Virtual town hall for retirees

Will there be changes in the organization of the University of Missouri System and on the four campuses in response to current financial challenges?
Each of the universities will establish a committee to evaluate how to streamline operations and eliminate redundancies. This is a time to look at program consolidation as well as program closures moving forward. In addition to the changes that will be made at the campus level, the UM System central administrative offices are also exploring further consolidation. In addition, the board is exploring the possibility of combining the role of President with University of Missouri-Columbia Chancellor in a way that also empowers the chancellors at the three other universities. There will be a lot of work ahead, but it will be done with a very thoughtful and direct approach.

How will budget constraints affect university programs and staffing?
University leaders and government officials at all levels are working to soften the impact of COVID-19 on public health and the economy. However, determining the best path forward amidst disruptions and revenue losses have meant difficult decisions and sacrifices. The president and chancellors issued a statement related to the University’s financial impacts and planning due to COVID-19. The full impact to the University is not yet known and information will be shared as decisions are made.

When will campuses reopen?
All four universities are making preparations to hold in-person classes for the fall 2020 semester. Spring 2020 and summer semester courses have transitioned to remote learning. The decision for employees to return to work on-site will be made with the input of local leaders, as well as public health directors. Operations teams are working to disinfect campus facilities and will do so on an ongoing basis. We will continue to provide information as plans become finalized and we will make sure that we follow the best guidance from the local municipalities and the public health directors.

Will enrollment be impacted by the current economic situation?
The University is monitoring freshman and transfer student enrollment on weekly basis. Those numbers look positive: MU, UMKC and Missouri S&T all show increases, even when considering who initially accepted our offer but have since sent in a notice of cancellation. Leadership is also measuring returning students and their enrollment. Systemwide data is not yet available, but Mizzou's returning student numbers look about 300 students higher than last year.

Part of the reason there is a strong demand for enrollment is high school students who have not been in class for the past few months want to come to college. Continuing students are also getting a little bit of cabin fever and want to come back to college. The scenario may change quickly if there is a resurgence of COVID-19 cases in the state. Indications are that Missouri is on a downward trend, which puts us in better shape than many universities in larger cities or on the coast. Across the system, we are preparing for a full open and also staying mindful of health and safety measures.

How is the University engaging students, both domestic and international, who may have financial concerns in continuing their education?
All four universities are reaching out to continuing students and accepted freshman and transfers. For those who may have a hold that affects their ability to re-enroll, the University has been proactive in sharing the possibility of the student's using CARES Act funding to lift those tolls, register the student and provide additional financial aid for the future based on means testing.

Many international students are still close to campus, whether living in residence halls or in nearby housing. Global affairs directors systemwide are actively reaching out to international students to ensure their needs are met. The University understands it is difficult for international students to be so far away from home as they address the pandemic on their own, and the University is here to support them.

How is clinical research affected during this time?
Clinical research has has taken hit because researchers are not able to complete work onsite in laboratories. They have been very creative in doing their work remotely, but it is difficult to do laboratory work remotely. The University will be sharing information to our faculty researchers very soon to put forth requests to return to campus and complete essential lab work. Following that review, faculty could return with their graduate students and staff later in May, with the proper precautions that they need to take into account.

Might the University consider combining programs offered at multiple campuses (like law or medicine) on to one campus?
At this point in time, all options are up for discussion. What is different for the current situation as compared to other periods in which such consolidations have been contemplated, is both the urgency of the need and the magnitude of the financial challenges ahead.

The motivations in asking this question may relate to the administrative costs of offering a program in two locations–wouldn’t it be cheaper to combine it? The answer is not always as simple as that, because the University must also consider the value of having programs available at multiple universities. Does combining make financial sense, but also does it support our mission?

Before venturing in to too many consolidations across the system, leaders at each campus must make a concerted effort to consolidate in their own campuses. It may mean eliminating colleges that no longer meet the mission, or perhaps consolidating colleges to help to save with administration costs or to better meet the mission. Those questions will be discussed at each university and across the system.

What should students do if they are at home and receive a bill for costs that should have been covered by financial aid?
Students who have questions about billing issues and how financial aid is applied should reach out to their university’s Cashiers Office for more information as it relates to their particular situation.

How has telehealth impacted costs and access to healthcare during this time?
Telehealth is the primary way that MU Healthcare interacts with patients right now. We anticipate seeing more activity in the hospital as we see the pandemic wind down in Missouri. Johnathan Curtright, CEO of MU Healthcare, shared that there were roughly 200 telemedicine visits during the past year. Now, University healthcare professionals are regularly seeing 1,000 patients a day, although we do expect that number will change going forward as in-person options become more available with the pandemic winding down. Telehealth visits do not replace physical examinations, but do provide a way reach patients where they are and help reduce the cost of medicine, which show a benefit to state and the nation.

What mental health and well-being resources are available for faculty and staff?
The University regularly shares resources with employees to assist as we continue to navigate this pandemic together. Personal health and well-being is top-of-mind; an index of information and resources related to well-being (and other topics), is available on the UM System 2019 Novel Coronavirus (COVID-19) Updates webpage.

How do I make a gift to the University?
If you would like and are able to make a gift, please reach out to the following contacts:

• Columbia: Give to the COVID-19 Relief Gift Fund or reach out to Carin Huffman-Grinch, Director of Donor Relations at (573) 882-0079 or grinchc@missouri.edu.
• Kansas City: Give to UMKC online or or reach out to Lisa Baronio, President of the UMKC Foundation at (816) 235-2672 or baroniol@umkcfoundation.org.
• Rolla: Give to Missouri S&T online or reach out to Tory Verkamp, Assistant Vice Chancellor of Development at (573) 341-6090 or vnfy8@mst.edu.
• St. Louis: Give to UMSL online or reach out to (314) 516-5756.
  • Donations by check should be mailed to:
    University of Missouri-St. Louis
    1 University Blvd
    308 Woods Hall
    Saint Louis, MO 63130

Are there fees on making a gift to the University?
There are many ways to make a gift to the University. There may be an administration fee associated with the gift to support university fundraising efforts and related costs; fees may vary depending on the type of gift and the university to which it is being given. For more information, consult with the advancement office at MU, UMKC, Missouri S&T or UMSL.

Will the University’s financial situation impact monthly pension checks?
No. The pension benefit is important to the University and the University is required by law to pay those benefits to current and future retirees. While not expected, if any changes were to occur for retirees, they would likely be part of broader changes at the state or national level. Retirees are protected to the extent the current laws surrounding public pensions remain in effect.

How has pension funding changed over the past few years? Will the current economic crisis impact funding? 
The University always makes the full annual contribution to its pension plan. The amount of that contribution is determined by actuaries each year, and the University will continue to prioritize contributing the full amount.

In Fiscal Year 19 (prior to the current financial crisis), the plan was 82% funded. Five years prior, in FY14, the plan was funded over 90%. In the national context, the University’s plan is better funded than the average public pension plan, which was Pew reports to be funded at 70%. 

In light of the current economic downturn, the University expects the contribution to be affected because plan investments are not likely to perform to target levels.

Visit the Retirement Investments webpage and the FY20 Q3 Retirement Plan Profile (PDF) for additional details about retirement plan investments. Annual financial reports are also available online.

Where will higher ed stimulus money not otherwise dedicated specifically to support students be allocated?
Any money the University receives through the stimulus, the CARES Act, comes with stipulations on how it can be spent. For the higher education portion of the act, the University expects approximately $34 million. About half of the funds (approximately $17 million) are allocated for direct payment to students in the form of aid, where the University is largely as the flow-through recipient of the funds. The remaining balance will help address the budget shortfall.

Based on the cuts the for the current fiscal year, the UM System as a whole has a $37 million shortfall. On top of that, there is close to $30 million in further expenses from issuing refunds for student housing contracts. So, while helpful, funds received from the CARES Act only begin to cover the losses already incurred for the current fiscal year and there are other financial challenges the University faces.

How will University leadership work with the Board of Curators about actions related to the pension plan following the current financial situation?
Recent conversations with the Board of Curators should signal that now (in the midst of a crisis) is not the time to rethink the University’s investment strategy as it relates to the pension plan or endowment. Once the lasting impact to the investment portfolio becomes clear, University leaders will need to consider and consult with the Board. For example, one item to discuss is the discount rate, which is currently 7.2% and was already being discussed prior to the pandemic and current financial situation. The Board of Curators will have to approve any changes to the assumptions used in financial planning. So while now may not be a good time to look at those changes, we may be ready to take a look later in the fall. When the lasting impact becomes clear, members of the finance team will meet with retiree groups to talk about the details of our investment performance.

What does a ‘7.2% discount rate’ mean?
The discount rate is the assumed return that the investment portfolio will earn. The rate had previously been at 8% and is now 7.2%. As one of the two main sources of funding for the pension plan, if the investments earn less than expected, the other source of funding, contributions, will have to increase as a result. It is important this rate be set at an appropriate amount where investments reach their targets and avoid adding additional pressures to the operating costs of the university. Ultimately, the cost of the pension plan will not be driven by the return assumptions the University sets as the discount rate, but what the actual investment returns are.

Does the University underfund or borrow funds from the pension accounts to fund operating needs of the University? 
The University makes the annual contributions to the plan in full as determined by outside actuaries. The plan funds are used to pay beneficiaries and related costs of managing the plan appropriately. This question may stem from actions taken in the early 2000s when the pension plan was overfunded, however, the University has not been in that position since then. The University does not use the plan for other purposes and has no intention of doing so going forward.

Who manages the University’s pension fund?
The UM System pension fund is overseen by the University’s chief investment officer, Tom Richards. Guidance is also provided by an investment advisory committee. The committee is made up of outside individuals who are experts in the field of investments, and many members have ties to the University. The UM System Office of Finance has been meeting with the committee every other week through the crisis to discuss and refine our investment strategy. From those discussions, we've come away with an ongoing commitment to our long-term strategy at this point time and are not contemplating any large shifts in the portfolio.

There will be a review of the current asset allocation during the September Board of Curators meeting. The board approves the investment strategy and asset allocation, then the University’s investment team works with investment managers to act on that strategy.

Can endowments be used to assist with the short-term financial situation?
Unlike some large private universities, most of the University’s endowments have legal restrictions on their use which often only allow earnings on those endowed funds to be spent. Additionally, it is also important for the University to be careful with its funds and not destroy wealth that has been built up over the history of the University or remove wealth from future generations.

What is the total value of the University pension plan?
The current value of the pension plan is approximately $3.8 billion. The UM System Office of Finance publishes quarterly investment reports, so members of the public can review pension-related information, such as the type of assets in which the plan is invested, as well as the funded status of the plan. Visit the Retirement Investments webpage for additional detail.

Is the UM plan backed by the Pension Benefit Guaranty Corp (PBGC)? If so, to what degree?
The PBGC is a federal agency created by the federal Employee Retirement Income Security Act to protect pension benefits in private-sector defined benefit plans. Therefore, the PBGC only covers pensions for private companies and, as a public institution, the University is not and cannot be backed by the PBGC.

What protection do retirees have against scenarios like the state declaring bankruptcy and eliminating pensions?
We are a long way off from this sort of scenario being a possibility. The University’s pension plan is not linked to the State of Missouri’s pension plan, and our plan does not receive direct funding from the state. The UM System is committed to fully funding its  contribution each year to ensure retirees continue to receive their benefit from the plan.

How does the current economic crisis impact UM’s pension benefit for current and future retirees?
The pension benefits to active and retired employees are important to the University, and the University is required to pay those benefits under current law. At the same time, the University must also the needs of students and the citizens of Missouri in delivering on the University’s mission. UM System leadership makes decisions through the lens of honoring our commitments and maintaining our mission and public good.  

As to our current economic situation, there are two major sources of funding for the pension plan: 1) University and employee contributions to the plan and 2) investment earnings. As in any economic crisis, when investment earnings are not strong, it affects the funding status of the pension plan and the liability increases. If returns are weaker, it requires amounts be addressed through contributions from current employees and the University. The University has the ability to increase the amount of contributions required by employees but has chosen not to do so up to this point.  

Will the UM System continue to make regular annual contributions to the pension plan?
The University has always made 100% of its annual contribution, and plans to continue to do so. If, hypothetically, the University were to ever choose to reduce the annual contribution in the future, it would be discussed with the Board of Curators before going into effect. That said, the University plans to continue to make its annual contribution to the pension plan.

How are University funds invested, and does investment shortfall impact pension benefits overall?
The University takes a total return approach to its investments, with an emphasis on balance growth, and include equities, fixed-income hedge funds, real estate, private equity, along with a risk-balancing strategy. Falling short of the assumed investment returns does impact the unfunded liability. When that happens, that means there will be an increase on part of the University.

Leaders from the UM System Office of Finance regularly review investment returns with retiree associations systemwide. If a retiree is interested in details related to the University’s recent investment returns, those reviews would be a good opportunity to hear about them more fully than this town hall meeting has time to cover.

Additionally, view the FY20 Q3 Retirement Plan Profile (PDF) for recent details about retirement plan investments. Other information about retirement investments is available on the Retirement Investments webpage, and the University publishes annual financial reports, also available online.

Are there plans to reduce the retirees' annuities?
No, there are no plans to reduce the payments that the University is obligated to provide retirees, whether monthly pension checks or annuities. The University will continue to meet that obligation.

Prior to the current financial situation, relatively speaking, the University came in to this crisis with one of the better-funded pension plans in the country. The University takes a conservative approach with regard to the pension plan and it has been well-managed over the years. University leaders plans to continue to do so going forward.

Do recent pay reductions affect a retiring employee’s retirement calculation?
Yes. Part of the retirement calculation relies on the average of the highest five years of salary. If the period of time in which pay is reduced is also one of the retiring employee’s highest five years of salary, that average would be affected. So, pay reductions applied to an individuals’ salaries, even voluntary ones, could, in effect, reduce future retirement payment if among the individual’s highest five years.

Will the current economic crisis impact healthcare coverage and subsidies for retirees and their dependents? 
It is possible. However, please keep in mind that the University continually evaluates benefit offerings to help ensure investments serve our community and keeps costs manageable for both the University and the employees and retirees who pay premiums. Even before current economic situation, the cost of medical and pharmaceutical claims was rising each year—as a result, the University has been and will continue to be proactive in evaluating plan design and cost.

As part of those efforts to evaluate options, the UM System Office of Human Resources consults with a robust team called the Total Rewards Advisory Committee (TRAC) that includes faculty, staff and retirees from all four campuses and the hospital. This group meets routinely and helps leadership determine how the University can manage costs and ensure strong, sustainable benefits. So while there may be changes in the future, it is not an unusual process.

When will we hear more about insurance changes for the 2021 plan year?
Information about Retiree Annual Enrollment is sent to all retirees covered by the plans in the fall, usually in September. This information includes the dates of Retiree Annual Enrollment (which typically occurs in October), as well as any changes to plan structure and premium cost for the upcoming calendar year.

What factors drive the selection of the University’s healthcare provider?
The University routinely puts out a request for proposals to consider healthcare provider(s) that will best serve the University community. These requests include a number of factors and input from multiple groups and generally look for vendors who provide value related to the quality of what can be provided, and of course cost. Other aspects the Office of Human Resources also considers are: what disruption would result in changing providers, how plans are designed, network discounts, the administrative support that the vendor would provide, and how the vendor work with HR teams and the university as a whole.

Will guaranteed annual increases continue for those who elected that option at the time of retirement? 
Yes. For those who are currently in payment, the option you selected at the time of retirement will continue. 

The University is currently assessing strategies to ensure liability remains at manageable levels while also meeting legal and other regulatory commitments in the plan. UM leaders will continue to collaborate with TRAC, university advisory groups and other partners to manage assets in a prudent manner for those receiving a benefit now and into the future.  

Is there an online resource where retirees can access a "retirement statement" showing projected retirement distributions? 
The Office of Human Resources provides an Online Pension Calculator where individuals who have not yet begun to receive their pension benefit can estimate their future defined benefit. Individuals with questions can also always reach out to the retirement team for assistance by email at retirement@umsystem.edu. We've got a great team of individuals who are available to answer your questions.

Can retirees elect to take a reduction in pension benefit to help during this time?
A number of retirees have inquired about reducing pension benefits. University leadership greatly appreciates the sentiment, and the request is representative of the spirit of collaboration that is so important to the UM System community. A temporary pay reduction for retirees will not be a possibility, however, retirees may make a donation to the University if they are able and choose to do so. 

Will the University offer an early retirement incentive or severance?
While University leaders continue to review potential cost saving measures that will best support our mission, there is currently no discussion of offering an early retirement incentive or severance.  

What is the University’s position on unemployment?
Unemployment is decided by the state and not the University. While unemployment is not a determination the University can make, the Office of Human Resources encourages individuals seeking information to reach out to the Missouri Department of Labor, Employment Security Division, and for those who think they may be eligible to apply.

Will tuition assistance be impacted for retirees?
There are no existing plans to remove or revise the tuition assistance benefit for retirees. 

Will online library privileges be extended to retired faculty?
Each university determines access to facilities on campus, so reach out to your individual campus to learn more about current resources may be available to you and potential future opportunities.

Does the University pension qualify for the Missouri public pension tax exemption?
Missouri tax law allows subtractions from Missouri adjusted gross income for certain amounts of “retirement benefits received from sources other than privately funded sources in the tax year.” More information can be found through the Missouri Department of Revenue. Retirees may wish to consult their tax advisors as to the treatment of their University pension benefits under this part of the state tax law.