People who went to work at Columbia College when Mike A Alexandroff ran it were clear about the trade-off they were making. “The premise under which I was hired,” says photography professor Peter LeGrand, “was you’ll never have a great salary at this institution, but you will get a wonderful working environment, a great set of health benefits, and a retirement plan that provides a sufficient amount of money to live out your life comfortably. The last part of that premise is gone.” In late April, Columbia announced that its pension plan was underwater, that benefits would be frozen as of last December, and that a new plan would be devised by the end of 2003. Now, as word is getting out about what the new deal might look like–including the college’s intention to contribute no more than 5 percent
of payroll per year–Columbia’s famously dedicated and initially optimistic full-time faculty and staff are starting to make noise. They’re also lining up meetings with unions that might represent them in what they fear is becoming an adversarial relationship.
How bad is it? “Having devoted 26 years of my life to the development of Columbia College, I now stand to lose approximately 37% of my promised retirement benefits,” photography professor Peter Thompson wrote July 1 in a searing letter to the school’s president, Warrick Carter. “While this may not qualify as a ‘crisis’ to you, it is nevertheless a serious setback for my family.” As for two pension models the administration is considering: “If implemented at the 5% pension funding level currently being pushed by the Trustees,” they would result in a loss of “48% to 54% of the previously promised retirement benefits for every employee whose data we studied….Many people will be much worse off than I.”
Columbia had an enviable pension package for nearly 25 years. Alexandroff, who became president in 1963, inherited (literally–his father owned it) a former women’s rhetoric college with fewer than 200 students, no full-time faculty, no campus, and no endowment. But he had a vision of an urban, open-enrollment school with a faculty of working professionals and an emphasis on media arts that was a perfect match for the Vietnam-era zeitgeist. John Mulvany, who founded Columbia’s photography and art departments and was a member of the first pension committee, says Alexandroff was “kind of a socialist who had a great regard for working people. When the college started to prosper, he wanted to take care of the faculty. We had a higher-than-normal teaching load, everybody participated in the creation of the college, and this was going to be their reward. The pension plan was like a covenant between the administration and the faculty, and it allowed me, as a department head, to recruit first-rate talent.”
The original plan, which allowed retirement with an astounding 80 percent of salary after only 15 years of service, was modified to require longer service for full benefits around the time Alexandroff retired, in the early 90s. (He died two years ago.) Many faculty members say they aren’t surprised that the school can’t afford to continue even the modified plan indefinitely. What’s got their dander up is the abrupt notice of the change, the school’s apparent readiness to shuck a fundamental commitment and disregard for the welfare of loyal employees (who fear the health care plan might be next), lavish spending at the top (a notoriously high salary and benefit package for the previous president and a recently purchased presidential mansion the school’s now trying to dump), and some unanswered questions about how the problem came about. Anthropology professor Joan Erdman, one of two faculty members on the committee set up to design the new plan, wonders if recent growth in bureaucracy and student services are factors. Erdman says half of the college’s full-time employees have been hired in the last five years. In addition, she says, some auxiliary programs (like the Center for Black Music Research) that until recently had outside funding are now more dependent on the college for support.
Columbia trustee Alton Harris says defined-benefit plans like Columbia’s–in which the employer makes all the contributions, takes all the risk, and pays a prescribed pension depending on an employee’s years of service and salary level–are “in trouble all over.” According to Harris, “Columbia’s no different from many other corporations,” and problems with the fund were “on the radar screen of the trustees” last fall. He says a decline in the stock market (some of which has been made up in the last few months) and lowered interest rates are responsible for a deficit that led to the decision to freeze the plan. If it hadn’t been frozen, the college’s contribution for this year would have been approximately $9 million. As it is, Harris says, Columbia will have to put in about $10 million over the next five years to bring the fund up to the level it should have been at in December. Annual contributions equal to about 5 percent of payroll will be needed to do that. “After five years I would anticipate that the amount available to fund the new plan could increase. Columbia’s never contributed 10 percent. So what is being considered at the moment [5 percent each for the old and new plans] is a historically high contribution. It’s hardly running for cover and saving money. Finger-pointing at the administration or the trustees is going to be very unhelpful. Nobody is talking about a diminution of the college’s contributions–if anything we’re talking about a huge increase. What we’re trying to do is avoid a situation in which the pension plan literally could bankrupt the college.”
But Barry Epstein, a Chicago CPA who’s written a series of books on accounting standards and is married to a Columbia employee, says it’s possible someone “failed to flag this thing on a timely basis. It would be interesting to take a look at the work of the independent actuary and also the work of the outside auditors. There’s a chance they didn’t do a good job calculating the obligation in prior years. In round numbers, this is only a $25 million plan, and all of a sudden there’s a $10 million hole in it. In my experience, that’s stunning. The market didn’t go down 40 percent in one year, and interest rates didn’t suddenly change enough to have that impact. You can’t know until you review it, but if there was deficient work by the actuary or outside accountant there might be an opportunity to look to them for some restitution. It’s not a question of malfeasance, but it might be a question of nonfeasance.” Erdman says Columbia’s department chairs have asked the school to hire a forensic accountant and “it’s supposed to be in process.” There are “two questions here,” she adds: “How can we avoid changing the culture of Columbia by reneging on commitments? And how, and why, did this happen so fast?”
Art accompanying story in printed newspaper (not available in this archive): photo/Bruce Powell.