University of Missouri Curators: 'Under no circumstances' will pension payments increase
ROLLA — The University of Missouri System Board of Curators on Thursday approved changes letting retirees, employees with a university pension and future curators know that no cost-of-living increases should ever be expected or considered.
The meeting was held at Missouri University of Science and Technology. It was the first time on that campus for the curators since 2019, before the COVID-19 pandemic.
"It's our largest liability," MU Chief Financial Officer Ryan Rapp said of the pension fund.
MU retirees and current faculty members protested the planned move at last week's general faculty meeting.
More: MU retirees unhappy about plan to remove option for future increases in pension plan
The change adds a paragraph to the UM System's "Collected Rules and Regulations" that reads: "Given the magnitude of the plan's liabilities and the additional risks inherent in managing a closed plan, under no circumstances shall plan benefits be increased above levels in place at the time of this policy's adoption."
The MU Retirees Association and the MU Faculty Council have registered their opposition to the move.
After the general faculty meeting, MURA officials emailed another communication to MU finance officials.
The wording change isn't needed "unless it is intended as an admonition to future boards" making it more difficult for future boards to grant an increase, MURA wrote in a letter to administration.
"Please keep the current tool even if it has been dormant for over 15 years," the association wrote.
The last time a cost-of-living increase was approved was 2007.
There's nothing else in the regulations that uses the phrase "under no circumstances," the letter states.
"While some on the board may not see this proposal as limiting their discretion, most any reasonable person looking at this would view it as creating a closed door," the letter states.
The language is unwise and some consider it insulting, the letter states.
The input was useful, Rapp said at Thursday's meeting.
"I do want to thank our retirees and our retirees association for their robust communication," Rapp said. "These changes do not affect payments to current or future retirees."
As part of the changes, the board also approved moving more of the pension investment portfolio into real estate assets. The investment allocation into multi-family housing and industrial real estate will increase.
"It's fairly recession-proof," said UM Chief Investment Officer Tom Richards.
In interviews last week, Rapp and Richards addressed the reasons for the change in the regulation wording. Rapp also has oversight of system finances.
The university has to keep the pension system funded until the final retiree in the current plan dies, which actuaries say is 2110, they said.
"It's a significant commitment and it's going to be honored," Richards said.
The pension plan closed to new employees in 2019 when the system shifted to the equivalent of a 401(k),
"The plan is getting ready to retire," Richards said.
That is why the change is needed at this time, he said.
It can provide those currently in the plan with funds they've been promised, but that's all, Rapp said.
"We are not going to offer any more than is being guaranteed," Rapp said.
Future boards will continue to have the power to approve cost-of-living increases, but Rapp said they shouldn't.
"The board would have every right to go back and revisit this at a future date," Rapp said.
Increases in the benefit aren't guaranteed and they're not funded, so they would come out of the operating budget, resulting in tuition increases, he said.
The university already is contributing, some members of the board said Thursday.
"We're kicking in $80 million a year out of our operating fund," said board member Keith Holloway.
"It's still a significant cost," Rapp said at the meeting.
University officials also wanted to be transparent about its plan, Rapp said last week.
"I don't want retirees to think a COLA is part of the plan," Rapp said, referring to a cost-of-living adjustment.
The financial crisis of 2008-09 hit all investment portfolios hard, Rapp and Richards said. The pension plan has to be able to withstand another crisis like that, they said last week.
It's in good shape now, they said.
"Our pension plan today is relatively well-funded," Rapp said.
Retired MU professor Art Jago watched the livestream of Thursday's meeting.
"Retirees are certainly going to be disappointed," Jago said by phone.
In an email to his fellow members of the MU Faculty Council, Jago also expressed his disappointment that the curators didn't even mention the alternative wording suggested by the retirees association.
"They preferred their 'under no circumstances,'"Jago wrote. "They effectively removed a discretionary 'tool' from their own 'toolbox' and closed the door on its future use."
The language in the regulations was carefully considered, said Mun Choi, UM System president and MU chancellor.
"We did not want to leave any room for ambiguity," Choi said in a news conference after the meeting.
Payouts to the pension plan peak in 2045, Rapp said during the news conference.
In his budget update, Rapp said the university has reduced full-time staff by 11% since 2015.
A 4% to 5% increase in salaries and wages is planned, he said.
"I don't think we'll see large enrollment growth," Rapp said, adding that it should remain stable.
"Inflation is a key pressure in this budget cycle," Rapp said.
Tuition and fees will be on the agenda for the May meeting, he said.
The board approved changes to the system regulations to improve digital accessibility on the campuses.
The change will increase assistive technologies on websites and create a digital accessibility committee, said Amber Cheek, director of accessibility and Americans with Disabilities Act education.
"Digital accessibility is key to student success," Cheek said.
Five-year capital plan
The five-year capital plan approved by the board includes a $20 million expansion of the nearly 60-year-old MU Research Reactor, with financing from the state. That is in the plan for this year.
Related to that is a new radioisotope processing facility at Discovery Ridge, costing $20 million, with funding from the federal Department of Energy. It's in the plan for 2023.
A $30 million addition to the Veterinary Medical Diagnostic Laboratory also is in the plan for this year. Its funding will be $15 million from donations and $15 million from the state.
There's $66 million in the plan scheduled for 2026 for MU Health Care campus consolidation and inpatient services expansion.
Decommissioning and mitigation of closed, radiation-contaminated Pickard Hall will cost $12 million from university funds. MU spokesman Christian Basi said the plan also includes the building's demolition, but it hasn't been established when work can take place.
The contamination is from early research in radium extraction, and the mitigation is required by the Nuclear Regulatory Commission before the building can be demolished.
S&T Student Innovation Center
Before the meeting, curators and S&T officials attended a groundbreaking ceremony for a new Student Innovation Center.
"It's part of our new arrival district," S&T Chancellor Mo Dehghani said during the news conference. "The idea is that people will transcend their own discipline boundaries."
The center will target mainly undergraduate students, he said.
Roger McKinney is the education reporter for the Tribune. You can reach him at email@example.com or 573-815-1719. He's on Twitter at @rmckinney9.
This article originally appeared on Columbia Daily Tribune: Missouri System Curators close door to pension increases for retirees