10
Apr
2015

Alvin Community College Adopts PARS Tax Deferred Separation Incentive Plan

Categories: Early Retirement Incentives,Hot Sheets,Texas Developments
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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
Faculty 49 13
Administrators & Professionals 20 7
Classified (TSCM) 37 9
Total 106 29

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
Faculty 7 $494,487 $1,355,725 $2,188,842
Administrators & Professionals 1 $132,948 $195,604 $172,642
Classified (TSCM) 3 $111,818 $321,312 $529,462
TOTAL 11 $739,253* $1,872,641* $2,890,946*

*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 dpapafote@pars.org.

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