Employee Benefits May be Reduced

Some employee benefits packages may be cut under a plan scheduled for release next month by the University-wide Benefits Task Force, President Neil L. Rudenstine said yesterday.

Addressing the Faculty, Rudenstine said he expects the task force to provide estimates to guide the University in decreasing benefits spending as health care costs soar nation wide.

The report might suggest, Rudenstine said, that the University subsidize only the least expensive of the seven health care plans it currently offers to faculty and staff.

In this scenario, employees would have the option of paying the University in order to upgrade their insurance plans from the least expensive level, Rudenstine added.

Last fall, the University revealed that it had accumulated a $52.2 million deficit in benefits spending in the last five years. According to Rudenstine, it took the University a few years to be certain that this increasing shortfall was "not just a blip, but a trajectory."

The deficit accumulated because the University began to pay out more for its employee benefits packages than it was collecting for those from its 10 different faculties, officials have said. In addition, nationally rising costs have made the price of health care "out of whack" with what the University could reasonably expect to charge its employees.

"In 1988-89 we enhanced our benefits program, and from that point the University began underecovering for benefits," Rudenstine said.

Rudenstine said the law does not permit the University to sustain annual deficits of $10 million or more in funding. If such shortfalls continue, Harvard would have to dip into its endowment to pay off the debt, he said.

Rudenstine claimed that the task force proposals, which if approved would become effective on January 1, 1995, would shift the burden of health care costs away from lower paid staff. That change would come, its seems, because higher-paid employees would have to pay directly in order to maintain their current extensive health care plans.

But Donene M. Williams, president of the 3,600-member Harvard Union of Clerical and Technical Workers, said last might that the proposed cut would not help many lower-paid employees.

"I fundamentally disagree with the basicanalysis that offering the same dollar value planto everybody will help workers," Williams said."Everybody should have the same access to anyhealth care plan they need."

Williams said some lower-paid employees choosemore extensive health coverage for variousreasons. "The effect of this will be to force moreworkers into the least expensive plan, and formost workers, anything more will become virtuallyunaffordable," she said.

Currently the University contributes 85 percentof its employees' medical costs based on the"weighed average" of the seven University approvedhealth care plans offered to faculty and staffmembers.

"Now the University will peg its contributioncost to the lowest approved plan, and employeeswho want more coverage than that can buy up,"Rudenstine said.

But the president acknowledged that cutbackswill be felt by all.

"It we do it properly, we all end up with alittle bit less," he said.

Rudenstine also reported to the Faculty thatUniversity officials are upgrading staff pensionplans and considering changes to faculty pensionstandards.

According to Rudenstine, the abolition ofHarvard's mandatory retirement age--a change thatwas dictated by federal law--has allowed someprofessors to collect more than 100 percent oftheir ordinary pension rates when they actually doretire.

Some faculty pensions dwarf staff pensions bysuch a margin that Harvard may be in violation ofanti-discrimination laws because of thedifference, according to Rudenstine.

"Pensions for some faculty members are growingquite sizable," Rudenstine said. "And theUniversity is in danger of falling out ofcompliance with anti-discrimination laws."

Rudenstine told the Faculty that evenconservative projections show the universityexceeding a legally acceptable ratio of faculty tostaff pensions. He said the University will beginto investigate possible solutions to the problem.

"This is a real problem that we can't ignore,"Rudenstine said. "And I want you to hear it fromme first.

"I fundamentally disagree with the basicanalysis that offering the same dollar value planto everybody will help workers," Williams said."Everybody should have the same access to anyhealth care plan they need."

Williams said some lower-paid employees choosemore extensive health coverage for variousreasons. "The effect of this will be to force moreworkers into the least expensive plan, and formost workers, anything more will become virtuallyunaffordable," she said.

Currently the University contributes 85 percentof its employees' medical costs based on the"weighed average" of the seven University approvedhealth care plans offered to faculty and staffmembers.

"Now the University will peg its contributioncost to the lowest approved plan, and employeeswho want more coverage than that can buy up,"Rudenstine said.

But the president acknowledged that cutbackswill be felt by all.

"It we do it properly, we all end up with alittle bit less," he said.

Rudenstine also reported to the Faculty thatUniversity officials are upgrading staff pensionplans and considering changes to faculty pensionstandards.

According to Rudenstine, the abolition ofHarvard's mandatory retirement age--a change thatwas dictated by federal law--has allowed someprofessors to collect more than 100 percent oftheir ordinary pension rates when they actually doretire.

Some faculty pensions dwarf staff pensions bysuch a margin that Harvard may be in violation ofanti-discrimination laws because of thedifference, according to Rudenstine.

"Pensions for some faculty members are growingquite sizable," Rudenstine said. "And theUniversity is in danger of falling out ofcompliance with anti-discrimination laws."

Rudenstine told the Faculty that evenconservative projections show the universityexceeding a legally acceptable ratio of faculty tostaff pensions. He said the University will beginto investigate possible solutions to the problem.

"This is a real problem that we can't ignore,"Rudenstine said. "And I want you to hear it fromme first.