Aerial photo of Purdue University located in West Lafayette, Indiana
Updated: Wednesday, 01 Sep 2010, 4:00 PM EDT
Published : Tuesday, 31 Aug 2010, 4:24 PM EDT
WEST LAFAYETTE, Ind. (AP) -- - An early retirement package has been offered to more than 1,600 Purdue University staffers with hopes that it will cut personnel costs by $6.6 million a year, school officials said.
Purdue administrators made the offer to professors and staff members who are at least 60 years old. They have been trying to reduce an anticipated $67 million budget shortfall over the next two years following state budget cuts.
Officials expect up to 500 people to take the incentive of up to half their annual salary and a five-year allowance toward medical expenses.
"I think it's clear from the past couple of years that we've done everything we can to preserve the workforce by delaying hiring last year and by taking no raises for two years in a row," Purdue President France Cordova said. "So our emphases are clearly doing everything we can against involuntary layoffs."
The university's trustees unanimously approved the plan Monday during a meeting at the Indiana University-Purdue University Indianapolis campus.
Up to $30 million could be spent on separation pay for employees accepting the offer, said Al Diaz, Purdue's executive vice president for business and finance. But administrators anticipate that only two-thirds of those leaving will be replaced.
"This is a chance to reorganize, chance to streamline, chance to realign and chance for promotion," said Luis Lewin, Purdue's vice president for human resources.
The trustees vote came hours after Gov. Mitch Daniels told a gathering of state university officials that they shouldn't expect a return to previous state funding in the near future. Daniels in December ordered a $150 million, or 6 percent, reduction in state higher education funding through next June because of shortfalls in projected state tax revenues.
Some Purdue trustees questioned the estimates of how many people would take the retirement offer and the money being spent on severance.
"Is this going to be a budget buster?" asked trustee Michael Birck.
Cordova said the final savings amount wasn't a certainty.
"It is a very inexact number. Universities don't do this all the time. We are not doing it exactly the same ways others have done it," Cordova said. "This is the definition of an educated guess."
Purdue doesn't have a mandatory retirement age for most workers. The application period for those interested in the retirement incentive starts Wednesday and continues through Oct. 29.
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