Buffeted earlier this year by the outcry over its plans to raise money by closing its art museum and selling the collection, Brandeis University said this week that it would suspend payments to the retirement accounts of faculty and staff members starting in July.
While universities across the country have taken a wide range of actions to confront their financial problems, including layoffs and the suspension of capital projects, freezing contributions to retirement accounts is rare. Financially troubled corporations have been taking such action, but faculty and staff members at colleges and universities have traditionally enjoyed stable, and generous, benefits and expect no less.
“There is this perception that the nonprofit world is maybe a gentler, kinder world than corporate,” said Roland King, vice president for public affairs at the National Association of Independent Colleges and Universities. “So some people seem to perceive this as a breach of faith, especially since many people go into nonprofit work at less salary, because the benefits are so good. But we are absolutely at a point in this economy where these sort of things have to be on the table.”
Suspending Brandeis’s contribution to retirement plans from July 1, 2009, through June 30, 2010, will cover $7.4 million of its projected $8.9 million deficit, the university’s president, Jehuda Reinharz, said in an e-mail message to the faculty and staff. In the message, Mr. Reinharz said he had planned to share the news of the suspension at the end of the week, but was pre-empted when it was announced in the May 19 edition of the student newspaper, The Justice.
Peter B. French, the executive vice president and chief operating officer at Brandeis, called the decision “the most equitable and least bad of the options” the university had been considering, adding, “I am quite confident that you will soon see more universities take the same action.”
So far, though, there are only scattered reports of colleges’ freezing retirement contributions though accompanied by rumors that some of the nation’s largest and most prestigious universities are considering the same move.
“It’s showing up first at smaller institutions that are more financially vulnerable, tuition driven, and maybe have less fiscal options to fill the gap,” Mr. King said.
Brandeis officials said they had concluded that a temporary freeze on retirement contributions would be fairer, and do less harm to the university’s mission and future, than layoffs or across-the-board pay cuts, which some other colleges have undertaken.
Brandeis’s staff and faculty members will still be able to contribute to their retirement accounts, but for the next year, those contributions will not be matched by the university.
Among the other colleges that have frozen retirement contributions in this recession are Cornerstone University, a Christian institution in Grand Rapids, Mich.; Dana College, a 550-student college in Blair, Neb.; and Stephens College,a women’s college in Columbia, Mo.
At Dana, which two years earlier cut some programs and laid off tenured faculty members, the retirement contribution freeze was accepted quietly, said Nikki Kinsey, the director of marketing. “People are happy to still have their jobs, and understand why we had to do it, and that it’s the lesser of two evils,” Ms. Kinsey said.
In Boston, Simmons College suspended its retirement contributions for four months, from March to June, effectively lowering its 9 percent matching of employee contributions to 6 percent for the year.
Chad W. Peterson, a spokesman for TIAA-CREF, the largest retirement fund manager for college employees, said that so far this year 15 higher education institutions and other nonprofits had suspended their employer retirement plan contributions.
The University of Miami said earlier this year that it was considering suspending retirement contributions as part of its strategy for dealing with the economic crisis, but then decided not to do so, at least in the coming fiscal year.
And a number of colleges and universities have trimmed the percentage of retirement contributions they would match; Ithaca College, for example, reduced the percentage to 8 percent, from 8.75 percent.
Brandeis, founded in 1948 in Waltham, Mass., has had a tough year.
In January, the art world was rocked by news that the trustees had authorized the closing of the Rose Art Museum and the sale of its well-regarded collection, which includes works by Roy Lichtenstein, Jasper Johns, Robert Rauschenberg and Ellsworth Kelly. That plan is now under review. The museum’s curated exhibitions ended last weekend, but some of the permanent collection will be exhibited starting in July.