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Senior Faculty Transitions Task Force

Senior Faculty Transitions Task Force. August 15, 2008 Executive Committee Meeting. Membership. Name Department Gary Schoolnik, Chair Medicine Kathy Gillam, Co-Chair Dean’s Office John Boothroyd Microbiology and Immunology Regina Casper Psychiatry

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Senior Faculty Transitions Task Force

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  1. Senior Faculty Transitions Task Force August 15, 2008 Executive Committee Meeting

  2. Membership NameDepartment • Gary Schoolnik, Chair Medicine • Kathy Gillam, Co-Chair Dean’s Office • John Boothroyd Microbiology and Immunology • Regina Casper Psychiatry • Linda Cork Comparative Medicine • David O’Brien Office of Institutional Planning • Harry Greenberg Medicine and Dean’s Office • Peter Gregory Medicine • Rob Krochak Pathology • Bob Lehman Biochemistry • Michael Levitt Structural Biology • Jim Mark Cardiothoracic Surgery • Christy Sandborg Pediatrics • Stanley Schrier Medicine • Ellen Waxman Dean’s Office-Academic Affairs • Sam Zelch Dean’s Office - Finance and Administration

  3. Purpose • To identify and address issues associated with various types of transitions experienced by our senior faculty, for example: • Stepping down from a period of administrative service to a more focused faculty role • Moving from a phase of intense research activity to one of lesser intensity - especially because of loss of funding • Moving from active duty to emeritus status • To provide ways in which these transitions can occur with dignity, for the sake of both the individual and the institution

  4. Faculty Retirement

  5. Faculty Demographics:Faculty Age of Retirement - FY95 - FY06 Anticipate Rightward Shift In Current Cohort

  6. Faculty Demographics:Faculty Age 50 and Greater - FY95 - FY06

  7. Projected Age Cohort of Retirement. 19. All other things being equal, in which of the following age cohorts do you anticipate retiring? 84% ≥ age 65 43% ≥ age 70 N=226

  8. Review of Current Policies and Programs • University and School policies prohibit part-time professorial appointments, except for family reasons (the practice is more flexible, but this flexibility is not promulgated). • There is no flexibility in the terms of the Faculty Retirement Incentive Program (FRIP) (entire incentive must be taken as a single payment). • Sabbatical leave immediately preceding retirement is not generally permitted. • Retiree medical benefits are not well explained and are perceived as complex and difficult to understand (and so are very anxiety provoking). • Information about other areas related to transitions is not readily available and/or is at department’s/Dean’s Office discretion and so not promulgated as policy, such as: • Space • What happens when funding diminishes

  9. Survey OverviewOf Active and Emeriti Faculty • Three populations: • Regular active faculty • Active emeriti faculty • Inactive emeriti faculty • Three sections: • Retirement • Administrative transitions • Funding transitions • Questions based on Task Force discussions, review of relevant literature and findings outlined above • Caveats • Descriptive survey, not designed to test hypotheses • Results may not amenable to statistical analysis

  10. Response Rates: By Faculty Type

  11. Distribution of Academic Line Respondent Populations by Academic Department

  12. Personal Financial Planning: 2. Which of the following statements best describes the resources you have accessed to-date for your own retirement financial planning? 50% Unassisted N=242

  13. Personal Financial Planning (cont’d) 2. Which of the following statements best describes the resources you have accessed to-date for your own retirement financial planning? % who answered: I have not yet done any formal financial planning for retirement response distribution by age

  14. Sufficiency of Retirement Funds- Active Faculty. 4. Which of the following statements best represents your financial planning for retirement? 27% 55% 64% 75% Now 5 yrs response distribution by age

  15. Knowledge Base: Retiree Medical Benefits - Correlation:5. Which of the following statements best represents your feelings about health benefits in retirement?6. Which of the following statements best represents your current knowledge about the retirement health benefits offered by Stanford? N=241 N=242 Lack of Knowledge Is Correlated with Level Of Concern!!

  16. Knowledge Base: FRIP. 8a. Which of the following statements best represents your attitude towards the Stanford University Faculty Retirement Incentive Program (FRIP)? FRIP Appears Not To Influence Retirement Planning; It Appears Not To Provide A Strong Incentive To Retire N=223

  17. Communication: 13. In thinking about retirement issues, with whom of the following would you be most likely to discuss your retirement plans? Response By Gender: Male/Female ♀ Gender May Affect Consultation Patterns!!

  18. Knowledge Base (cont’d) (All Respondents) • Received or have or had access to adequate information on how to phase into retirement in the following areas: % responding “No or Definitely Not:” • Ramping down professional commitments - 48% • Timing of grants - 39% • Transition planning for long-term staff - 50% • Acceptance of new graduate students and postdoctoral fellows - 42%

  19. Factors Affecting Retirement. The decision to retire is influenced by various factors. Please rank the following with "1" being the most important factor [average rank, scale: 1-8] Active Emeriti Financial > Health

  20. Preferred Paths to Retirement (cont’d).If you were planning retirement, which of the following would be most appealing to you as a way to phase into retirement? Many Faculty Appear Interested In A Phased Retirement

  21. Key Findings • The fraction of faculty age 51 and older is rising and currently stands at 47% • A considerable fraction of faculty in their sixties: • Feel that they do not have sufficient funds to retire • Are planning to retire in their seventies • Many faculty have not engaged in personal financial planning • Many faculty lack information on topics relevant to retirement

  22. Key Findings (cont’d) • Many faculty, especially women, do not communicate with their chairs regarding their plans • There is a desire for flexibility by some (but not all) faculty with respect to retirement • The written institutional policies re retirement do not encourage flexibility; tailored arrangements are possible but not promulgated • There is interest in volunteering in a variety of capacities

  23. Survey Results Funding Transitions: Faculty Beliefs and Expectations

  24. 3. What percentage of faculty salaries do you believe should normally be supported from extramural sources? Expectation of 55% of 223 faculty: ≤50% Support Should Come From Extramural Sources N=223

  25. 5. For someone whose salary is partially supported by research funds, if they experienced a significant (≥ 40%) and unexpected loss of research support and sought “emergency/short-term” assistance from their department chair, the chair would most likely: Short-term (1 Year) Problem Gender Differences Gender Differences Gender Differences response distribution by gender

  26. 5. For someone whose salary is partially supported by research funds, if they experienced a significant (≥ 40%) and unexpected loss of research support and sought “emergency/short-term” assistance from their department chair, the chair would most likely: On-Going Problem Gender Differences response distribution by gender

  27. 7. If someone’s extramural (clinical or research) funding did not recover, how long would you expect the department to support their: Salary 78% of Faculty expect ≥ 2 years salary support even it funding shortfall did not recover N=207

  28. 7. If someone’s extramural (clinical or research) funding did not recover, how long would you expect the department to support their: Program 50% Faculty: expect 2-3 years programmatic Support even if funding shortfall continued N=194

  29. Funding Transitions:Key Findings • There is a lack of knowledge about what would happen in the case of either a short-term or a long-term loss of funding. • Women express this lack more frequently than men. • In the face of funding losses, there is probably a significant disconnect between faculty expectations for funding support from department/school resources and the department/school’s capacity to meet those expectations.

  30. Implications of Funding and Retirement Survey Results Approaching Retirement Age Local and National Economic cycles Declining Funding Institutional And Personal Challenges Concerns About Retirement May Significantly Inhibit Faculty Considering Retirement As A Viable Option to Declining Funding

  31. The career transition challenge is a complex amalgam of national, institutional and personal factors • Recent and ongoing economic trends (difficult to rectify, difficult to predict, seemingly volatile) • Decreased net worth (perceived or real) • ↓Housing value • ↓ 403(b)value • Changing retirement medical benefits • Lack of information (can be addressed) • Real current assets and retirement readiness • Actual retiree medical benefits • FRIP • Institutional policies and practices • Evolving professional careers (can be managed) • National demographic trends favor longer work lives • Professional transition for the individual: changing roles within and outside SOM and their linkages to financial status and self esteem

  32. Selection of a Transition Scenario May Be a Consequence of Individual Financial Assessment Uncertainties and The Role of Individual Choice Impede Institutional Planning With Respect To Billets, Space and Budgets • Current University Policy: The individual can choose when to transition to emeritus (active or inactive) status. • Survey results indicate that this choice is likely to be significantly determined by individual financial considerations and perceptions about institutional policies and practices.

  33. Five Scenarios and Their Consequences for the Individual and the Institution • A. Salary fully supported by grants and other activities. • 1: continues full time until age 70 (FRIP declined) • 2: transition to active emeritus at 67, supported to NIH cap until age 70, takes FRIP (2 x salary) at age 67 • B. Declining or absent support. • 3: elects inactive emeritus, takes FRIP at age 67 • 4: elects active emeritus until age 70 at a percent commensurate with level of support (requires department approval), takes FRIP at age 67 • 5: continues full time until age 70 or 71; department freezes salary year 1; salary then reduced (with Provost approval) 20% per year to base ($140,000); space reallocated.

  34. Five Scenarios and their Consequences for the Individual and the Institution (cont’d) • Consequences Of Each Of The Five Scenarios Are Based On The Following Profile Of a Hypothetical Faculty Member • University Line (1 billet), Stanford-based (the consequences for VA-based faculty would differ) • Age 66 + 11 months • Eligible for FRIP (2 X total salary) • Salary (total) not including fringe benefits of $200,000 (increased at 3% per year) • Base salary of $140,000 (grandfathered value, current non-grandfather amount ~ $110,000 for full professors) • NIH cap $180,000 (current cap has been increased to ~$190,000) • University contribution to 403 (b) is $20,000 (maximal allowed value is $20,500) per year while a member of the active faculty • Calculations do not include benefits or space cost in hospital-based faculty

  35. Reimbursable ActivitiesAnd Transition Scenarios • Reimbursable (Salary) • Extramural Grants and Contracts • Clinical Revenues • Endowed chairs • Administrative Functions • Reimbursable (Deposited into Operating Budget) • Non SOM Teaching Via Tech Units • Not Reimbursable (But Contributes to the Greater Good) • Mentoring • Committee Memberships • SOM Teaching Reimbursable Status Ambiguous Fund Raising Activities for School or University

  36. Salary Fully Supported by Grants and Other Activities • Scenario 1: fully supported by grants and other activities; continues full time until age 70 (FRIP declined) • Cost to School: one billet • Cost to Department: none • Cost to Individual: Forgoes FRIP • Income to Individual: $678,000 (salary + 403 (b) contribution by University) • Income to School and Department: indirects, clinical and teaching revenues

  37. Salary Fully Supported by Grants and Other Activities Scenario 2: recalled and fully funded to active emeritus at 67, supported to NIH cap until age 70, takes FRIP (2 x salary) at age 67 • Cost to School: None, retrieves billet which is reassigned • Cost to Department: none • Cost to Individual: salary reduced to NIH cap; forgoes University contribution to 403 (b) • Income to Individual: $940,000 (FRIP + salary) • Income to School and Department: indirects, clinical and teaching revenues

  38. Declining or Absent Support • Scenario 3: elects inactive emeritus, takes FRIP at age 67 • Cost to School: None, retrieves billet which is reassigned • Cost to Department: none (assumes no space allotted) • Cost to Individual: forgoes salary; forgoes University contribution to 403 (b); different medical benefits • Income to Individual: $400,000 (FRIP) • Income to School and Department: None

  39. Declining or Absent Support • Scenario 4: recalled (active emeritus) until age 70 at 50% time (department approves), takes FRIP at age 67 • Cost to School: None, retrieves billet which is reassigned • Cost to Department: none • Cost to Individual: forgoes 50% of full time salary; forgoes University contribution to 403 (b) • Income to Individual: $700,000 (FRIP + 50% salary x 3 years) • Income to School and Department: indirects, clinical and teaching revenues if any.

  40. Declining or Absent Support • Scenario 5: continues full time until age 69, 70 or 71; department freezes salary year 1 (one possible scenario); salary then reduced (with Provost approval) 20% per year (this is an example, there is no fixed percentage) to base ($140,000); research space reallocated • Cost to School: 1 billet, which is retained by individual • Cost to Department: $780,000 • Cost to Individual: self esteem, salary reduced to base, loss of FRIP • Income to Individual: • $560,00 if retires at 70th birthday • $720,000 if retires at 71st birthday • $980,000 if retires at 72nd birthday • Income to School and Department: none or may include clinical and teaching revenues

  41. Scenarios That Are “Best” for the Individual and the Institution • Some scenarios are better than others • Choosing the “best” will require • Careful assessment of each individual’s current financial, family and personal situation with accurate projections • Accurate information about the consequences of transitioning to active emeritus or inactive emeritus status: in the absence of information, the default “choice” may be to retain active faculty status • Institutional flexibility to accommodate individual needs and preferences; the institution may have to identify areas of potential flexibility. • Individual guidance and coaching may be required by a knowledgeable person who does not have, nor is perceived to have, a conflict of interest and who may also be empowered to intercede with department chairs

  42. Transition ScenariosversusPathways • Scenarios: Hypothetical examples of career evolution, not necessarily planned; may not be optimal for institution or individual. May be typical of many transition situations currently. • Pathways: Guided and planned career evolution that optimally balances institutional and individual needs. A better way for all concerned.

  43. Transition Timeline And Pathway Selection Annual Transition and Pathway Meetings Annual Meetings With Chair/Division Chief 60 50 51 52 53 54 55 56 57 58 59 61 62 63 64 65 66 67 A B C • A: Initial Financial Analysis and Workshop • B: Professional Evolution Discussions Initiated or Intensified, • Identification of Reimbursable Activities, • FRIP Option Commences • C: Average Transition Age, Transition Pathway Counseling • and Selection, revenue from FRIP begins to decline

  44. Key Recommendations for the School • Personal financial planning: The School should strongly encourage faculty to engage in personal financial planning and find ways to facilitate it. • Information: The School should compile as much relevant information as possible on a single web site. • Advising: The School should establish a small cadre of senior faculy/emeriti to serve, in conjunction with the Office of Academic Affairs, as resources and advisors to individual faculty as they consider retirement or other transitions.

  45. Key Recommendations for Department Chairs • Communication: Chairs or their delegates must meet annually with all of their faculty. • Flexibility: Departments should provide as much flexibility as possible to accommodate a faculty member’s desire to make a transition to retirement. • Departments should develop guidelines for less than full time service as a way to phase into retirement.

  46. Next Steps • Complete list of recommendations to Executive Committee with this presentation • Comment period • Return to Executive Committee with detailed implementation plan

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