Benefits Debate Turning Ugly

When Harvard first decided more than a year ago to completely revamp its benefits system, the University almost certainly envisioned a logical, orderly process.

Ideally, a hand-picked committee would gather information, seek community input, and design a new program to keep down spiralling health care costs.

Like Hillary Clinton's health care task force, the process didn't quite work out that way.

First there was a bitter exchange of words between the Harvard Union of Clerical and Technical Workers (HUCTW) and benefits task force leader Provost Jerry R. Green over the union's role in determining changes.

But after Green stepped down as head of the task force in March and resigned his job as provost in April, things really turned ugly.

Fellow task force member Sally Zeckhauser, vice president for administration, took Green's place, and the group's report, released in mid-June, stirred controversy.

HUCTW, citing the report's proposed cuts to part-time health benefits, immediately denounced it.

No one was surprised, since the union has a history of public disagreements with the University. But this time the protests didn't stop there.

At the Law School, a group of faculty members complained to the central administration and their dean.

Green himself wrote a memo to President Neil L. Rudenstine and Zeckhauser in June sharply criticizing the findings of the task force he headed for several months.

The final report of the task force is expected late this month or early next month, according to Candace R. Corvey, associate vice president for human resources. But that supposedly "final" copy will most likely serve to kick off another chapter in the long, tortured history of benefits review at Harvard.

Saving Millions

The proposed restructuring of benefits for Harvard's faculty and staff is expected to save about $10 million per year, according to administrators. When the process reaches a conclusion, major changes will involve at least some of the following.

*The amount Harvard contributes to health insurance premiums will be pegged to a percentage of the lowest-cost health plans available.

*The University will to some degree pro-rate benefits for part-time employees, pegging benefits to hours worked.

*Harvard will lower its annual contribution to the faculty pension plan by one percentage point.

*Future retirees will be responsible for a share of their medical premiums.

*Delta Dental will take over from Prudential as the University's dental care benefits provider.

In July, Corvey described the finished product as "fair." But she also admitted that the changes would be roughest on part-time employees. "The fact that the University's contributions will be pro-rated is going to be very difficult for them," she said.

Corvey said then that feedback received through a special hotline and informational meetings had been fairly positive. But members of HUCTW publicly criticized the plan, despite the fact that their own benefits are set by contract and will not be directly affected by the changes.

HUCTW officials said they feared that in future contract negotiations the University will force the union's workers to accept changes to their benefits similar to those now proposed for other Harvard employees.

"Our sense of people who would make sacrifices for this plan [are] part-time people and retirees," said Bill Jaeger, HUCTW director. "We have some doubts about whether this set of changes asks for greater contributions from the right people."

While union officials quarreled with Green last spring over their participation in the task force, the former provost, if he had remained on, might have proved to be a key ally in the administration.

In fact, one of Green's major criticisms in his June memo to Rudenstine and Zeckhauser could have come straight from a union leader's mouth.

"By violating the principle that all Harvard employees get the same health benefits packages we leave ourselves open to many counterproductive forces," he wrote. "To say that we need a salary-linked benefit policy on the grounds of equity is to ignore the great disparities in means and circumstances that exist within salary groups."

Green also faulted the committee for refusing his proposal to create a separate category for single adults with a child or children. While the former provost did support reducing health care for part-timers, he wanted it directly linked to specific hours worked. He disapproved of creating broadly defined worker categories with different amounts of coverage.

Green's memo makes clear that his influence on the final product of his own task force was far less than he would have liked.

"I proposed and advocated a number of creative ideas, none of which has found its way into the package you offer," he wrote.

The former provost, who has spent most of his career as a professor of political economy, told Harvard Magazine last month that "$4 million a year was being wasted" on benefits. Green's memo also indicates that the economic calculations in the benefits plan may not be sound.

Green's only public statement on his private memo was an brief reply to a reporter's question last month: "I think the memo speaks for itself."

Law Profs Object

The former provost's memo only became public after a professor at the Law School dug it up.

Among the faculty, law instructors have spoken out most about the plan. They have focused their ire on Harvard's proposal to reduce the University's contribution to the faculty pension plan by one percentage point annually.

In a summer letter to the professors, Law School Dean Robert C. Clark said some of the objections seemed to stem from a misunderstanding. Apparently, several Law School professors believed that savings from the benefits cuts might fund higher faculty salaries.

Misunderstanding or not, professors' opposition to the proposed changes forced Clark to create a faculty advisory group to hash out the issue.

"It now seems clear that there are so many technical issues and individual perspectives on the issues that a general memorandum going somewhat beyond the explanations already provided by the University's Task Force Report...would not be a fully satisfactory response," Clark wrote in his letter to faculty.

In recent months, Carter Professor of General Jurisprudence Charles Fried and Fessenden Professor of Law Bernard Wolfman have emerged as two of the strongest voices in the Law School debate over the proposed benefits changes.

In a July memo to the faculty advisory committee, Wolfman presented an outline of the Yale University Retirement Annuity plan as an alternative model.

Caving Into Pressure

Initially, administrators had indicated there would be few, if any, changes in their benefits proposals before they go into effect on January 1, 1995.

But now they may be caving to the pressure.

Late last month, a summary of the health benefits changes arrived at the homes of professional staff and faculty members. The papers included a surprise: the amount Harvard plans to contribute for part-timers was increased by 10 percent over earlier proposals.

A letter written by Corvey said the change was prompted by "new information" regarding the burden the proposed changes would put on employees, especially part-timers.

"It was largely because we obtained updated market comparisons from other institutions and other employers," Corvey said in an interview last week. "We realized [we] would become less generous than the marketplace, less so than we wanted."

According to Corvey, the final report of the task force and the "compendium" of their work will be available for interested parties to request either late this month or early next month--she thinks. "We continue to hope to meet our self-imposed deadline," she said.

But even if the current controversy over the proposed benefits changes dies down soon, the topic is sure to reignite within the next year.

All of the seven contracts Harvard has with its workers' unions will expire over the next 13 months, and there will have to be new agreements with benefits provisions.

HUCTW members have already said they won't accept the stated benefits changes. Harvard is determined to limit its benefits spending. A conflict seems a good bet, if not inevitable.

"Not everybody can be happy with the outcome," Corvey said last month. "This is inevitably an issue on which reasonable people will disagree." Employee Health Care Harvard coverage of lowest cost health plan, effective July 5, 1994. Annual Salary  Part time  Full time Less than $45,000  70%  85% $45,000 - $70,000  65%  80% more than %70,000  60%  75%

Faculty Pension Plan Harvard's funding of the pension plan, effective July 5, 1994. Age  Harvard's annual contribution Under 40  4% of pay up to wage base, 9% of pay over wage base 40 or older  10% of pay up to wage base, 15% of pay over wage base (The 1994 Social Security wage base is $80,600.)

Retiree Medical Benefits Harvard's annual post-sharing contribution, effective July 5, 1994. Length of service  Part time  Full time 10 years  40%  50% 11-19 years  40-65%  50% plus 3% for each year after 10 years 20 years or more  65%  80% Source: The Harvard Gazette

Faculty Pension Plan Harvard's funding of the pension plan, effective July 5, 1994. Age  Harvard's annual contribution Under 40  4% of pay up to wage base, 9% of pay over wage base 40 or older  10% of pay up to wage base, 15% of pay over wage base (The 1994 Social Security wage base is $80,600.)

Retiree Medical Benefits Harvard's annual post-sharing contribution, effective July 5, 1994. Length of service  Part time  Full time 10 years  40%  50% 11-19 years  40-65%  50% plus 3% for each year after 10 years 20 years or more  65%  80% Source: The Harvard Gazette

Retiree Medical Benefits Harvard's annual post-sharing contribution, effective July 5, 1994. Length of service  Part time  Full time 10 years  40%  50% 11-19 years  40-65%  50% plus 3% for each year after 10 years 20 years or more  65%  80% Source: The Harvard Gazette