UNIVERSITY OF KENTUCKY

SENATE

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Regular Session

November 10, 2003

3:00 p.m.

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W. T. Young Library

First Floor Auditorium

Lexington, Kentucky

Dr. Jeffrey Dembo, Chair

An/Dor Reporting & Video Technologies, Inc.
179 East Maxwell Street
Lexington, Kentucky 40508
(859)254-0568

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JEFFREY DEMBO, CHAIR

GIFFORD BLYTON, PARLIAMENTARIAN

REBECCA SCOTT, SECRETARY TO SENATE COUNCIL

LISA E. HOINKE, COURT REPORTER

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CHAIR DEMBO: Greetings, Senators and
friends. In the interest of time we need to
start. There may be some folks who come in
along the way. Can you hear me okay? Okay,
great. So the first item of business is I’d like
to beg your indulgence to consider changing
the agenda order. This is how I’ve plotted
out the way that the afternoon should go.
Faculty Trustee Davy Jones has assured me he
has a five-minute presentation. What I’d like
to recommend is that we put that early on
the agenda so that we can save the Retiree
Benefits Task Force discussion for the middle
and end of the meeting to begin at 3:30. The
other agenda items should take probably a
maximum of 10 minutes a piece, including
the College of Pharmacy proposal that we’ll
talk more about in a few minutes. So unless
there are any serious objections to that, I
would like for us to do that. Okay. The
minutes, if there are no objections -- sir,
Professor Albisetti.
ALBISETTI: Jim Albisetti, Arts and
Sciences. The meeting of October 13th took
place on September 8th, according to these
minutes.
CHAIR DEMBO: Are you suggesting we change
that?
SCOTT: I’m sorry. Thank you.
CHAIR DEMBO: Any other recommended changes?
Thank you, Jim. Okay. The minutes stand
approved as written with the modification by
Professor Albisetti.
Announcements. You probably
have seen mailings that we’re trying
something bold. We’re trying to have an
all-faculty forum and because of difficulties in
timing and location, we’re having actually
two fora. One will be held tomorrow from
3:00 to 5:00 at the Worsham Theater. The one
on Friday will be held at 2:00 in Health Science
Building 201. It’s in the Kentucky Clinic. If you
look at Rose Street, and there is the
pedestrian walkway, it’s on the right hand
side, the newer building, and it’s a large
auditorium on the second floor. Professors
Jones, Kennedy, our two faculty trustees,
Alice Christ who’s the co-president of the
Kentucky Chapter of the AAUP, and I will be
talking about various things related to the
role of the faculty at the University. A lot of
questions have arisen over this last year as to
what exactly we do and what is our role and
what should it be. So I’m hoping it’s a good
chance not just for a few talking heads at the
front of the -- of the auditorium, but to have
a good thorough discussion of, by and among
faculty. So if you have maybe colleagues who
haven’t heard about this, please pass the
word along.
There’s also going to be a
holiday reception this year. The University
Senate and Staff Senate invite the senators
from both Senates along with the Board of
Trustees to join in this holiday reception. It’s
going to be on Tuesday, the day immediately
following our Senate meeting at 3:00. It’ll
right after the Board of Trustees’ meeting on
the 18th floor, catered by the Boone Center.
This is sort of an annual event, but what’s
different about it this time is both the
location and the co-participation of the Staff
Senate. Sheila Brothers, I think I saw you
here. Sheila is sitting in the back. If you’ve
never met Sheila before -- raise your hand,
please, or stand up for a second. Sheila
Brothers is the chair of the Staff Senate.
Thanks, Sheila, for agreeing to do this with us.
Professor Tagavi who is the
chair of the Senate Rules and Elections
Committee, has asked that I point out that
Senate Council ballots will be -- will be
distributed now. Ballot No. 2 is going to be
sent, and here is what you’ll see. Whoops,
that’s not what you’ll see. There’s a letter
that goes along with this with a deadline.
These are the six finalists, semi-finalists.
Anything else, Tagavi, that you’d like to
announce to the Senate about this?
TAGAVI: No.
CHAIR DEMBO: Recall that three -- three of
these individuals will -- will fill the slots for the
Senate Council spaces. Okay. So the first item
on the agenda is Professor Jones to give the
trustee report.
JONES: I’ll make it short and sweet
here. Some of you may have picked up the --
the handout that I had on the table there.
This is -- a little abbreviation of it. These are
your predecessors here. And there was --
there was oscillations as to how their creative
and independent spirit has been viewed by
the University. It’s difficult to separate the
faculty’s creativity from its independent
spirit. I’ve abbreviated this here. Those of
you who didn’t pick this up on the outside,
you’ll probably get a tease out of it. Just
going on: Several decades later, though, the
Board of Trustees expressed its confidence in
the faculty’s role here. It will be the
legislative body of the University. The Senate
was created in 1918. There’s the manual with
the Governing Regulations of the Board and
the first rules of the University Senate.
Fast forward several decades to
1941, and the pendulum swings the other
way. I’m just giving you a little -- little context
to my report here, and you’ll see how this
ties together. The Dean of Engineering at
that time, Dean Graham, felt the faculty were
ants and just -- just didn’t like having to deal
with the faculty, and so he cahooted behind
the scenes with several members of the
Board out of view of the public to get the
University’s regulations changed. And this
was done on April Fool’s Day 1941. They had a
secret meeting, and you see the title here,
the Colonel got wind of it a few days later,
the Senate was abolished. This body in front
of me was abolished and did not exist. It was
replaced by a Council of Deans who were
headed by -- you can see the little print there
-- a dean of University, which would be sort of
like a provost we have today, and all
curricular policy-making, deciding who’s
going to get degrees, was all done by this
Council of Deans and this -- this super dean.
The faculty had no role. And now, two years
later we got back a small sliver, the narrowest
possible part of the pie they could give us,
but that didn’t work. And after 20 years, we
were still just a local institution with not
much national prominence. So the Board of
Trustees brought in John Oswald. He
believed and he got the Board to believe that
it’s the -- the creative power of the faculty. If
we’re going to hold the faculty responsible
for leading us nationally in programs on
instruction, research and service, you’ve got
to give the faculty comparable policy-making
authority to go with the level of
responsibility you’re holding them to. And so
we have codified the regulations of the
Board that we have today. This -- this is from
the Board’s regs. The University Senate and
the Board are the two primary educational
policy-forming agencies, you and the Board.
Nobody else is primary except the two of
you. Now, at the level of departments on
internal educational policies, again, it’s the
department faculty that would do this not
the administrative chain. And it’s in all three
areas, that policy is being made, the
instruction, the research and the service
functions, not just curriculum. So this is the
ambience we have codified today.
Educational policy-making is done by faculty
bodies chaired and led imaginatively by the --
the chair or the dean, but it’s the vote of the
faculty that -- this is the democratic side of
the University’s operations. This is all done by
democratic vote on educational policy. The
management side is over there, and that’s
democratic to the extent that that branch
wants to make it democratic. So one of the --
getting now to current Board events, one of
the things that the Board charged the Senate
also to be involved with is to -- advising the
Board on changes to the University structure
relating to its academic units. And so at the
most recent Board meeting, this is the
Academic Affairs Committee. I’m not on that
committee. I attended it as an observer, but I
saw this on the agenda. Here -- remember at
our last Senate meeting we put Visual
Sciences on the end of the name of the
Department of Ophthalmology. That had --
had reached the Board, and it was very clear.
You can see where underlined in yellow the
Senate committees and the Senate Council
and the Senate had approved that, and that’s
why -- and upon that, it had then gone on to
the Board. In another recommendation, I
was a little more concerned. It was a
recommendation, again, on changing an
organizational structure of the Research
Center shown there, and there was nothing
here indicating that this had been routed
through the Senate in any way. It just had a
VP and a provost’s recommendation and
nothing about the Senate. So that -- that
made me concerned because the Board’s
regulations expressly define
multi-disciplinary research centers as
educational units. So this -- this, again, relates
to educational
policy-making being policy-making in all three
mission areas, not just instruction. So I
brought this to the attention of the Senate
Council, and I believe they’re iterating now
with the provost as to how did this happen
and try to make in the future these kinds of
units -- this -- those centers that
are -- do reach the level of educational unit
are routed through the Senate. Another
aspect on this currently codified structure,
we’re trying to figure out under provost
system how to put a provost in over there.
And this past May, this body adopted some
recommendations to go forward to the
President’s committee that I’m on that’s
trying to codify a provost context to the
Board’s governing regulations. Up there in
May, again, the Senate publicly approved its
recommendations in open session for
everybody to see what the Senate wanted.
That went to the President’s committee, and
to a draft that was then provided to parties
including the deans. And at a dean’s retreat,
some recommendations came out of that
that I saw at the committee that really raised
some concern as they were articulated, and I
brought those to the Senate Council. And
Senate Council was concerned as well. Senate
Council did its homework, though. It -- rather
than just barking, it articulated some very
clear language on alternatives, how to
accommodate what the administrators might
have been concerned about without
compromising the faculty’s educational
policy-making role. And we got to give credit
where credit is due when it happens. In my
discussions with the Provost, he has stepped
forward and really helped to diffuse what
could have been contentious issues, so I’m
optimistic we’re going to have a happy
outcome on this, and we’re not going to have
a repeat of 1941. There’s a few more things
to work out. One of the things just real quick
here is information to the Board on loss of
faculty. We have lots of press play on that,
you know: Why are faculty leaving? More
faculty are leaving. But at the level of the
Board, the Board does not get any
information about faculty that are leaving,
what their numbers are. The Board receives
the appointments of faculty, but the Board
gets no information about the loss of faculty.
And the Board members want to know about
this, so they asked me about this. But there’s
-- right now there’s some subsets of the
University administration that are strongly
resisting giving to the Board information
about the faculty that are leaving and how
many are leaving, what units are they leaving
from? You know, I don’t see why this
information should be hidden from the
Board or the faculty. And so I’m trying to talk
with these sub-entities and the
administration, that this is public information
anybody -- I mean, Davy Jones could go make
an open records request and get this and
then put it into the Board’s minutes if he
wanted to. So it would be better for them to
be seen leading and voluntarily giving this
information rather than it being obtained
over and around them. Any event, some of
these things are going to be tweaked. A few
more governance issues here relating to the
Board’s regulations might come up later this
year not in this current wave of things.
And finally, I do want to point
out that the Board saw at the September
meeting a gift from Dr. Albisetti. He donated
$50,000 to the University to assist in faculty
salaries -- oh, no, student scholarships. I’m
sorry. Okay. But that was noticed up there at
the Board, and I wanted to give him an
acknowledgment of that. And, Dr. Dembo,
that’s my report. If you have any questions
about this stuff I’ve gone over quickly, you
know, I want to get the floor on to some
other things, just give me a buzz by e-mail.
CHAIR DEMBO: Thank you, David. The next
agenda item is the procedures for
discontinuation of programs. Just to show
you where this -- this item has come from. In
Spring of 2003, there was a special committee
charged with developing procedures for
discontinuation of programs. It was curious
that we have many regulations and
procedures for approval of new courses and
programs, but nothing specific regarding
what happens when programs are proposed
to be discontinued, what happens to the
students, the faculty? Are there guidelines
by which one should or should not consider
certain programs for discontinuation. This
committee was a special committee actually
composed of members of existing Senate
committees, the Academic Organizational
Structure Committee and the Academic
Programs Committee. And the chair of the
special committee was Kate Chard. The
committee came up with a draft document
that was sent to the Provost for review and
comment. The Provost reviewed it, had a
number of comments that were made. They
were viewed by the committee chair and
forwarded to the Senate Council. On October
27th there was further modification by the
Senate Council with Professor Chard present,
and it was approved as a Senate agenda item,
thus it’s on the floor. Kate, what would you
like to embellish on this?
CHARD: I think a lot of you were here
last spring when we first brought this up as a
discussion item. So some of you have already
heard about this. The primary reason we did
this is we noticed that we have absolutely
nothing in the ARs about discontinuation of
programs. And in this time when we’re a
little bit concerned about the finances of the
University, that would leave the
administration the right to terminate entire
programs, departments, colleges, institutes,
without any protection for the faculty for
moving them into other positions or even for
protecting them financially if they brought
the program back a year or two later. And so
what we did is we surveyed the benchmarks,
and we also surveyed other institutions
throughout the United States that seemed to
be similar in size to the University of
Kentucky and in similar, what I would call,
economic areas, so rural versus urban. And
found that actually a lot of agencies that are
comparable do not have regulations. But the
ones that do, provide a fair amount of
protection to the faculty. So what you see is
a draft. I think it’s in your packet in orange.
This is draft that gives you more protection
than we had before and a little bit more, I
would say, structure for the administration
that if they choose to terminate faculty, we
are asking that they follow these guidelines.
We are not messing with anything internal to
your college, to your department, to your
unit. If you want to make changes in terms
of your names and things like that, you go
through the existing Senate or ARs. Okay.
This is more for the larger scale when we’re
talking about actually termination or
disbanding of entire colleges, departments,
units or faculty. And then also protecting the
students within here. So I think we’ve
covered most of it. As Professor Dembo
mentioned, this has gone to the President
and the Provost. They provided
commentary, and we did respond to that
commentary as best we can. I don’t think
there’s anything that we didn’t respond to
and wasn’t included. So this should be
something that the President and Provost
have no problem endorsing if it comes to
this. Do you have any questions. I’m sorry,
go ahead.
CHAIR DEMBO: Could you, Kate, talk about
that second part on centers and institutes and
why there’s still an open-ended question
about that?
CHARD: The last part is this, “Other
educational units.” We have been asked by
the Senate Council, and actually this has gone
back just to the first committee, the
Academic Affairs and Structure Committee.
We’re looking at that -- Organization Structure
Committee, I’m sorry. We’re looking at
defining a center and an institute within the
term of educational unit. There seem to be
some question coming from the Provost of
what was meant by an educational unit. And
then how would you handle a center or an
institute if you were talking about disbanding
them. And I’ve discovered, through a year of
having this position, is there seems to be
some ambiguity once you cross this campus
as to who creates a center or institute, who
you’ve gone through to create that center or
institute, and whether that center or
institute receives money from the University,
or whether it’s fully grounded in grant
money. So I think we’re going to have
Professor Davy Jones come meet with us to
look at the ARs, make sure that we’re keeping
in accordance with anything that’s existing,
but then also draft some policy to define
what an educational unit is as it refers to a
center or an institute. So that’s going to be
the next step. And we may put an addendum
into these guidelines after we do that.
UNIDENTIFIED SPEAKER: The meeting is canceled.
CHARD: Wendell has an issue with us.
Any questions at all in terms of the policy
that we’ve outlined, the guidelines so far?
CHAIR DEMBO: So because the Senate Council
has approved this as an agenda item, is it
already on the floor for further discussion, or
if there is none, for a vote. So while Kate is
up here... By the way, please introduce
yourself because Lisa has not seen you
before.
TAGAVI: Kaveh Tagavi, Mechanical
Engineering. There’s a sentence at the end of
this proposal missing, and for the record, I’d
like to add it. It should say: Upon approval of
this, this proposal would be sent to the Rules
Committee to be codified as a Senate rule.
That’s the way it was approved at the Senate
Council.
CHARD: Yes. I think the Senate
Council added that later.
CHAIR DEMBO: The implication there is that
the Senate has 100 percent authority to
create a new Senate rule. And after much
discussion with the special committee and
with the Senate Council, the decision was
that that was the best place to have it
codified.
Okay. So we’ll take it to a
vote then. All in favor of adding these
procedures to this continuation of programs
as new Senate rules which would be sent to
the Rules Committee for final codification,
please indicate by raising your hand. Okay.
All opposed, please raise your hand. Any
abstentions? Okay. So the procedures stand
approved proposed for Senate rules.
Let me beg your indulgence now.
We have several minutes before 3:30 which is
my goal. There’s a Senate rule that says that
the agenda shall be prepared and senators
notified 10 days before the meeting. In some
cases, it’s not entirely possible to do that
because of the routing of different
proposals. In this case there’s a proposal
from the College of Pharmacy to change
from two divisions to two departments. The
implication of this is that if we don’t consider
it at this meeting, that it would not be heard
at the December board meeting and would
be delayed until at least the January board
meeting if not later than that. Ordinarily, we
try to stick by the rules because that’s why
they’re written. But the Senate does have
the power to waive the rule under
circumstances that would be exceptional or
that would serve the members of our
community. In this case, the Senate Council
carefully considered this proposal, read it
over thoroughly and given the degree of by
and approval, recommends to the Senate it
consider waiving the 10-day rule. Before you
say anything, Kate was also committee chair
of Organization and Structure intimately
involved in this. Kate, any comment to help
the senators?
CHARD: Yes. I want to say that part
of the delay in this was actually the Senate’s
fault. We created that form that’s on the
back of your minutes, the purple last page.
It’s a routing sheet. I was contacted last
spring about this proposal, but in their
attempt to fill in our form, there was a little
bit of a delay for Pharmacy to get all of these
procedures and steps met. You can look at
their time line. They started on this very
early, and it just took a little bit of time
before they could get all of the steps
completed. So this really isn’t the
Pharmacy’s, you know, issue or fault. This is
more that they were trying to do something
that we had created right at the end of the
year and were trying to meet our demand.
And I have to say this is the best job I have
seen so far of anyone following our routing
sheet. I’m going to hold this up, for any of
you talking about redistribution of your
faculty or senate, use this one. This is a really
good example of how to do a routing sheet.
So I encourage you to waive the 10-day rule. I
think they deserve it.
CHAIR DEMBO: I’ll entertain a motion in that
regard.
BLANDFORD: So moved.
CHAIR DEMBO: Okay.
GESUND: Second.
CHAIR DEMBO: Professor Blandford made the
motion. Professor Gesund seconded. Any
discussion about waiving the 10-day rule? All
in favor, please say aye.
UNIDENTIFIED SPEAKERS: Aye.
CHAIR DEMBO: All opposed. Okay. So it’s on
the floor for discussion. Would somebody
from the College of Pharmacy like to speak to
this proposal? Please introduce yourself.
ANDERSON: Dr. Heidi Anderson. Only if
there are questions. I’m here to respond to
any particular questions. Basically, the
proposal basically states, just like Kate
mentioned -- can you hear me okay? Our
college is currently now two divisions. We
have been that way for a number of years.
The faculty within the college, as well as our
accrediting body, has encouraged us twice to
go ahead and move toward department to
try to move that process along. The
accrediting body was here just again this past
September, the 9th, 10th and 11th and
encouraged us again. So we put the proposal
together. We’ve been in touch with Dr.
Chard.
Also we met with Dr. Dembo
throughout this process to try to make sure
we adhere with policy and it came before the
committee with support from local current
divisions, as well as the students, graduate
students and the staff. If there are no --
that’s about all I would like to say unless there
are any questions?
CHAIR DEMBO: Questions for Dr. Anderson
regarding the proposal? Again, my
compliments to the College of Pharmacy.
There was very close communication the
whole time, and it sounds like there was the
true consensus among members of their
college community.
Without any further question,
then the motion on the floor is to -- well,
actually, I guess, Professor Blyton, if we made
a rules exception to put it on as an agenda
item, I need a motion first to consider the
proposal; do I not?
BLYTON: It was approved by general
consent, I thought.
CHAIR DEMBO: Okay.
BLYTON: So you don’t need to do that.
CHAIR DEMBO: Okay. So all in favor of
accepting the College of Pharmacy proposal,
please raise your hands. Okay. All those
opposed? Any abstentions? So it passes
unanimously.
Okay. I’d like to set the
stage before we begin our discussion here.
This is how the rest of this meeting will
progress. We’re first going to have a
presentation from the Retiree Benefits Task
Force. We have several members in
attendance. We have Joey Payne from
Human Resources; we have Tom Samuel over
here; we have Dick Siemer, Vice President for
Finance and Administration. This will be for
information from the task force. I explained
to task force members that you have had
plenty of chance to review this, so hopefully
this will point out the high points or things
that may have been unclear. There are some
handouts coming out. I’d like the next thing
to follow to be specific questions to be asked
of the task force, things that were unclear,
things that have not been answered for you.
So before we get to any other actions as a
result of the Senate, that we have a chance to
have a good discussion with the task force
asking them about the substance of their
recommendations.
Now, what is the routing as
currently proposed? And, Tom, tell me if you
disagree with any of this. The task force
recommendations, as they currently exist,
will go unmodified to the Employee Benefits
Committee. Karen Stefaniak is the chair.
Karen, I saw you here. She’s in the back.
However, as a result of the University Senate
discussion, Staff Senate discussion and all the
forum that will be held across campus over
many days, comments from those discussions
will also be forwarded to the Employee
Benefits Committee. And, Karen, you and
your committee are going to meet on
December --
STEFANIAK: 16th, I think it is.
CHAIR DEMBO: December 16th. Okay. It’s on
the Web site.
STEFANIAK: Yeah, correct.
CHAIR DEMBO: In the Mining & Minerals
Building. And at that point, your committee
will discuss all the findings together and
then at that point we’ll send your report
to the President; is that correct?
STEFANIAK: Correct.
CHAIR DEMBO: Okay. So as far as you planned
it, there’ll be that one meeting to compile --
STEFANIAK: Right.
CHAIR DEMBO: -- all this information together?
STEFANIAK: At this time, that’s the plan.
CHAIR DEMBO: Okay. The Staff Senate will be
meeting this Thursday in the same room. And
Chair Brothers will be running that meeting,
so I’m very glad you’re here to listen to our
discussion. I have complete confidence that
this is the group on campus, this group of
faculty, staff, students and administrators
that care the most about what happens to
the University and its employees. So I’m
convinced that what we produce out of
today’s discussion will be something
meaningful and will help the University to
move in the right direction, whatever you
deem that to be. So in that regard, I’d like to
see our discussion be collegial, productive
and putting us steps forward, further than
we were when we first started. So at this
time, Tom or Joey, how can I help -- and Dick.
SIEMER: Thank you very much. I
apologize. I’m getting the flu, and the people
who have gotten the flu, you know how this -
- like my mind feels clogged. So I’m going to
try to be as coherent for the few minutes
that I’m on the stage, and then turn it over to
Tom Samuel who knows about it. This is an
excellent issue that I appreciate you’re here
to consider.
I could go back to World War II
and explain how benefits like this got into
the structure of organizations, universities
and companies. But probably a more
reasonable point to start is when in the last
year or so when we realized that there was a
huge unfunded liability associated with this,
and people who pay attention to numbers
understood why that was happening. And
it’s really an evolution of the national
argument. We’re having more people
retire and a static population with increased
costs. And over the next 30 years, our costs
for retiree health care are going to move
from -- if the model is correct and the future
remains unchanged, from $7,000,000 where it
is this year to $85,000,000. That doesn’t mean
we shouldn’t do this. I mean, this may be a
benefit that everybody wants to maintain.
The reason I think it’s a good stewardship
conversation is because there’s a tradeoff as
we move into the near and longer term
between making these dollars that the
University has at the margin available for this
benefit or available for other uses that it
could have, whether it’s salary or other
benefits. And it’s a discussion that ought to
be shared broadly within the University. I
was pleased, and I can’t take for the fact that
the administration set up the task force led
by one of our very best faculty who has
expertise in this area, who will talk to you.
They had, I think, wonderful deliberations.
Came forward with a recommendation, and
now want to share with you and other
members of the University community for
advice and counsel. I can assure you the
President and the senior officers of the
University, the Provost, Executive Vice
President of Health Affairs, have come to no
conclusion about this. Are simply looking in
the way shared governance works to the
members of the University community
through its elected representatives to give
advice and counsel on how we ought to do
this. It’s a serious issue because as it moves
forward, there’ll be a -- we agree that this
benefit will not change. It will consume a
gradually larger piece of our budget and will
have an impact in other ways, but that’s
certainly a conversation that ought to be
held here. Tom do you want to go over the
conversation.
SAMUEL: I’ll try to take as little
time as possible to sort of fill in some of the
points that are -- have not been covered
otherwise. You have seen the task force
members, and I think many of them are here
and will certainly hopefully help me respond
to questions as they arise. I want to point out
that there have been considerable discussion
about the fact that we were talking about
the Governmental Accounting Standards
Board rules as somehow changing
something. The only thing it changed was,
and I think this was how it arose in terms of a
task force being appointed, was that it
suddenly required the University to consider
that number, and that’s a large number of
about $350,000,000 of unfunded liability, that
is, promises have been made that have not
been funded in the past. That didn’t change
the liability, however. That liability was there,
and in fact, many members of the task force
who have been members of the Employee
Benefits Committee over the years have
discussed this particular problem of an
unfunded liability that was building up at the
University of Kentucky without any
recognition or discussion on campus. It was
like we could just continue to go on funding
this benefit in the year that we received it as
retirees and not worry about it. Well, the
fact is, as you will see from the numbers -- in
fact, Tim, could we maybe bring those
numbers up? We
could look at the numbers and see how they
grow over time and ultimately begin to
consume more and more of the University’s
resources. This is, as you can see we’re now
right at about $8,000,000, $7,000,000 in
benefit costs this year for retiree health
insurance. That grows over the 30 years and
to where at about $85,000,000 of being paid
for retiree health benefits.
And the question is -- this was the question
that was given to the task force: Should we,
in fact, continue this benefit at that level?
One of the things that the task force
members felt was very important was that
we needed to continue the benefit. It was an
important benefit. We knew, though, that in
1992 when private employers were required
to recognize the unfunded liability, that
things changed in terms of the private
sector. For employers with more than 500
employees, they went from 46 percent
offering retiree health benefits in ‘92 down
to 29 percent in 2002. So you can see there’s
been a decline in terms of the number of
employers offering retiree health benefits.
For employers with more than 1,000
employees, those offering pre-65 retiree
benefits went from 89 percent down to 72
percent. Those same large employers in
terms of Medicare-eligible retirees went from
80 percent down to 61 percent. So we’re
looking at something between a 20 and 25
percent diminution of services offered by
the employers, large employers, over that 10-
year period.
Recognizing that and recognizing that we did
want to continue the benefit, and that in fact
were just beginning the era, when the baby
boomers begin to retire. For example, in
1950, the number of workers, that is people
below age 65, between 28 and 65, were about
7.3 per retiree, person over age 65. Today
that number is somewhere around 4.7
workers per retiree. By 2035, that number
will be about 2.7 workers per retiree. That
influences the ability of those people that are
working to pay for us that are retired. And
what we’re saying is that as this number
becomes larger and larger, that burden is
increasing on fewer and fewer people. We’re
asking them to pay for those of us who have
retired. So with that in mind, the task force
said we need to consider altering this
benefit; preserving it but altering it. One of
the things we did also is look at our
benchmarks. We could only get information
on 17 of the benchmarks. Eleven of those
benchmarks have a charge per month of
between 50 and $223 per month to the
retiree for retiree health. For six of them,
there’s no charge at all. So you suddenly say,
okay, what can we do? How can we organize
this benefit so that it is still a viable benefit,
so it is still there to take care of people in
retirement? And one other point I guess I
want to make -- and that’s how we came to
the conclusion we came to. That’s how we
got there was trying to preserve the benefit
and make it a reasonable benefit in terms of
our ability to fund it over time. One of the
concerns is that many employers in the
private sector that have not already done
away with retiree health, are considering
doing that. Fifty percent of the large
employers have a cap on their contribution
to the employee retirement. Fifty-seven
percent of those have already reached that
cap which means they’ll never contribute
more to the future retirees in terms of how
much they’re going to receive. So when we
looked at all the various and sundry
information before the committee and
considered the unfunded liability and the
cost, the increasing cost of this benefit, we
said let’s look at an alternative. Tim, could we
go to Table 5, and then I’ll open up for
questions. Thank you. Just one more, 6.
What this is, this is the current benefit in
yellow. This is the revised D, the one that
we’ve been talking about. Assuming that
future retirees or future employees are
allowed to enroll in the retirement plan. The
red line assumes the revised D which has
been proposed by the committee but that
we would as of 2005 not permit new
employees to enroll in the retirement
system, retiree health benefit system. So
with that, we’re open for questions because
I’m told by Jeff that really the committee or
the faculty both have been well informed as
to what the issues are.

ARTHUR: Mary Arthur. I wonder if you
could say briefly what the data are that
contribute to your projections with the green line?
What the data includes that give us that projection
up to 75 or 80,000,000?
SAMUEL: First of all, it’s done by our
consultant Mercer, and I don’t pretend to be
an actuary to know how to do that, and if you
want to talk to them, we’ll give you their
phone number, number one. But number
two, it obviously includes the increasing cost
of healthcare over time. It has a projection of
increased retirees from the University of
Kentucky, and what else? What am I missing,
Joey?
PAYNE: The medical inflation and
increased number of retirees?
SAMUEL: Basically, medical inflation
and increased number of retirees. Yes.
TAGAVI: Kaveh Tagavi. I want to make
observation on the last few questions. The
name of this proposal is retiree benefits. Five
of the members are retired or very close to
retiring and I think some others are closer to
retirement, but amazing enough, this affects
the current employees more than the
retirees. It actually safeguards the retirees.
That’s kind of an interesting observation.
My comment is on liability.
Let’s say I have promised my son to give him a
$500 birthday present for the rest of his life.
But when I apply for mortgage. This is not a
liability on my part because it’s out of my
generosity. I can stop it any time I want to.
Your Rule 90.1.3 which I have sent to the
Senators, says you can stop this any time. So
having said that, to be an unfunded liability,
you have to be a liability. Do you consider --
does UK consider the retiree benefits a
liability, a legal liability? And I know that’s a
trap question but I hope you answer it
correctly.
SAMUEL: I hope I didn’t, I think. But
at any rate, I will turn to Clay Owen for the
answer to that because far be it for me to
determine how we’re going to answer it in
terms of putting that onto our balance sheet.
TAGAVI: And one other thing, when did
Rule 90.1.3 be changed in writing in the
University?
OWEN: Lynn on the HR policy, was it
‘97 that codified for the first time?
WILLIAMSON: Correct.
CHAIR DEMBO: Time out. Let’s introduce
everybody who’s on the floor.
OWEN: I’m sorry. I’m Henry Clay
Owen. I’m Controller at the University.
CHAIR DEMBO: And Lynn.
WILLIAMSON: T. Lynn Williamson, Human
Resources.
TAGAVI: I was hired before ‘97, so I’m
safe.
OWEN: Well, strictly from an
accounting perspective, you’re exactly right.
If there is no continuing legal commitment on
the part of the University to retirees, then
there is no legal liability that would result in
an accrual entry that would affect the
accounts of the University.
However, if this is a benefit
that the University offers to its current
employees and to its current retirees and
there is an expectation that that benefit will
continue, then clearly that benefit will have
an impact on future budgets of the University
of Kentucky and certainly on the statement of
assets, as you would know as the balance
sheet. So from the standpoint of prudent
fiscal management, we have to measure that
the amount of that future liability, and if in
fact the present plan continues, then we
would have to record that as a liability against
the books of the University. At this point, it’s
not completely clear as to whether or not the
University will have a reportable event or not,
but you’re exactly right in the analysis that
you used. If it’s simply an expectation that we
may do this, but there is not an absolute
commitment to it, then there may not be a
liability.
SAMUEL: But let me just -- let me say
that these numbers are still real, if in fact, all it
means is that we’d be postponing when we’re
not going to do this. Surely, I guess as we
have fewer and fewer workers per retiree.
The longer we delay that, the more
complicated it becomes to fund the unfunded
liability because we have fewer and fewer
people, be they taxpayers or be they
employees or whatever, to pay for that -- that
benefit. It seems unfair to go forward with
our generation, and I will -- I’ll say my
generation since I would be a beneficiary if we
decide to postpone it, and say that that
belongs to somebody else. Somebody
somewhere along the line is going to have to
honor the fact that this is costing more and
more money for the University, reducing the
ability to do other things, for salaries, for
benefits for current employees. All that -- I
mean, there’s only so much money at some
point to pay for that benefit. Now, if we say
we’re just going to leave it out there and at
some point we’ll let some other
administration decide that, in fact, this is
something that needs to be addressed, I
would say that’s not something I would want
to participate in. And so -- the reason the task
force, in fact, honored this particular liability
is something we needed to address because
whether it’s recognized on the balance sheet
or not, it’s real.
CHAIR DEMBO: Professor Peffer. Then
Professor Gesund.
PEFFER: Hi. Sean Peffer. Just one
real quick thing. I know you’re using the word
liability, but I think that’s messing it up. The
idea is that’s what we think we’re going to
have to pay as a University going out in the
future.
SAMUEL: Yes, that’s what --
PEFFER: That’s what we think --
SAMUEL: That is a budget item.
PEFFER: So when we hit 2020, we’re
going to have to pay $34,000,000 out there,
that’s just a given, if we keep going the way
we’re going.
SAMUEL: You’re correct.
PEFFER: Therefore, his comment is or
their comment is: We’ve got a problem if
retirees keep going up, and the amount we
got to pay each one keeps going up, if we
keep the same plan, we’re going to run into a
problem paying out the cash later.
Whether we report it as liability, don’t report
it as liability, all that, that’s pretty much all
irrelevant. Does that kind of make sense? So
it goes back to their argument whether --
their argument is look out there in 2024 we’ve
got to come up with $51,000,000. And that
year, we’re going to have a real hard time
doing it, that kind of a thing. Just when you
use the word liability, I think it’s messing it up.
SAMUEL: Thank you very much, you’re
correct. Because this is a budget projection
here rather than a liability. If we wanted to
put out the liabilities, we decided that the
nature of present value et cetera of all the
liabilities was really getting in the way of a
true discussion. And this is not about
liabilities. This is about a budget item that has
to be funded in those years, and I will tell you
those are very conservative projections. Our
consultant, I think, is at about a five percent
medical inflation by the time we get out 10
years. I don’t happen to think that’s going to
be the case, but I was not going to try to
interrupt our consultants in terms of their
projections, and their point is at some point
health care cannot continue to go up. I
remember when it went it to ten percent,
and we said it couldn’t go any higher, and it
has.
CHAIR DEMBO: Professor Gesund was next.
GESUND: Hans Gesund, Engineering. Did
anybody on the task force consider the honor
of the University. The fact that the University
made a promise to its employees long prior to
1997 when the weasel words were inserted
somewhere in thousands of pages of
regulations. I happen not to have a horse in
this race. Neither -- I have taken my wife and
myself out of the University health insurance
plans completely sometime ago. We have
Medicare and we have our Medicare
supplement insurance provided by the
Department of Defense, thanks to my Army
service.
I do -- I am in my 46th year on
the faculty here. I have a great stake in the
honor and integrity of this University which
the task force is trashing. You are saying that
the University should break its solemn
promises to its employees, to the faculty, to
the staff. That stinks. And I have absolutely
no confidence in people who want the
University to have lied to its employees, to its
staff, to its faculty. The University, first of all,
has to be an honorable institution. The
faculty depends on honesty in all its work.
The students depend on our honesty. If the
University is not going to deal honestly with
its employees, who will? Frankfort?
Washington? No. We are the University. We,
the staff and the faculty, and if the University
can break its promises to us, if you want the
University to break its promises to us,
regardless of anything else, then we can break
our promises to the students, and we can turn
around and tell the students: Oh, the
University needs more money. You’re going to
-- we’re going to add 30 hours to your degree
requirements so you’ll stay here an extra year
and pay us more tuition. And we can turn
around and tell the alumni: You’re going to
have to come back to school and do another
30 hours to validate your degree. What’s to
prevent it? Once trust is broken, it’s gone.
Now, as far as the politicians
among us are concerned, if the
University breaks its promises to the present
employees, how are we going to hire the first
class, top-notch people we want to hire? If
they can’t -- if we can’t trust the University,
can they? My advice would be: Honor your
promises to the present employees, to the
staff and faculty, and I hope the Staff
Congress will do this too. And then as far as
future hires are concerned, be up front with
them. Tell them honestly that we will try to
give you these benefits or some benefits, and
then hope that eventually the U.S. Congress
will do something to relieve the whole -- the
whole problem of health and welfare in this
country. It’s going to come. They’re already
working on it. So
these -- this green projection heading off to
the sky is a Chicken Little affair. The sky is not
going to fall, and that green line is not going
to hit the sky. So my -- would I be in order
making a motion?
CHAIR DEMBO: I’d like to encourage you to
hold off until we get some more questions to
the task force.
GESUND: But that’s -- that’s all I have
to say, and I don’t want to hear -- I’m really not
interested in the grubby details of changing a
period here, a comma here, a paragraph
there. It’s the honor of the University that is
at stake here and that you guys want to kill,
and I can’t find words enough to tell you what
I think of that idea.
CHAIR DEMBO: First, let’s let Professor
Samuel respond, and then you’re next.
SAMUEL: I mean, I will -- I will simply
say that in an honorable way we are coming
to the University community for exactly those
comments. And if that’s what the -- you as the
faculty and what the administration choose to
do, I think that’s fine. We were given a task of
being fair not only to the retirees of the
future and presently but also to employees
and students of the future. And that’s what
we’ve tried to do. I am sorry that you
consider that we’re dishonorable in that
process. I have to think that we’re very
honorable and very open, and if, in fact, that’s
the decision, then so be it. We believe that
we did the right thing. We believe that we
were, in fact, taking the best interest of
current retirees, future retirees, future faculty
and staff and that we believe that the funding
of this over time will cause change that’s
much more traumatic than that. Some of us
since ‘92 have been saying we ought to
change this benefit because the fact is in the
long run this is an unsustainable benefit. We
have not funded it. And that is the problem.
And all we’re doing is coming to everybody
and saying: Is there a way? This is the way we
propose. And I do not feel dishonorable in
that process. I feel very honorable in that
process. And if, in fact, the vote is
differently, so be it. That’s fine.
CHAIR DEMBO: There’s a question over here.
JOHNSON: Keith Johnson, Business &
Economics. We’re all mesmerized by big
numbers, so I’ve got a couple of questions.
Number one, are those nominal or real dollars.
Nominal dollars, of course, are inflated dollars,
and they’re pretty hard to interpret, I
presume that they’re probably nominal.
SAMUEL: Those are nominal dollars.
JOHNSON: Pardon me?
SAMUEL: Those are today’s dollars.
JOHNSON: Yes. Secondly, the forecast --
whenever we try to forecast anything, and
I’ve been involved in a lot of forecasting
projects, doing anything over approximately
eight to ten years is really, really -- you’re on
shaky ground. So you might get pretty good
up to about 2016 tops, after that, you have no
idea what’s going on. The third thing,
probably what’s really relevant, is percent of
the University budget that this represents,
and if this is the declining percentage at
present budget -- the University is growing
much faster than that, then it’s really not as
serious an issue as it appears by your dramatic
line. Fourth thing, I question was other
alternatives considered? For example, you
have the example where somebody could
retire at age 52, you know, meet the
requirements and all this kind of stuff. I
presume the bulk of the cost on retirement
benefits there and medical, is people retiring
before Social Security kicks in or Medicare
rather and which -- in which case that --
because I think Medicare picks up a good
chunk of your medical expenses when you’re
over 65. So if you -- did you investigate the
possibility of altering the early age at which
you retire or at least reduce benefits for
retiring early, as opposed to those retiring at
65 or later.
SAMUEL: We did, and the impact, Joey,
was minimum?
PAYNE: Yeah. The 251,000,000
liability is basically already incurred by the
2,300 retirees that we have and the 1,600
employees who are eligible to retire right
now under the rule of 75. You know, when
we started looking at the problem, we said:
What if we eliminate early retirement? It
didn’t have a material affect because -- or we
said: What if we make the rule of 75, the rule
of 85? Most of the people who have met the
rule of 75, in that l,600, they have the
additional years to meet that as well. So you
can’t make that liability go away, you know,
for those people. And when you look at the
numbers running, the 2,300 retirees, you
know, it doesn’t take five to seven years if
there’s no change at all before you have 4,000
retirees. People are living much longer than
they have in the past, and we’re adding a
number of new retirees each year. And we
anticipate, you know, with 1,600 people
eligible to retire, that there be a lot more in
the near future.
SAMUEL: What we did -- let me just say
we did explore, as Joey pointed out,
changing the rule of 75. As a matter of fact,
that was my first response. It just seemed
like that would work. And other universities
have done that. Other universities have made
changes. Ohio State has gone from five
years eligibility for retirement to 15.
Purdue has stopped subsidizing spouse’s of
retirees. So that all of these -- I mean, there
are a number of changes going on out there
now, primarily because of what we’re looking
at here. But, we looked at a number of
options. In fact, the last -- you have Scenario D
because we went through several before that,
and we, in fact, at one time were going to
present many of those. We found that what
we were going to do was actually be
more confusing rather than clarifying. And
we said: Let’s come down with a
recommendation. Let that
recommendation go forward and let people
respond in terms of questions. We’ll
respond to those and we’ll try to answer the
questions.
CHAIR DEMBO: Professor Goldman.
GOLDMAN: May I have the permission to
address the Senate? I am not a senator.
CHAIR DEMBO: You have the floor.
GOLDMAN: Thank you. What I want to
observe is not intended in any way to detract
from the ethical point that Professor Gesund
made a moment ago. But even if we were in a
budgetary crisis that forced us to say: Well,
where is the money going to come from? The
money is there if you would look at the bigger
picture. When you make it less desirable for
someone to retire, they don’t retire. I’m 65. I
haven’t begun to think of when I’m going to
retire. There’s no real incentive in it for me. If
I stay on for another 10 years, with this
proposal, they’ll be even less incentive for me.
If I stay on for another 20 years, they’ll be still
less incentive. In fact, any possible
contribution to my health insurance will be --
have been wiped out under this proposal.
Now, what does that do? I took a look at the --
at the -- the covered fiscal year data for the
average compensation at the University. The
average compensation for a full professor,
this is salary, $85,598; associate professor,
$60,618; assistant professor, $52,593. If I defer
for 10 years retiring, that’s 10 years when an
assistant professor is not going to be hired to
replace me. If we use the average figures
here, and keep in mind that the most senior
people probably are making a bit more than
the average for a full professor, but if we use
just the averages and if we assume that it
takes five years for a new assistant professor
to go from assistant to associate and then
another five years from associate to full
professor -- and I think in many departments
that would be a pretty fast track -- here’s what
we come up: For the first five years, the
difference between a full professor’s salary on
average and the average associate professor’s
salary is $33,005. Oh, they’ve got it up there.
Thank you. If you multiply that by five, that’s
$165,000. Potential savings in compensation
for the University that has been discouraged,
that has been lost because people aren’t
retiring as quickly, and then if you add to that
five years for the difference between an
average associate and full, that’s another
124,000. In other words, close to $300,000 of
savings is lost to the University by not making
it more attractive, by making it less attractive
for people to retire. This is a
counterproductive proposal as far as raw
financial interests of the University are
concerned. Putting aside all the other
interests involved in bringing new blood into
academe. And those figures, by the way, are
some -- a bit of an underestimate because
there’s some other factors involved. There’s
also a payroll tax for Medicaid that would be
on top of all of those figures. And then what
we’re talking about is an insurance pool for
the active faculty that has more and more old
fogies like myself who have to have major
procedures, and I’ve had two already. That’s
part of the insurance pool for the current
faculty. It’s not just us gray hairs who are
affected by this, even more the younger
faculty is affected adversely by this proposal.
Thank you.
CHAIR DEMBO: Is there a response?
SAMUEL: I will say that, again, this --
it may be that, in fact, I mean, I’m certainly
doubting the numbers that are here. Our
consultants, and I will say again, I go back to
the numbers that we’re looking at to begin
with are based on their experience, not just
here but other places, with private employers
that have made these same kind of changes
over the years. I will say that they do not have
the permanent status employment of a
faculty member, and therefore there may be
a difference on that basis. I would hope that
they had considered that in terms of the
numbers that they gave us. But certainly we
did talk about the number of people that
would likely retire. In fact, these numbers
assume that if we go to Scenario D that we
would get some earlier retirement in the
short term. It did not -- we did not try to
address what it would be in the long term in
terms of people staying on longer. So this is a
valid point that the administration should
consider.
CHAIR DEMBO: Professor Steiner is next.
STEINER: I’m not a member of the senate.
May I address the floor?
CHAIR DEMBO: You have the floor.
STEINER: Thank you. I agree with what
you said before 100 percent, I’m also in that
range. And it’s a disincentive; a very strong
disincentive and I expect there are a whole
bunch of people who say -- in the same -- the
same boat. The other thing is when you
mention the benchmarks, industry is really --
we don’t pay like industry.
UNIDENTIFIED SPEAKER: Yeah, yeah.
STEINER: And we shouldn’t basically be
judged by industry.
UNIDENTIFIED SPEAKER: Thank you.
STEINER: We come here, basically our
salary -- and even if you want to compare us
to the benchmarks we’re bottom feeders,
we’re low. There’s no question. I’ve been on
committees also seeing -- seeing the range
and we’re -- we’re the absolute bottom aside
from administrators, who are up there in the
middle of the pack somewhere, which -- which
is the case. At any rate, you mentioned the
benchmarks. Those are important to us,
right? That’s what we’re -- we’re not aspiring
to be McDonald’s or other things -- we’re
aspiring to be benchmark. And you said that
they’re increasing by 50 to 220 on retirees,
that’s the range that you gave. That’s the
range that you gave.
SAMUEL: Lets see, 223 yeah.
STEINER: 223?
SAMUEL: Uh-huh (AFFIRMATIVE).
STEINER: So why aren’t you considering
-- I mean, it’s understanding that -- that
healthcare costs should increase for retired
people to some extent, but the cap will take
you out about 12 years, and then -- then at a
time when it’s probably needed the most, in
that sense, and then it’s dropped, and that’s
it. Now, faculty might be able to survive it,
and they’ll probably stay. In fact, they might
be able to survive it. Certainly, staff will have
great, great trouble, in my opinion, based on
salaries, very low salaries at this University.
Which brings another point, and that’s a
recruitment point. One of the reasons that
we get -- staff after staff after staff says, you
know, I could do better on the outside with
the benefits, and part of the benefits are
obviously retirement benefits. And I think -- I
think it’s a tremendous disincentive for hiring.
Faculty come here and faculty will leave. Get
near retiring -- you know, you’re in the prime
of your -- your life and all of a sudden another
university asks you, and they have a great
retirement program, it’s not going to be a
major thing I don’t think. But it certainly will
be something driving you in that direction.
This University needs to be attractive, and we
aspire to be a class -- class institution. This is
not a class type thing, in my opinion.
It’s -- it’s a disincentive. I think it’s negative
down the line. If you increase the amount
that people pay, they can live with that,
because, you know, there’ll be increases and
significant -- I think people can live with that
over time, and budget, we can live with that.
If you put an absolute cap on it, particularly
staff, I think, faculty too, but particularly
staff, they’re going to be out of the system.
This -- what you’re going to have is what you
have in the country now. The very poor
people will -- I mean, just -- it’s a very bad
system, and I don’t think the University should
be party to that. Even our benchmarks.
You’re not saying that they’re -- they’re
capping. You haven’t -- are they capping?
SAMUEL: No.
STEINER: So none of our benchmarks are
capping.
SAMUEL: Not that I know of.
STEINER: Well, but that’s good enough.
Why should we, bottom of the pack, start
capping. I don’t understand why -- you know,
we’re working in a reverse way it seems to
me. We couldn’t find an accommodation that
will help -- I’m sympathetic to that. Not this
way. This is a very, very -- (inaudible).
CHAIR DEMBO: A response?
SAMUEL: In terms of the cap, I don’t
want to get into the details as Goldman said,
we don’t need to talk about commenting, et
cetera, but the cap on the current retirees
and those that retire prior to whatever point
in time this would be implemented, the cap is
several down the way before that’s realized. I
-- I -- that is a problem perhaps, but if, in fact,
we’re going to get national health insurance,
we would have some kind of solution at the
Federal level. For example, we did not
consider the possibility of passing a
pharmaceutical benefit this particular year
which would then stretch that -- those dollars
out for a longer period of time in terms of
what we, in fact, could spend from that. For
our Medicare retirees, about 60 percent goes
to the purchase of pharmaceuticals. Forty
percent goes to other medicals -- spills over --
Medicare retirees, 40 percent goes to other --
other items. But we considered the issue of
continuing a retiree health benefit. Our
concern was if we don’t get a handle, then the
natural inclination, which many employers
have gone to is to, in fact, exclude new
employees from participating in the retired
health benefits.
STEINER: Are there benchmarks on this?
SAMUEL: Are there benchmarks --
STEINER: Benchmarks on this?
SAMUEL: Well, we have several
benchmarks that currently don’t pay anything
for the retirees or any of them already.
Purdue, for example, pays nothing.
STEINER: But has this -- have they

changed the system that you’re saying --
SAMUEL: Oh.
STEINER: That’s what we should be
aspiring to.
SAMUEL: Well, let me just say that we,
in fact, the University of Kentucky is
considering this before others. That’s another
point. If you want to wait on this and see
what everybody else does, we can do that.
But this rule doesn’t take effect until July,
2006.
So that in fact many employers,
our public employers, have not currently even
begun to consider, in addition, many of them
are part of state retirement system. For
example, here in Kentucky we have at the
regional institutions many faculty have no
retiree benefit at all if they’re not part of the
state retirement system. Those that are part
of the state retirement system do have as a
component of that retiree health benefits.
But there are many that have no retiree
health benefits already. By their own
election, however, I will say. This is not
something the University imposed. But by
their own election, they chose to go into an
alternative retirement system which did not
have -- did not have retiree health benefits.
CHAIR DEMBO: Vice President Siemer has asked
for the floor.
SIEMER: I just want to make a comment.
This is my first experience with the University
Senate, and -- and -- mixed feelings --
CHAIR DEMBO: Well, come back now.
SIEMER: The -- and the reason I say
that is not because the comments in and of
themselves are -- are unfair. But what I should
say is it’s not fair to direct them in the way
they’re being directed at Professor Samuel.
He’s simply been asked to do a study with
people throughout the community to come
up with an inter-generational answer. And I
don’t think he’s less honorable because of
that. He has -- he has brought forward a
recommendation that his committee would
have brought forward, and certainly it’s
correctly being discussed here. If there’s -- if
there’s lack of -- of -- if there should be a focus
on who brought it forward, of course, I’m the
one that brought it forward for the
discussion. I could have, in fact, tabled it
before it came forward to a larger
conversation, but I thought it deserved to
have, because so much time and energy were
put into it, and the issue was significant
enough, it deserved to have the kind of
conversation that a good University has about
these issues. My only disappointment in this
conversation, not that you’re raising -- the
points you’re raising, I think they’re all valid
and -- and should be considered. It seems to
me, as an outsider coming into your group,
that it’s certainly not Professor Samuel that --
that in any way in this -- you know, lacks honor
in this conversation. He has simply tried the
best he can to bring his expertise to bear to
help this University in a way that, I think, he
would like to do. So...
CHAIR DEMBO: Professor Yanarella, you had
your hand up next.
YANARELLA: Thank you. I’d like to speak
as the chair of the Ad Hoc Senate Committee
on faculty salaries. We have been wrestling
with this issue for several months now. And
we’re at the point where we’re trying to hone
our -- our draft resolutions. Now, what I’d like
to point out first is that the assumptions and
the expectations of that committee and those
of the mounting chorus of faculty critics of
the latest proposals of the Retiree Health
Benefits Task Force seem to be really quite
convergent. In our work, we have
emphasized the need for moving toward a
total compensation package, both salary and
benefits that will make the University of
Kentucky more competitive with the
benchmarks and other universities that stand
well ahead of us in public university rankings.
Certainly, the commitment to quality and
excellence entails increasing not decreasing
the overall compensation levels of faculty,
both those presently on board and those who
will be hired in future years. In addition, the
Faculty Salaries Committee has also examined
an underlying equity issues that relate to the
treatment and the reward of loyal faculty
members who work to build this University
and -- and carried out, I think, with honor and
dignity their responsibilities of teaching,
research and service over most of the lean
years that we have experienced over the last
20 years. Now, the arguments that bear on
the pursuit of excellence and higher rankings
by the University, and those relating to -- to
remaining competitive in attracting new and
meritorious faculty, I think, are -- are well
known. And certainly within our committee
we have -- we have consensus. What I’d like to
emphasize are, well for me, are the equity
arguments relating to those faculty members
who have given good weight to their roles as
teachers, as researchers and as servants of the
University community in the Commonwealth.
I’d like to begin with a concept that many of
us are probably not familiar with, and I only
learned about some years ago, and I picked it
up in a book by two sociologists. And that’s
the notion of sacrificial contract. This is a --
this is a concept that was used by the authors
to describe the bargain that elements of the
American working class reached with
corporate management. In effect they -- they
argued workers in mass production industries
accepted the fact that they would take on
boring, repetitive, often injury-prone jobs in
exchange for the promise of a better future
for their children and their children’s children.
It strikes me that many of us who have
demonstrated our intellectual commitment
and institutional loyalty to the University have
been willing over the years to accept meager
salary increases, often promoting salary
compression and even salary inversion while
giving our best because we look forward to
our retirement with relative dignity and
reward that was offered by the University in
its contribution to our retirement plan and to
retiree health benefits. Now, under the
pretext of a situation with no legal
imperative, it seems that we’re being
threatened by a situation where the
University may renege on that tacit contract,
that tacit academic sacrificial contract, if you
will. And I think this is also taking place, and
this is the concern -- major concern of the
Faculty Salaries Committee, this is also being
done despite the professed concern of this
administration with making strides towards
greater excellence and achievement. It seems
to me that we need to remind the
administration that it risk being seen among
the public and the watching media, both as
cavalier and heartless in breaking this long-
standing contract, and it’s hypocritical as well
in claiming it wishes to pursue steps toward
higher status and better rankings among
public universities. If it’s going to pull the rug
out from under these existing benefits. Those
of us who have worked steadfastly for a new
day and a new chapter in the history of the
University need to underscore the fact that
we are not simply human capital to be
invested or used up, we are not merely
human resources to be casually expended or
manipulated for higher return. We are
people, not personnel, to be treated with
dignity and respect who have earned a right
to a level of health care in our retirement
which this University owes us. That’s my basic
point.
CHAIR DEMBO: Professor Cibull.
CIBULL: Mike Cibull, Pathology. From
what you’ve said and what I’ve heard, there’s
no emergency to do this this year; is that
correct, and that none of our benchmarks
have really addressed this, and that very few
universities have really addressed this? I
would suggest that you guys all get together
and talk about it before the University of
Kentucky becomes the leader in benefit
rollback. It doesn’t make sense for us to be
the pioneer in this. I don’t see the rush to do
this.
SAMUEL: Well, I will -- I will say
first of all, we were given a charge to do
something. You can talk to somebody else,
Mike, but in terms of my response, I will say
that I do think there’s some value going
forward. And I think that has to do with
they’re going to be changes elsewhere in
Kentucky. And we could become part of
those changes, and that may or may not be
beneficial to the faculty. The legislature at
any time could decide to change the way
these benefits are administered, and they
may not be as beneficial as what we are
talking about here. I think part of our
thinking in the committee was the quicker we
resolve this, and if the resolution is we’re not
going to change anything,
that -- that’s fine with us. But I think we were
saying it is better to go forward affirmatively,
make a decision. And in fact, I’m not sure it’s --
I understand it’s -- I’m not saying it’s good and
I will tell you that you even on the committee
I moved to try to make some changes for
lower paid employees which the remainder of
the committee did not go along with because
I happen to think that’s really where the
problem occurs, not that it’s totally fair to
faculty. I’m not trying to say that. But low
paid employees are particularly adversely
affected by the suggestions that we’re making
here. And we’ll be talking about that on
Thursday at the Staff Senate. I -- I do agree
with that. And -- but on the other hand, if we
don’t make the changes, and somewhere
down the way a change does come, it may not
totally be within our control at that point --
CIBULL: I’ll tell you from my
experience, worrying about what other
changes -- other people are going to make
rarely protects you. Shooting yourself in the
foot doesn’t generally protect you from other
people shooting at you as well. And that’s
been true in the federal -- federal
government. I -- I would not use that as a
reason to change. And if you have problems,
you -- if you have ethical concerns about what
this does to lower paid staff, then I would -- I
am surprised that you would bring this
forward. If you think that this -- that this is so
disadvantageous to the people who work
here, and I’m not talking about faculty and I’m
not talking about myself because my wife
won’t let me retire. But if you have problems
like that, then I would think you would be the
one that wanted to put this on hold and
reconsider it.
CHAIR DEMBO: Okay. I’m going to step in
for a second here. So first, Vice President
Siemer, I really appreciate what you said about
the -- the need to maintain collegiality and the
fact that it’s not a personal thing. But on the
other hand, we have some very important
recommendations that are going forward
from this task force. I’d like to reserve this
time now for any other questions of
substance and process about things you may
not understand about the task force and its
recommendation. Okay. So now, these are
limited to questions of substance or process.
Okay. Professor Albisetti.
ALBISETTI: No one has mentioned how up
until 2017 or so on your chart, the new plan
will, in fact, cost more than the existing plan.
The lines only cross 12 or 13 years out --
they’ve disappeared. Is the assumption that
you’re going to encourage more people to
retire early by this January 1, 2005, deadline,
so this is really a policy about early retirement
as much as it is about long-term retiree health
benefits?
SAMUEL: Dick, do you want -- you want
me to respond to that?
SIEMER: I can too. I think the --
without being the person that modeled the
exercises, they made some assumptions about
the change that would -- would affect people’s
decision to retire, so it will cost more in the
short-run. The short-run is 20 years. It’s what I
said at the beginning, I mean, we’re not
bringing this to you because this is -- this is a
short-run budget answer. I mean this is a
stewardship question. It’s -- there is no short-
run benefit to the University in -- in changing
the healthcare plan for any reason. It simply
has a long-term effect on the University’s
finances which is explained here. I think that,
without the -- again, Mercer would be able to
say this easier, but it presumes there will be a
bump and people are retiring earlier, and that
will carry through for a number years. In this
case about 15 or 20 years. That the 1,600
employees that are still here will make an
election, and I wouldn’t have any idea what
that was, but my inference, says some number
will make an election, and that would increase
the cost until they work out of the system.
CHAIR DEMBO: Professor Govindarajulu, a
question of substance or process?
GOVINDARAJULU: I would like to ask a question.
You’re projections are based on certain
assumptions. For example, one of the
assumptions you are making is .5 increase in
the healthcare cost and that is projected over
time. Have you considered -- and also you
assumed the number of retirees (inaudible)
salary rate. And as Professor Goldman was
pointing out, Al Goldman, that -- there’s only
certain -- many people have a tendency to
work even longer because of the deflation
going on and situations (inaudible) and I -- I
don’t know whether you have taken that into
consideration. Number two is, have the
committee considered risks in the healthcare
cost? Is there any way you can contain the
healthcare costs?
SAMUEL: As I said, from my perspective
this projection from ten years out at five
percent is conservative unto itself. We did
not try to -- in terms of a Medicare
supplement particularly for over 65, try to get
into how to control cost, because at that
point the University is really supplement to
the -- the Medicare plan. Now, with our own
plans, we have done that. We have instituted
a number of things to try to control the rate
of increase in healthcare costs. And in fact
we’ve been very successful in terms of
controlling the increases in healthcare costs
here at the University so that our benefits are
more affordable. When it comes to Medicare-
eligible retirees, it’s very difficult for the
supplemental plan to be the controlling agent
in terms of cost.
CHAIR DEMBO: There were a few other hands
up. Questions about substance or process.
BRAUN: Michael Braun, College of
Engineering. I still remain very concerned
about this being sort of a
one-size answer that fits everybody
because of the $50,000 cap. I mean, I would
imagine, you know, that Tubby, once he hits
his $50,000 could kind of kick in a little bit
more and keep moving, but, I mean, we’ve
got a whole lot of staff in particular who are --
who are very low paid, and if they run out of
their 50,000, then it’s going to be a major
portion of -- of their retirement income. Now,
you mentioned that this was, I think, brought
up but you were apparently overwhelmingly
voted down, I guess, I’ve got two questions:
How many lower staff, paid staff people were
on the task force? And then secondly, I’d like
to hear the reasons why it was voted down?
SAMUEL: Well, let me -- we didn’t go
into why but I -- I think I can speculate as to
why. The concern was that for existing
retirees and those that are close to retirement
that, in fact, they had less time to prepare for
some kind of change. And that people that
had a longer period of time, could, in fact,
more likely change their investment habits or
savings so that they could more likely
accommodate the changes. But I will bow to
any other member of the committee that
wants to speak, but I think that really got
down to the -- the idea that people that are
already retired or are close to retirement have
less capability of making changes in their
preparation for retirement.
BRAUN: Well, I guess, my question is
about means testing, if you will, in this policy,
was that ever considered?
SAMUEL: Well, (inaudible) -- Joey, go
ahead and respond.
PAYNE: I think Tom misspoke. What --
what -- when he raised the issue was with the
task force is that he thought that people who
have not yet retired, not low paid people,
people of my generation that we should get
more money versus the people who are
already retired or soon to retire. That -- that is
what the committee debated over. And the
rationale is that somebody who’s already
retired if you try to put a large cap, you know,
that it’s in the near future or some finite
amount of money on them, they have no way
to modify their retirement income to adjust
for that. However, somebody who is not yet
retired if you change the benefits in
midstream, then they understand going into
retirement what it’s going to take for health
benefits. And somebody who is my age has a
number of years left to work who might be
able to save. So that’s where the discussions
were around is those people who had, you
know, many years left to work not low paid
people in general.
SAMUEL: Well, that -- that’s correct,
but I will say that my -- let me just take my
own personal motivation. It really goes in
particular to low-paid employees that have
less capability of -- of saving for that point.
That -- that was -- it -- it is true I was talking
about younger employees, but I also, in
particular -- that’s sort of like a square
problem if you’re low paid at the same time,
then you really can’t change your current
consumption in order to prepare that
process, and therefore I felt we should try to
provide more for that group.
BRAUN: So means testing was never
considered?
SAMUEL: That’s not something we
considered. I will say the University of Illinois
does that. That’s the only one of our
benchmarks that does means testing. It’s
right at about, I think, $40,000 is where they
make some kind of differential in terms of
contributions, so that is something that could
be considered.
BRAUN: And how many lower-paid staff
are on the committee?
BROTHERS: I’ll volunteer. I was --
I’m sure I’m lower paid. I was -- I --
SAMUEL: Sheila, I would ask you to --
to ask if, in fact, that was not a consideration
on the minds of the committee on a regular
basis?
BROTHERS: I’d say the two -- from my
recollection, the two biggest concerns that we
had were how this would affect the lowest-
paid employees and how this -- and then that
was secondary to how this would affect
people who are currently retired and close to
retirement simply because those people that
are retired currently or close to retirement
have the least ability to change their saving
plan. I’m not saying that there are -- and that’s
not to say that staff has enough money to
change their savings plans greatly either, but
someone who’s a retiree or a current retiree
doesn’t have an opportunity to make a
change, whereas a staff employee, although it
probably will hurt, the staff employee does
have a chance to make it -- or lower paid
faculty has a chance to make a decision now
that will affect them 25 years from now.
CHAIR DEMBO: Okay. We are starting to wind
down in terms of new information that’s
coming out. So I don’t want to stop the
questions if it’s questions of substance or
process, but we’re getting towards the time
I’d like the Senate to consider if there’s a
motion or some opinion that would like to
raise or we’re going to go with this, but
you’ve been very patient.
GARVY: Beth Garvy, College of
Medicine. My question has to do with the fact
that there’s a projected linear growth it looks
like and how does that relate to the growth of
the budget of the University? And then when
you have this downturn in your D scenario,
you essentially flatten out for -- for 20 years
whereas, presumably, the University budget is
going to continue to increase. Have you
considered just slowing the rate of growth
rather than flattening it out so that more
benefit can go to the retirees?
SAMUEL: We did talk about some kind of
a gradual implementation process of any kind
of change. The problem -- and that may be
what, in fact, ultimately the administration’s
decision is if they do this. Let me just say to
you that every time we drew a line, there was
somebody on one side or the other of that
line. And if we had like 20 lines, we had -- it
seemed more complex in terms of a
recommendation. It may be fairer, and that --
it’s sort of like income being a possible line to
be drawn. From the point of view of the
committee, the task force to do that became
very, very difficult and to be fair about it, I
mean, there were no guidelines. We didn’t
have other -- others to look at, in that, people
have made these decisions, employers have
made these decisions, and in fact simply as of
a given date. Even public employers,
universities, have made decisions that as of a
given date, certain changes will be made, and
that’s -- that’s what happened. I’m not saying
that’s the way to do it. And I -- I will say to you
we talked about a gradual implementation, it
just got to be very complex because every line
we drew to try to be fair left somebody out.
CHAIR DEMBO: Professor Peffer, then
Professor Tagavi.
PEFFER: Just real quick, twice the
question has come up, once here and once
over there. This is the problem, and the
problem’s going up. But twice the question
has come up: What, in fact, is the percentage
of the University’s budget going forward?
And both times other questions were
answered, but that wasn’t. And I’m just
curious, it would be a good piece of
information to have up there to see what that
is as a percentage of the University budget so
we can really see how big the problem really
is.
SAMUEL: We did not do that. We could
do that -- I mean, that could be done.
PEFFER: Yeah.
SAMUEL: I will say to you that -- the
primary and our consultant was very reluctant
for us to use this particular projection. I will
tell you that when they got beyond 10 years,
as somebody pointed out -- pointed out
earlier, it gets to be really difficult to know
exactly where you are. That’s why we were
looking at five percent medical inflation as we
go on out. You’re not -- I mean, if anybody
really thinks that as we get more and more
retirees and people -- the longer we have
more medical technology, we’re not going to
use it, then I’d like to know how that’s possible
because in my lifetime, that’s not been the
case. That’s part of the problem, I think, of
talking about this as a percentage of budget.
I’m not saying that’s not a legitimate
approach. But I -- I think in making projections
both on medical costs and on what the
possible increase in the budget is, but I’ll leave
that to the administration if they choose to
do that. We felt that we couldn’t take that on.
PEFFER: Yeah, but when you present it
to us as the problem --
SAMUEL: I think the --
KENNEDY: Can you -- can I just throw out
a number? The current University budget is
$1,400,000,000, 1.4 billion.

CHAIR DEMBO: Vice-President Siemer.

SIEMER: I think the question the -- the gentleman’s asking is is at what rate are
these growing? And this is growing at double
digits and the University budget normally
grows at single digits. Next year it may look
like the red line, but over time that’s not what
happens. It’s somewhere between, you know,
six to ten percent is what university budgets
tend to grow. This line’s going up at a higher
level, so it’s diverging, but as the -- as the
business and economic professor said, this is
in today’s dollars. And so you could deflate
this; you could deflate the other to make the
line difference smaller. But yeah, but there is
a divergence between them, one’s double
digit, one’s single.
CHAIR DEMBO: Professor Johnson.
JOHNSON: Yeah. And the problem, you
know, really is is in the 16 beyond period, you
know, that’s what we’re all panicked about.
And I think we really should have had
somebody from your consulting group that
provided the numbers for you here to help
define it because it appears to me that the
growth rate on your medical expenses and on
what you’re assuming is going on in the
medical economy is going to be such that we
will not have anything in this country other
than medicine by the time we get up to --
(inaudible)
SAMUEL: (Inaudible) because I -- I
would say if that -- if that rate was what we
had for the last 20 years, 30 years, that
number would probably be double what’s on
that page today. In fact we might, as a friend
once pointed out, we’ll all be in healthcare
and we’ll have nothing else to do.
SIEMER: It depends on whether the baby
boom generation is going to own the
government or not. You know whether they
get doubles or not, but -- but what goes in the
model, and again, I didn’t pick the model
either -- it is -- it does look funny to me
because it’s like after two or three years, it
goes to five and five- and-a-half percent.
Now, the counter- argument is you can only
assume so much of the GDP, you know, in
healthcare. And -- and other than the fact
that I know all my -- my cohort of kids that
were born when I was are very self-
serving, you know -- it shouldn’t take that
much of -- and we should have
generational distribution. On the other
hand, it’s been a fairly selfish generation
as it’s gone through. I’m not sure it’s going to
change now. But -- but that is a fair -- that’s
a fair argument. I mean at some point its
number consuming a huge amount of -- of
the gross domestic product, and will we
continue to do that in an increasing
amount?
CHAIR DEMBO: Professor Tagavi, before we get
to your taking the floor, I just want to remind
you that the best way for the voice of this
Senate to be heard is through a motion that’s
voted upon. So I think we’re getting towards
that time if that’s what you wish to consider.
TAGAVI: This previous claim -- Tagavi,
Mechanical Engineering. This previous claim if
you are more than two years away from
retirement, let’s say ten or even three, you
have enough time and opportunity to change
your lifestyle. Well, I don’t think it adds up
even for highly-paid people like myself. Let
me give you an example, two years ago I got a
raise of bonus, one-time raise of $2,000,
maybe 25, I can’t remember. And you’re
proposing compared to somebody who is
retiring soon that I lose 20,000. Let me do the
math. 20,000, 2,000 a year, what do you
expect me to adjust? How to include my next
ten years’ raise into this change that you are
making? I don’t think that adds up. There is
one other logistical problem you might want
to consider. Since you mentioned 2036, if we
go by your numbers, in 2036 what you are --
what you pay for my retirement if I’m still
here, compared to what it’s going to cost, it’s
going to be very little. And since it’s my
understanding that I can only that use money
as a retiree for UK HMO, here is a conflict of
interest -- interest problem.
SAMUEL: It’s not UK HMO at all. As a
matter of fact, you could not use that as your
retirement.
TAGAVI: What could you use it then for?
SAMUEL: We have a --
PAYNE: Well, I mean, the -- the
illustrations are based on a 20-year normal
retirement beginning at age 65 which
typically the person is on the Medicare Carve-
out Plan. You know, now, if you are an early
retiree and you take either if you’re in this Cap
Program and the Notional Account, you could
be on UK HMO or Humana or whatever, but
that’s to age 65 or you stop working. At the
point you stop working and you’re age 65
eligible for Medicare, you’re on our Medicare
Carve-out Plan. So we use the University’s
normal retirement date and a 20-year
projection
TAGAVI: I misspoke, I’m sorry, and I’ll be very
quick. Okay. Any UK-
sponsored plan, I cannot go to somewhere
else and --
PAYNE: Right. That’s correct.
TAGAVI: So there’s a conflict of
interest in this sense: Here you are
negotiating with yourself how much should
be the premium that I’m going to pay, that
you’re not going to pay. That’s a conflict of
interest problem. You might want to consider
that for the future.
SAMUEL: Would the suggestion be that we
should have an insured plan? Let me just say,
Louisville does that. They have a set amount
that they give to the faculty member, $188.
And they buy a AARP type plan with that. It
does not have pharmaceuticals. Remember,
60 percent of those over age 65 -- 60 percent
of the consumption is from pharmaceuticals.
CHAIR DEMBO: Professor Gesund.
GESUND: Motion, you’ve asked for one,
but first I do have one other comment, and I
believe that the legal people, if your legal
weasel words did not get into the personnel
manual until ‘97, those of us who were
promised retirement, health insurance prior
to ‘97 may or may not have a legal case. And I
would, as I say, I would leave that to the
attorneys. I move that the University Senate
reject the report of the task force on health
insurance benefits for retirees.
HAHN: Second.
CHAIR DEMBO: The second, Professor Hahn.
Any discussion on the motion?
SCOTT: One more time please, I’m
sorry?
CHAIR DEMBO: What do you need?
SCOTT: The University rejects the
report of the health --
CHAIR DEMBO: Of the retiree benefit task
force. Professor Peffer.
PEFFER: Stupid question, what’s it mean
if we reject it? They -- they said this is a set of
facts, so what is the kind of point of
procedure if we reject it, what are we
rejecting. I just don’t know.
UNIDENTIFIED SPEAKER: So the maker of the motion
should respond.
GESUND: We are rejecting their
recommendations, and we are rejecting the
basis for those recommendations as
enunciated by the task force. In other words,
we don’t believe that there is basis is correct.
PEFFER: Is it we don’t believe their
basis is correct, or we do not believe this is
the way that it ought to go?
GESUND: That is not the point. The
point is we are rejecting their
recommendations and we are rejecting the
report that underlies those
recommendations. And, my own feeling is
that it’s a matter of honor, but apparently I’m
the only one feeling honorable.
CHAIR DEMBO: Professor Cannon was the Senate
representative on the task force.
CANNON: Well, I -- I just wanted to
say that, of course, the wording of Hans’
motion is a little deceiving, I think, in the
sense that this is not a report to the Senate. It
is a report to the administration as an
administrative report. The Senate can, of
course, indicate that once -- and this is the
essence of Hans motion, I think, that it wants
nothing to do with this, but it will -- a vote to
reject it will not in any way affect the further
consideration of the report.
CHAIR DEMBO: Is there a clarification, Hans?
GESUND: Yeah. It seems to me we just
spent over a hour having this report
presented to us, so to say that this was not
meant to be presented to us is not correct, I
think. It was presented to us, and we have a
reason and right to reject it if the majority so
moves or so votes.
CHAIR DEMBO: Discussion about the motion on
the floor.
ROGER: I think the committees getting
the feedback from the Senate -- the Senate so
all they -- they want to get some more
feedback from other outside meetings and so
on. So it is not the final version of the report.
I don’t know why we have to re -- you know,
this --
CHAIR DEMBO: This is the final version --
BERGER: This motion is a month premature at this
point.
CHAIR DEMBO: A point clarification, Roger.
It -- it is a final version of the
report. Nothing will change in the report, but
any comments from groups around campus
will follow the report to the Employee
Benefits Committee chaired by Karen
Stefaniak.
BERGER: Rolando Berger, Medicine. And
just for my own edification, I am slow this
afternoon, if we’re not supposed to approve
or reject, and this is an administrative report,
why are we listening to it? What was the
purpose of us coming here? If this is an
administrative report that’s going to proceed
forward regardless of what we say, and we’re
not to reject or approve it, then why are we
talking about it?
CHAIR DEMBO: Well that is --
BERGER: What is the purpose of it?
CHAIR DEMBO: So that is ultimately what can
happen that the President could say: Thank
you very much. And send it on its way. One
would hope that our voices would be listened
to. So in essence, the University Senate can
provide a comment, and even can make a
recommendation to the President how he
should deal with the report.
BERGER: So is the idea here is just for
us to attach a comment to the report.
CHAIR DEMBO: That’s my view. Yes, Ling
Hwey.
JENG: May I -- may I make a friendly
amendment that -- because of the way I
understand the word reject is that we really
do not endorse the -- the report. So if we can
say in this motion that the University Senate
does not endorse the report, then I think
we’re in the right position to do it right?.
CHAIR DEMBO: Professor Gesund, what’s your
feeling? Is that a friendly amendment?
GESUND: It’s a very friendly amendment,
and it -- I -- I feel reject is a stronger word than
not endorse, but I’ll go along if that will help
the motion to pass.
CHAIR DEMBO: Okay. Further comments on this
motion?
UNIDENTIFIED SPEAKER: Amendment.
(Inaudible)
CHAIR DEMBO: Yes. Uh-huh (AFFIRMATIVE).
UNIDENTIFIED SPEAKER: Should we say why?
CHAIR DEMBO: Certainly, a rationale is very
helpful. Would you care to attach a rationale
to this motion?
JENG: I’m -- I’m going to make a --
Ling Hwey Jeng from College of
Communication and Information Studies. I’m
going to make a very, very naive comment,
and that’s the comment that’s that’s basis of
my -- my support for this motion, and that is
when we look at those three lines on that
chart what we’re looking at is we’re looking
at a new measure -- a corrective measure that
we want an increment in -- the University
wants the increment in 2006 in order to
correct what we will see the -- the problem
that we will see in 2030-something. And what
we see is the first -- the first ten years the new
plan is going to be more expensive than the
old one. The second thing is that I believe the
committee was unable and, in fact, it will be
unrealistic for the committee to do that, it
was unable to consider a lot of the social and
political changes that might come during the
next ten years. And therefore it’s almost
impossible for us to say that this measure is
going to solve the problem in 2030. It’s more
likely to me that something is going to
happen, and we need to look at the same
thing again within the next ten years. So why
are we spending more money for the next ten
years in order to correct something that is so
uncertain and so far away. I think we’re not
ready to implement that plan.
CHAIR DEMBO: So I think I hear a rationale
built into what you said.
JENG: The rationale is that there is
not enough data, not enough information in
that projection for us to risk that extra
expense for the next ten years in order to
protect what’s coming in 2030.
CHAIR DEMBO: Okay. Professor Gesund.
GESUND: I agree with everything that
has just now been said. However, I would like
to have -- if we’re putting in rationales, the
honor of the University and the fact that the
University must not renege on its promises to
its employees.
CHAIR DEMBO: With your indulgence, could we
submit -- consider this one big amendment
that we could vote on; is that acceptable?
UNIDENTIFIED SPEAKER: No. I mean, you can vote on
the --
COURT REPORTER: Name?
UNIDENTIFIED SPEAKER: -- the --
CHAIR DEMBO: Professor Cibull.
CIBULL: You can vote on -- on the --
the thing there on the amendment. The
rationales, I don’t necessarily -- you don’t need
to necessarily vote on those; do you?
CHAIR DEMBO: No.
LENG: No. No. No.
CIBULL: I mean, you -- those are just
sort of a list of reasons why -- why we have
decided to propose this. I mean one thing
would be that we think it’s premature either
because the data is insufficient or because
there is no national experience, and we don’t
believe we should be the, you know, yeah...
CHAIR DEMBO: So you’re saying when I send
a letter to the President and to the Employee
Benefits Committee, they should get this
motion and then the rationale?
CIBULL: Right. Right.
CHAIR DEMBO: I’d be happy to do that. Are
there any other things to add to the rationale
since that’s what we’re talking about?
Professor Kaalund?
KAALUND: Brafus Kaalund, Law. I -- but
I think also you might also want to include in
there going along with Professor Gesund’s
comments about the underlying ration -- the
underlying basis for the report, they talk a lot
about how private employers do a lot of these
things, and I think it must be emphasized that
we are not a private employer. We’re a public
education institution. There are tons of
different -- we are not for profit. We don’t
have shareholders. We don’t hold little stock
meetings and have a little board of directors
that don’t pay any attention to us, even
though this report, you know, is bending that
way. So I think it has to be emphasized that
because of our status as an institution, we
need to look for -- for a report and a benefits
package that is more suited to an educational
university and not just to a private business.
CHAIR DEMBO: So what do we have so far under
the rationale? I’m not meaning to be funny. I
just want to make sure that we have it listed
in logical order --
GESUND: Let’s have a vote.
CHAIR DEMBO: Hang on one second, please.
SCOTT: We have that we have not
information yet for the rationale that
you see up on the screen. The issue of honor
and honoring your promises to your
employees. That private employers and
public education institutions are two different
entities and should offer two different types
of compensation packages. And that it’s
overall just an issue of benefit structure.
CHAIR DEMBO: Any further discussion on the
motion? Professor Jones.
JONES: Davy Jones. Just -- just as a
faculty trustee who might see something
reach the Board at some point, when Senate
committees send recommendations to the
Senate, the Senate committee votes on the
rationale to send forward as part of the
committee’s report not just -- the first line or
two up there. It would be much more helpful
for me up at the Board to be able to say the
Senate supported these rationales rather than
these are just a miscellaneous listing that then
we don’t know how many supported each of
these rationales.
CHAIR DEMBO: So you would recommend that
that become a part of the original motion?
JONES: I’m -- I’m just -- no. I’m
just saying how much impact to have? What
do you want me to be able to say at the Board
the Senate as a body supported this? Make it -
- make it clear what you want me to be able to
say the Senate is advising.
CHAIR DEMBO: Okay. Professor Goldman.
GOLDMAN: I find this a little strange.
You’re trying -- this committee as a whole to
draft rationale after a -- almost an hour-and-
an-half’s discussion, and people ad hoc
throwing out suggestions as to what it should
be. The Senate Council members have sat
through this. It seems to me that -- I don’t
know what the timetable is, but if there’s not
going to be another Senate meeting between
now and when this -- this proposal goes to the
President, that it would be for -- to vote on
the motion and then leave it to the Senate
Council to draft the explanation based on the
overall discussion and bring that back to the
Senate and let the Senate vote on -- on
whether it supports that or wants to modify
that statement.
CHAIR DEMBO: And the next Senate meeting
will be in advance of the Employee Benefits
Committee that’s coming up.
GOLDMAN: Wouldn’t that work much better
then?
UNIDENTIFIED SPEAKER: Yes, let’s do it that way.
GESUND: So it’s just a vote on the
motion, and I move the previous question.
CHAIR DEMBO: Okay. So with the point that
this will then be referred to the Senate
Council for further clarification; is that
correct?
UNIDENTIFIED SPEAKER: Wait a minute.
CHAIR DEMBO: Okay. The right rationale.
UNIDENTIFIED SPEAKER: The right rationale.
CHAIR DEMBO: Okay. Can I ask a question
before -- is there anything you want to add to
it regarding any forward -- motion forward
progress, things you’d like to see happen?
GESUND: Let’s just vote on the motion.
CHAIR DEMBO: Okay. I believe you did call
the question which --
GESUND: Yes.
CHAIR DEMBO: -- requires a two-thirds vote.
All in favor of ceasing debate, please raise
your hand. Okay. Would you agree we have
that, Professor Blyton?
BLYTON: Yes.
CHAIR DEMBO: Okay. So we’re back to the
original motion now that the University
Senate with the amendment does not
endorse the Retiree Health Benefit Task Force
report. Okay. All in favor, please raise your
hand. Okay. All opposed to the motion.
Three, four. Okay. Any abstentions? Three
abstentions. Okay. Are there any further
motions or discussion on this issue? Thank
you all very much for participating in and
answering our questions.
(MEETING CONCLUDED AT 5:00 P.M.)

STATE OF KENTUCKY )
)
COUNTY OF CAMPBELL )

I, LISA E. HOINKE, the undersigned Notary
Public, in and for the State of Kentucky at Large, certify that
the foregoing transcript of the captioned meeting of the
University of Kentucky Senate is a true, complete and
accurate transcript of said proceedings as taken down in
stenotype by me and later reduced to computer-aided
transcription under my direction, and the foregoing is a true
record of these proceedings.
I further certify that I am not employed by nor related
to any member of the University of Kentucky Senate, and I
have no personal interest in any matter before this Council.
My commission expires: January 23, 2007.
IN TESTIMONY WHEREOF, I have hereunder set my hand
and seal of office on this the 20th day of November, 2003.

__________________________
LISA E. HOINKE
NOTARY PUBLIC
STATE-AT-LARGE
K E N T U C K Y

Posted by Rebecca Scott on 11/25/03 for the University Senate.