Potential savings are $7-10M; offers were made to 198 employees

By Neil Offen

noffen@heraldsun.com; 419-6646

DURHAM -- Ninety Duke University employees have accepted early retirement buyout offers, potentially saving the university $7 to $10 million.

The offers, part of Duke's effort to cut its budget by $125 million over three years, were made earlier this fall to 198 monthly salaried employees on the university's defined contribution plan who had met a number of criteria.

"Some who have accepted the offer still have an opportunity to change their minds," Kyle Cavanaugh, Duke's vice president of human resources, said Wednesday. "But at this point, we wouldn't expect any dramatic changes in the number."

While Cavanaugh acknowledged it was difficult to pinpoint exactly how much money would be saved by the early retirements, "if you take the average salary as well as fringe benefit types of costs, that is probably between an additional $7 to 10 million" that has been saved.

The offers were Duke's second universitywide early retirement buyout initiative. The moves have been necessary because personnel makes up about 60 percent of the university's budget, which has been hit hard by a decline in major gifts and a shrinking endowment.

The first wave of offers, made over the summer to biweekly salaried employees -- generally at the lower end of the pay scale -- resulted in 294 early retirements.

Cavanaugh said he thought this round -- where 40 percent of those who received offers accepted them -- had been even more successful because of a comprehensive communications effort.

"Every employee involved received an individualized packet," he said. "We ran numerous educational sessions, in group settings initially, and individuals were then encouraged to meet one-on-one with an adviser. I think everyone felt very good about the level of information."

With the two early retirement initiatives, a targeted reduction in overtime and not filling a number of vacant positions, Duke has reduced its work force by around 500 full-time equivalents, Cavanaugh said. "We think the work force strategies we have deployed have served the institution exceedingly well."

Yet despite the successes, Duke officials have said that the university is nevertheless still likely to have to lay off some employees as it continues work on tightening its belt. University Executive Vice President Tallman Trask III announced in the spring that Duke needed to eliminate about 1,000 jobs over two years to meet its budget-cutting goals.

Large-scale layoffs, like at some of the university's peer institutions, will probably be avoided, "but layoffs on a smaller, more localized basis" remain a realistic possibility, Cavanaugh said last month.

But any kind of decisions about that, he said Wednesday, would not be made until at least after the new year.

"We have a number of ongoing [budget-cutting] initiatives," Cavanaugh said. "I anticipate we would be in a position after the first of year to really recalibrate where we are with all of these initiatives and assess where we are, see where that places us."