to retire this July 1, the day before the change takes effect. University-wide, the July figure jumped from 114 to 522. (SURS records retirement dates on the first day of the month following the employee's last day on the job, so June retirees are recorded July 1.)
Retirements at other state colleges and universities are also higher this year, though the growth is not as dramatic. Statewide, the total was 2,171 for the first six months of 2011 and 3,356 this year — a 55 percent increase.
Part of that is due to a natural aging of the work force, with a large percentage of the nation's 77 million baby boomers in their 60s, said Randall Kangas, UI associate vice president for planning and budgeting.
Bill Mabe, executive director of SURS, calls it the "silver tsunami." Retirements have grown every year as the plan matures along with its members, he said. About 25 percent of SURS members are currently eligible for retirement.
Dempsey, the executive director of UI Facilities and Services, said 5 to 7 percent of his workforce has retired annually for the last few years, as boomers age. But this year the numbers are double — 10 to 15 percent. In some departments, that's 45 to 60 workers, he said.
"That's huge," Dempsey said.
A survey by SURS in February showed more than a quarter (25.6 percent) of almost 1,200 employees then planning to retire before July 2 were doing so because of the money-purchase factor change, which is expected to reduce benefits by 7 to 8 percent.
Another 24 percent said they were retiring because they met the age and service requirements. And 18.4 percent said their decision was related to potential pension changes in Springfield.
Legislators proposed cutting retirees' health benefits or cost-of-living increases, though no action was taken before the end of the session.
Wilson said the money-purchase change was the reason cited by most retirees she's talked to. Employees who were planning to retire in the next year or two anyway now have an incentive to do it sooner, she said.
Mabe said most employees would recover any loss in annuity payments by working another 12 months, but workers are nervous and want to lock in their benefits.
"The uncertainty is what's driving people to make choices," he said.
The cuts under consideration in Springfield would affect current and future pensioners alike, so retiring early wouldn't make much difference, officials said.
In fact, higher insurance costs or lower cost-of-living adjustments would make retirement more expensive, which has prompted some employees to work longer, noted Carol Wakefield, chief budget officer for the College of Liberal Arts and Sciences. She is retiring but planned to, regardless of the changes.
Carl Wegel, director of maintenance for UI Facilities and Services, said one 40-year employee who had considered retiring in May changed his mind because of the uncertainty about future benefits. But two others who originally planned to retire in June moved up their retirement dates to May 31, in case legislators approved other costly changes in the meantime.
"I think right now it's not clear whether you're better off in the system or retired. People are waiting to see what happens," said Professor Michael Bragg, executive associate dean for the College of Engineering.
More staff than faculty
Wilson, a UI vice provost, said retiree numbers appear to be higher among civil service and academic-professional workers on campus than the faculty ranks, and Wakefield and Bragg agreed.
But some notable professors are retiring, including award-winning author Richard Powers, who holds one of the first endowed chairs on campus; and Alex Scheeline, an analytical chemist.
Wilson said the voluntary retirement program offered to faculty in 2010 thinned out the ranks of potential retirees. A total of 133 professors, "including some of our most esteemed faculty," took advantage of the program, which offered a one-time payment (up to $75,000) equal to half their base salary. A separate voluntary separation program for other staff drew 420 takers.
The departures were expected to save the university about $19 million a year.
"At some point you don't have a lot of people who are capable of retiring," Wilson said.
Scheeline, who retired May 31, said the timing of his decision was related to the money-purchase change, along with other factors. He had considered retiring in August 2013 but would have ended up with a lower pension than he is getting now, even after working another 14 months.
Scheeline also has started a small company with a student he worked with while teaching in Vietnam, to develop a small hand-held spectrometer, but he hasn't had time to get it off the ground.
"I can't do the job I need to do with that company and teach and do research," he said. "Were it financially sensible for me to continue with the university, I might have said let the company sit for another year."
He hopes to be appointed an emeritus professor, though the position carries no salary, so he can continue mentoring younger chemistry faculty, chair the campus Military Education Council and maintain library privileges.
Other potential pension cuts by the Legislature didn't factor into his decision.
"I figure what's going to happen there is going to happen. I can't control it," Scheeline said. "I can't go planning life around what goes on in Springfield. It's just too chaotic. You don't know from one day to the next whether (House Speaker Michael) Madigan is going to support a bill he proposed."
SURS divides employees into two categories — academic (faculty and academic professionals) and staff/civil service. At the Urbana campus, 103 academic employees planned to retire the first six months of this year, compared with 76 during the same period in 2011, according to SURS. By comparison, 388 staff or civil service workers are retiring, more than double the 147 recorded in 2011.
"We've seen a lot of critical academic professionals and civil service people with long institutional memories and histories here, very accomplished people, leaving," Wilson said.
People like Livingstone, UI Registrar Carol Malmgren and Deborah Ritchie, longtime associate dean in the Graduate College, as well as several college budget officers, she said.
The campus has started searches for some of those positions, but "it's going to take us some time to build back up to our capacity in these critical areas," Wilson said.
"We laugh with all of them at every retirement event: 'I hope you're going to be on speed dial for us, so we can call you with our numerous questions.' I think everybody's anxious about losing really critical employees," Wilson added.
Dempsey said his division will lose many senior employees who have invaluable knowledge of campus facilities, which range from century-old buildings to new laboratories.
"There are pieces of equipment that people who are younger maybe haven't ever seen," Dempsey said.
It takes several months for new employees to get oriented to campus, so productivity could drop in the short term, he said.
"We're losing a lot of really good technicians," Dempsey said, which also means there are fewer people left to train new workers.
On the academic side, Livingstone's job is to manage all campus data operations, including the campus profile, institutional data and a public website, Wilson said. That encompasses everything from student data — diversity, test scores, majors, etc. — to tenure numbers, faculty workloads, grant expenditures, department staffing and the courses professors are teaching.
"It's just a monumental job," Wilson said. "She understands not only the numbers but what the numbers mean."
The division used to be known as the Office of Administrative Studies, and before that, the Bureau of Institutional Research. Housed in a small gray house on Sixth Street since the 1960s, the division has an attic stuffed with old reports (and an occasional bat) dating back to the 1910s and 1920s. Livingstone has been working with UI archivists to determine what should be saved, so her successor isn't overwhelmed.
Livingstone said retirement was a tough decision but she was ready, and the pension change was going to cost her thousands of dollars a year if she stayed.
"I've got great staff, and hopefully they'll carry on," she said.
Filling the jobs
Not all positions vacated by the retirements will automatically be filled, as the UI's state funding is again being reduced, administrators said.
For some units that may mean they can only afford to fill three of five empty positions, said Maureen Parks, associate vice president of human resources. The campuses have had "very specific" hiring guidelines since 2008, when the UI imposed a hiring freeze, she said.
Deans will submit hiring plans to the provost's office this summer, and decisions will be made by August, Wilson said.
"We'll have to look into budget issues and figure out what to approve," Wilson said.
Each college has cash reserves because the UI has been anticipating budget cuts of some kind, Wilson said.
Dempsey said he will likely fill all the jobs in Facilities and Services because "there's plenty of work."
How many retirees may come back part time?
Wilson wasn't sure. That issue is under the legislative microscope in Springfield, so the UI has clamped down on retiree rehires, she said.
"We're not making promises to anyone," Wilson said.
The campus developed a new set of procedures outlining conditions under which retirees can be rehired in response to a UI Board of Trustees' policy approved in 2006. Retirees can only be rehired for a year at a time, they cannot work more than half time, and it must be a position that requires special expertise — typically, a professor who teaches a specific course who can't be immediately replaced, or a department that doesn't have the money to hire a replacement, Wilson said.
Dempsey knows of just one temporary rehire in Facilities and Services, director of construction management Clark Wise. That position, which oversees more than 400 people, is being eliminated, and his duties are being split between two existing directors. Wise, who originally had not planned to retire for another year, will come back part time temporarily to help with the transition, Dempsey said.
University Librarian Paula Kaufman lost 30 people in the 2010 voluntary separation program, and another half-dozen faculty and an undetermined number of staff are retiring this spring.
She isn't replacing all of them, but she will bring several retirees back on "a very part-time basis" until she can fill some vacancies. Otherwise, she wouldn't be able to provide library services to UI faculty and staff.
"It's very hard to absorb," Kaufman said. "I don't have the infrastructure to handle so many searches at one time."