Alvin Community College Adopts PARS Tax Deferred Separation Incentive PlanCategories: Early Retirement Incentives,Hot Sheets,Texas Developments
Reduces Budget and Restructures Staff
In the Fall of 2014, Alvin Community College began exploring the benefits of offering a PARS Separation Incentive Plan. With overstaffing in some departments and a need to create new positions in others, the College was looking for a creative way to restructure departments and reduce the overall budget.
PARS provided the College with a no-cost, comprehensive analysis detailing the fiscal impact of offering an incentive plan. The College looked at various benefit levels and eligibility requirements to determine which option would achieve their budgetary and staffing goals.
Of the 29 employees that enrolled in the PARS plan, 18 positions were filled and 11 were eliminated – leaving a surplus of $2,890,946. The surplus was used to restructure departments and create 11 new positions. After adding the new positions, the College’s added cash flow over 5 years is projected to be $568,880.
The Alvin Community College Plan
|Employee Groups:||Faculty, Administrators/Professional, and Classified|
|Eligibility:||15 Years of Service at Alvin CC|
|Benefit Amount:||75% of Final Pay|
|Plan Funding:||Contributions Paid into Plan Over 5 Years|
Who Participated in the Plan?
|Employee Group||# Eligible Employees||# PARS Separations|
|Administrators & Professionals||20||7|
What Were the Savings to the College?
|Employee Group||# of Non-Replaced Employees||Projected Savings in Year 1||Projected Savings over 3 Years||Projected Savings over 5 Years|
|Administrators & Professionals||1||$132,948||$195,604||$172,642|
*PARS fees, plan contributions, the increase in retiree healthcare cost, and savings from current and future natural attrition are deducted from the total savings.
Benefits to the Participants
- Select length of monthly payout ranging from 5-15 years to lifetime
- Payouts over 5-9 years are eligible from an IRA rollover
- Participants are taxed as payments are received
What Did the Plan Accomplish?
The PARS Separation Incentive Plan gave the College the tools it needed to make desired staffing changes and reduce the budget – all through a positive approach.
To request a complimentary analysis for your College, contact Dion Papafote at (512) 415-6874 or email@example.com.