H. Finance, Technology, and Human Resources Committee Meetings... · H. Finance, Technology, and Human Resources Committee ... to the meeting. Mr. Barnes is a Student Regent

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H. Finance, Technology, and Human Resources Committee 3:00 p.m. (ET)*, December 4, 2008

Conference Room 102B

KCTCS System Office, Versailles, Kentucky

Page

Call to Order Roll Call

Approval Minutes

Approval of September 25, 2008, Meeting Minutes ............................................................................... 69

1. Action: 2007-08 Annual Audit Report ............................................................................................. 75

2. Update: KCTCS Quarterly Financial Report ................................................................................... 77

3. Update: 2008-09 Budget ................................................................................................................... 81

4. Information: Policy Revision – KCTCS Board of Regents Policy 2.0

KCTCS Employment Status ......................................................................................................... 83

5. Information: Policy Revision – KCTCS Board of Regents Policy 3.7

KCTCS Retirement Plan Policies ................................................................................................ 99

6. Update: Facilities and Capital Construction Status Report ............................................................ 123

7. **Action: Ratification of Personnel Actions .................................................................................. 125

8. Update: Human Resources ............................................................................................................. 129

9. Update: Fulfilling the Promise Campaign ..................................................................................... 133

Next Meeting – March 12, 2009, KCTCS System Office, Versailles, Kentucky

Adjournment

*Start time will be upon conclusion of the preceding event.

** All items listed with two asterisks (**) are considered to be routine by the Board and will be

approved by one motion. An item may be removed from the consent agenda at the request of a regent.

Agenda items removed from the consent agenda will be discussed in their normal sequence at the full

Board of Regents meeting. Consent agenda items will be discussed separately during committee

meetings of the Board of Regents.

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DRAFT

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MINUTES KCTCS Board of Regents

Finance, Technology, and Human Resources Committee September 25, 2008

Committee Members Present: Mr. Thomas O. Zawacki, Chair Mr. Mark D. Brooks

Mr. Randall L. Barnes Mr. Porter G. Peeples

Mr. Richard A. Bean Mr. Michael D. Quillen

Committee Member Absent:

Ms. Brenda R. Corey, Vice Chair

CALL TO ORDER Committee Chair Zawacki called to order the meeting of the Kentucky

Community and Technical College System Board of Regents Finance,

Technology, and Human Resources Committee at 1:50 p.m. (ET),

September 25, 2008. The meeting was held at Bluegrass Community and

Technical College’s Winchester-Clark County Campus, Winchester

Kentucky, in Rooms 207 and 210. Chair Zawacki announced that the press

was notified of the meeting on September 20, 2008.

Chair Zawacki welcomed the Committee’s newest member, Mr. Randall

Barnes, to the meeting. Mr. Barnes is a Student Regent.

There being a quorum present, Committee business began with the approval

of minutes.

APPROVAL OF MINUTES

Mr. Bean moved and Mr. Peeples seconded that the minutes of the

June 12, 2008, Finance, Technology, and Human Resources Committee

meeting be approved.

VOTE: The minutes were approved by unanimous consent.

ADDITIONS OR CHANGES TO THE AGENDA

There were no changes or additions to the agenda.

DRAFT

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ACTION: WORKFORCE DEVELOPMENT/ TRANSFER PROGRAM GUIDELINES

RECOMMENDATION: That the KCTCS Board of Regents endorse the

planned use of the $1,129,000 transferred from the CPE Workforce

Development/Transfer Program to the KCTCS state appropriation base as

follows:

1) $1,000,000 for an ongoing KCTCS endowment match

program.

2) $129,000 for an ongoing transfer scholarship program

initiated with fiscal year 2007-08 trust funds.

Chair Zawacki called on KCTCS President Michael B. McCall to present this

item. KCTCS Vice President Ken Walker assisted with the presentation. It

was noted that KCTCS has never been included in the “Bucks for Brains”

endowment program. During the 2006 legislative session, the General

Assembly appropriated $300,000 of non-recurring funds in fiscal year 2006-07

and $1.2 million in recurring funds in fiscal year 2007-08 to the Council on

Postsecondary Education (CPE) for the 2006-08 Workforce

Development/Transfer Program. KCTCS quickly raised private funds to match

the $300,000 endowment match pools in both fiscal years 2006-07 and

2007-08, creating endowment funding of $600,000 for each of those fiscal

years. The remaining $900,000 in fiscal year 2007-08 was used for various

workforce development and transfer initiatives as approved by CPE, including

$200,000 to establish a scholarship program for KCTCS students indicating an

interest in transferring to a four-year institution after completing the an

academic program at KCTCS.

During the 2008 legislative session, the General Assembly transferred

$1,129,000 (the net amount of the $1.2 million following the two 3 percent

budget cuts) from the CPE base to the KCTCS state appropriation base.

President McCall has agreed to provide CPE with a planned use of the fiscal

year 2008-09 funds transferred to KCTCS. The proposed recommendation

results in KCTCS Board of Regents guidelines that states how the money will

be spent and does not obligate the expenditures in future budgets. Expenditures

will be made only if the program continues to receive state funding.

The funds, which are now recurring, are included in the fiscal year 2008-09

budget approved by the KCTCS Board of Regents at its June 13, 2008,

meeting. KCTCS college presidents have indicated that they can raise

additional private funds for a larger endowment match program in fiscal year

2008-09. An area of focus for the endowments will be transfer scholarships.

Since the funding is now recurring within the KCTCS state appropriation base,

the Board of Regents will no longer need to approve individual endowment

matches as was needed in fiscal years 2006-07 and 2007-08 when this funding

was available on a nonrecurring basis from CPE.

DRAFT

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The Committee discussed the CPE’s $700,000 expenditure from the program funds to purchase software that is supposed to enhance transfer. It also discussed how the Board’s action on the proposed recommendation would be reported to CPE and how the Board would be updated in the future. It was noted that similar to KY WINS updates, the Board would receive updates on the Workforce Development/Transfer Program. MOTION: Mr. Brooks moved and Mr. Quillen seconded that the Finance, Technology, and Human Resources Committee recommend that the KCTCS Board of Regents endorse the planned use of the $1,129,000 transferred from the CPE Workforce Development/Transfer Program to the KCTCS state appropriation base as follows:

1) $1,000,000 for an ongoing KCTCS endowment match program.

2) $129,000 for an ongoing transfer scholarship program initiated with fiscal year 2007-08 trust funds.

VOTE: The motion was approved unanimously.

ACTION: RATIFICATION OF PERSONNEL ACTIONS

RECOMMENDATION: That the KCTCS Board of Regents of Regents ratify the personnel actions listed in the agenda materials.

Chair Zawacki called on President McCall to present this item. KCTCS Vice President Gwendolyn Joseph assisted with the presentation. It was noted that the personnel actions presented were in accordance with reporting guidelines and policies adopted by the KCTCS Board of Regents. The personnel actions presented for ratification include:

• Individual Personnel Actions.

• Summary Personnel Actions, including academic and administrative appointments, reappointments, terminal reappointments, leaves of absence, retirements, resignations, and non-renewal of appointments.

MOTION: Mr. Peeples moved and Mr. Bean seconded that the Finance, Technology, and Human Resources Committee recommend that the KCTCS Board of Regents ratify the personnel actions listed in the agenda materials. VOTE: The motion was approved unanimously.

INFORMATION: BENEFITS STUDY

Chair Zawacki asked President McCall to present this item. Mr. Lewis Prewitt, Executive Assistant for Administrative Affairs in the KCTCS Chancellor’s Office, assisted with the presentation along with Ms. Jean Morton, who is a member of the KCTCS System Office Human Resources Unit. President McCall noted that supplemental information was mailed to the KCTCS Board of Regents via overnight mail on September 18, 2008. The supplemental information provided options for consideration in light of the study findings and emphasized the need to reduce and control costs balanced with the need to attract and retain employees.

DRAFT

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Benefits are one of the highest costs to businesses and education institutions, and many organizations are looking at their benefit programs to identify which benefits should be continued into the future. The benefits study conducted by KCTCS was based on guiding principles of current employee interests, a focus on new hires for any potential benefit changes, and the effective allocation of resources. Benefits comparison data included in the study were from the Mercer Benefits Valuation Report previously shared with the Board of Regents, a summary of retirement program trends for higher education, and a comparison of Kentucky educational institutions’ benefits programs. The Committee discussed the various benefits, alternatives, and each alternative’s potential cost savings presented in the materials. It was emphasized that the discussion of proposed changes to benefits would be for new employees only. The Committee directed that recommendations related to benefits be presented at the December 4-5, 2008, Board of Regents meetings and suggested that the recommendations might include:

• Eliminating post retirement health insurance for new employees participating in 403(b) retirement plans.

• Adopting the state schedule for employee costs of health insurance, eliminating the 25 percent discount enhancement that KCTCS extends to KCTCS employees.

• Eliminating the $50 benefit for employees who choose single health insurance instead of family or employee/spouse benefits.

• Decreasing the employer contribution for 403(b) retirement programs so that KCTCS contributions are between 5 percent and 10 percent and still maintain KCTCS competitiveness.

• Adopting a vesting program for new employees.

The Committee also discussed revising employee leave plans (vacation, sick, spring/fall breaks, and institutional closing), possibly establishing sick/personal days for faculty and strengthening faculty leave policies. It was noted that staff would continue to research KCTCS leave policies, including use patterns and leave policies at other institutions. Findings and a possible recommendation will be presented at a future Board meeting. The Committee complimented the Human Resources staff for their work managing the benefits associated with the six personnel systems.

UPDATE: FACULTY APPOINTMENT PROCESS

Chair Zawacki called on President McCall to present the item. Supplemental information was mailed to the Board via overnight mail on September 18, 2008. The supplemental material included information regarding the KCTCS faculty promotion and tenure process, Faculty Appointment Survey 2007, Kentucky higher education practices, KCTCS tenure trend data, and tenure accountability. The KCTCS tenure trend data reflect a trend among KCTCS colleges toward awarding term contracts, which is similar to what is occurring in other states.

DRAFT

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The Committee discussed the tenure process, the Board’s statutory authority related to tenure, KCTCS policies and procedures regarding tenure, and information from the American Association of University Professors (AAUP). The Committee also discussed the origin and rationale for AAUP’s tenure definition along with the current KCTCS process for awarding tenure. It was noted that the tenure process in the African-American community is perceived unfavorably. The Committee asked staff to continue studying the KCTCS faculty appointment and tenure process, to provide additional information at the next meeting, and suggested that a recommendation be made based upon the information.

UPDATE: KCTCS QUARTERLY FINANCIAL REPORT

This item was not discussed by the Committee because of the Board’s obligation to attend the Winchester-Clark County Campus building dedication. It was noted that the item would be discussed in its entirety at the September 26, 2008, Board of Regents meeting.

UPDATE: TECHNOLOGY SOLUTIONS


UPDATE: FULFILLING THE PROMISE CAMPAIGN


NEXT MEETING Chair Zawacki announced that the next Finance, Technology, and Human Resources Committee meeting would be would be December 4, 2008, at the KCTCS System Office in Versailles, Kentucky.

ADJOURNMENT Mr. Bean moved that the meeting adjourn. Mr. Barnes seconded the motion. VOTE: The motion was approved unanimously, and the meeting adjourned at 3:52 p.m. (ET).

12/4/08

Date Approved by the Finance, Technology, and Human Resources Committee

Thomas O. Zawacki Committee Chair

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ACTION Agenda Item H-1 2007-08 ANNUAL AUDIT REPORT December 5, 2008

Recommendation

That the KCTCS Board of Regents receive the financial audit results for the 2007-08 fiscal year.

Rationale

The independent opinion issued by Crowe Horwath LLP is an unqualified opinion. This

opinion means that the KCTCS financial statements present fairly, in all material respects, the

KCTCS financial position on June 30, 2008. The KCTCS financial statements and the audit

firm’s opinion letter are included in the document titled 2007-08 Annual Financial Report.

The audit firm has reported that there are no weaknesses in the KCTCS internal controls

considered to be material weaknesses or significant deficiencies. The audit firm’s

management comment letter, KCTCS responses, and other related correspondence from the

audit firm are included in the document titled 2007-08 Audit Correspondence.

The audit firm has audited the KCTCS major federal programs in compliance with the

requirements of the U.S. Office of Management and Budget Circular A-133. That audit report

is in the document titled Report on Audit of Institution of Higher Education in Accordance

with OMB Circular A-133, June 30, 2008.

Background

The KCTCS Board of Regents at its April 1999 meeting acted to accept financial management of

KCTCS as authorized by KRS 164A.550 – 164A.630 effective July 1, 1999. KRS 164A.570

requires that an annual financial audit be performed. The Kentucky Administrative

Regulation (739 KAR 1:030) resulting from this action of the KCTCS Board of Regents states:

The Kentucky Community and Technical College System Board of Regents

elects to engage a qualified firm of certified public accountants for the

purpose of submitting an independent opinion concerning the internal

accounting controls and compliance with the provisions of KRS 164A.560,

164A.565, 164A.575, and 164A.620. The engagement of the qualified firm,

scope of the audit, and report of findings shall be in accordance with the

provisions of KRS 164A.570.

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UPDATE: Agenda Item H-2 KCTCS QUARTERLY FINANCIAL REPORT December 5, 2008

The financial statements depict activity through the first quarter of fiscal year 2008-09; the

quarter ended September 30, 2008. Information for these statements was derived from the

KCTCS Administrative Financial System.

The Statement of Revenues and Expenditures (Attachment A) reflects actual program and

operational expenditures compared to the 2008-09 budget approved by the KCTCS Board of

Regents June 13, 2008. This report reflects total revenues of $274 million, 41 percent of the

budgeted revenue and appropriated funds. The Statement of Revenues and Expenditures also

reflects current fund expenditures and budget reserve through the first quarter of the fiscal year

of $196 million, 29 percent of the expenditures budgeted for the year. The Statement of Net

Assets (Attachment B) reflects the overall financial position of the System and includes assets,

liabilities, and net assets.

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Kentucky Community and Technical College System

Statement of Current Funds Revenues and Expenditures

September 30, 2008

(in thousands)

APPROVED

BUDGET

REALIZED

TO DATE PERCENT

REVENUES

General Fund

State Appropriations 219,317$ 65,795$ 30%

Tuition and Charges 173,419 85,712 49%

Investment Income 10,402 349 3%

Governmental Grants and Contracts 29,589 4,989 17%

Sales/Services Educational Activity 6,775 3,594 53%

Other 47,461 17,488 37%

Total General Fund 486,963 177,927 37%

Restricted Funds 183,295 96,138 52%

Total Revenues and

Appropriated Fund Balances 670,258$ 274,065$ 41%

EXPENDITURES BY PROGRAM Instruction 238,022$ 50,146$ 21%

Public Service 37,406 8,289 22%

Academic Support 39,989 8,454 21%

Student Services 43,432 10,980 25%

Institutional Support 92,032 18,574 20%

Student Financial Aid 142,556 70,401 49%

Operations and Maintenance 59,333 11,413 19%

Total Expenditures by Program 652,770 178,257 27%

Budget Reserve 17,488 17,488 100%

Total Expenditures and Budget Reserve 670,258$ 195,745$ 29%

Current Year Revenues in Excess of Expenditures 78,320$

Attachment A

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Kentucky Community and Technical College System

Statement of Net Assets

September 30, 2008 and 2007

(in thousands)

ASSETS 2008 2007

Current Assets

Cash and cash equivalents $ 245,071 $ 240,422

Short-term investments 38 2,015

Loans, accounts and gifts receivable, net 51,730 31,295

Other current assets 1,086 4

Total current assets 297,925 273,736

Noncurrent Assets

Restricted cash and cash equivalents 6,007 34,107

Loans and other receivables 9,409 9,571

Endowment investments 24,486 26,709

Other long-term investments 28,438 0

Capital assets, net 464,505 408,226

Total noncurrent assets 532,845 478,613

Total assets 830,770 752,349

LIABILITIES

Current Liabilities

Accounts payable and accrued expenses 3,606 11,477

Employee withholdings and deposits 13,688 13,505

Compensated absences 10,465 10,213

Deferred revenue 11 52

Leases payable - current portion 1,958 1,208

Total current liabilities 29,728 36,455

Noncurrent Liabilities

Leases payable - noncurrent portion 13,084 12,045

Other long-term obligations 23,312 2,887

Total noncurrent liabilities 36,396 14,932

Total liabilities 66,124 51,387

NET ASSETS

Invested in capital assets, net of related debt 449,324 394,811

Restricted for:

Nonexpendable

Scholarships, instruction, and other 17,397 19,771

Expendable

Scholarships, instruction, and other 45,417 45,637

Loans 15,923 15,333

Capital projects 24,994 30,778

Unrestricted 211,591 194,632

Total net assets $ 764,646 $ 700,962

Attachment B

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Agenda Item H-3 UPDATE: 2008-09 BUDGET December 5, 2008

The Board of Regents approved the KCTCS 2008-09 Annual Budget at its June 13, 2008,

meeting. The budget and its provisions became effective July 1, 2008.

On October 30, 2008, Governor Steve Beshear released a report prepared by the Office of the

State Budget Director, which projected a $294 million General Fund revenue shortfall in fiscal

year 2008-09. The revenue shortfall projected in October amounted to 3.3 percent of the

budgeted revenue. When the report was released, Governor Beshear indicated that he would

request that the Consensus Forecast Group, the independent team of economists that makes

official revenue forecasts, make a revised revenue estimate for 2008-09 in November. The

Consensus Forecast Group’s revised revenue projections were released on November 21, 2008.

The forecasting group’s revised General Fund revenue estimate for 2008-09 reflects a projected

revenue shortfall of $456 million, 5.1 percent below the budgeted revenue for 2008-09.

The Governor has indicated his intent to develop a proposed plan of action in early December

that could include a budget cut for postsecondary education and other areas of state government.

The Minutes of the June 13, 2008, meeting of the KCTCS Board of Regents indicates that the

2008-09 budget approved by the Board would:

Maintain a recurring $2.4 million unallocated fund. If a

mid-year budget reduction is ordered by the Governor or

is enacted by the General Assembly during fiscal year

2008-09, this fund will be the first amount available for

that budget reduction.

In anticipation of a mid-year budget reduction order, the KCTCS President is working with the

President’s Leadership Team on various budget reduction scenarios that use this $2.4 million

fund as well as funds already budgeted for expenditure.

The KCTCS President will provide updated information at the December 4 Finance, Technology,

and Human Resources Committee meeting and the December 5 Board of Regents meeting.

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INFORMATION: POLICY REVISION – KCTCS BOARD OF REGENTS Agenda Item H-4 POLICY 2.0 KCTCS EMPLOYMENT STATUS December 5, 2008

Background

When KCTCS was established by the Kentucky Postsecondary Education Improvement Act of

1997, former community college faculty transferred to KCTCS on tenure track or with tenure.

Former technical college faculty transferred under 151B provisions with continuing status or the

ability to earn this status under the rules in effect as of June 30, 1998. In the early years, new

KCTCS full-time faculty were primarily appointed on tenure track (community colleges) or

granted continued status after a six month introductory period (technical colleges). Among other

matters, the KCTCS Board of Regents was busy dealing with part-time employment issues

(1998), academic policies (including transfer of credit, faculty employment, definition of

faculty/faculty rank/faculty titles, tenure policy and procedures, separation, and review of

educational units) (1999), map over/promotion process for technical college faculty (2000),

revision of KCTCS Board of Regents Policy 2.0 KCTCS Employment (2001) and 2.1 KCTCS

Definition of Faculty, Faculty Rank, and Faculty Titles (2002), and a compensation plan and

classification program (2002).

Concerned with rapid shifts in the job market, emerging new job markets, and state budget cuts

which underscored the need for flexibility, the KCTCS Board of Regents began to monitor the

faculty appointment process, reviewing literature research, results of surveys of other states’

employment practices, and KCTCS hiring trend data.

Previous KCTCS Board of Regents requests, reviews, discussions, and/or actions related to

faculty appointments have included:

Contract/Tenure Ad Hoc Committee Report, June 2002

o On June 28, 2001, the Board’s Committee on Finance, Administration, and Technology

requested an update on the System’s tenure policy.

o A Contract/Tenure Ad Hoc Committee, consisting of seven faculty, two college

presidents, the KCTCS Chancellors, and the KCTCS General Counsel, was established to

look at various options.

The ad hoc committee began meeting in February 2002.

The ad hoc committee charge was to research, review, and address the framework for

the use of employment agreements (tenure and/or contracts) for new faculty hires.

o The Contract/Tenure Ad Hoc Committee’s findings were:

In employment agreements, KCTCS utilized both non-tenure term contracts and

tenure track contracts. As a foundation for the framework for the use of employment

agreements, KCTCS Board of Regents Policy 3.1 Equal Employment Opportunity

states, “KCTCS is an equal employment opportunity employer. Employment

decisions are based on merit and business needs …”

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The literature search revealed that contracts and tenure both are used, and each has its advantages and disadvantages. There is no body of literature to support the superiority of one practice over another. The literature indicates that the use of non-tenure term contracts is increasing. However, tenure track contracts have a substantial presence in postsecondary institutions. There is a considerable body of literature and debate on this topic.

The survey of benchmark states plus Kentucky revealed that only two of the systems

currently report availability of tenure to all newly hired faculty members, one has both tenure and non-tenure contracts available (KY), and the remaining systems report no tenure contracts available to new hires.

The Kentucky Revised Statutes (KRS) provided that the Board of Regents shall appoint a president, and the president will be charged with the appointment of all other employees (both faculty and staff). A faculty member may be removed only for incompetency, neglect of or refusal to perform his duty, or for immoral conduct. Non-tenure term contracts may not exceed four years (KRS 164.360). Current KCTCS policies address both tenure and non-tenure term contracts for newly hired faculty.

The ad hoc team found no data to support a relationship between the use of tenure or non-tenure term contracts and longevity.

o The Contract/Tenure Ad Hoc Committee recommended: KCTCS should consider the following framework for employment agreements for

new faculty hires: 1. Maximize KCTCS ability to attract and retain faculty. 2. Affirm academic freedom, due process, and job security. 3. Allow flexibility for colleges and faculty alike.

To allow flexibility, KCTCS should continue to offer both tenure track and a variety of non-tenure term contracts.

KCTCS should develop criteria and guidelines for determining the type of employment agreements to be offered to new hires.

KCTCS should track and report on the types of employment agreements issued to new hires each year.

KCTCS Board of Regents Policy 2.0 KCTCS Employment Revision, May 2004 o On May, 14, 2004, the KCTCS Board of Regents Policy 2.0 KCTCS Employment was

revised to include a section titled “Employment Status Categories”. Seven status categories were established, one of which was “Term Contract Employment Status”.

Faculty Appointments Report, September 2007 o On June 14, 2007, the Board’s Finance, Technology, and Human Resources Committee

requested additional information regarding faculty appointments.

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o Presented at the September 26-27, 2007, Board meeting, the Faculty Appointments Report

consisted of the following sections:

Literature Review 2002-07

The literature (Finkelstein, 2006) reported a restructuring of faculty appointments in the

past decade to include a parallel system of term contracts.

The change was attributed to “growing financial pressures, … lower costs of hiring

nontenure-track faculty members, and increased flexibility … in the face of uncertain

economic times and the end of mandatory retirement for tenure-track faculty members

(that took place in 1994)” (Ehrenberg, 2005).

Pros and cons of both types of faculty appointments were addressed:

Tenure is seen as the protection of academic freedom, due process, and dismissal for

just cause (AAUP; NEA; Cloud, 2004).

Tenure concerns spoke to gender and minority disparity (Lewin, 2004), use as a “rare

perk” to attract researchers to universities (Burgan, 2003), public perception - a poll

that found a majority of the public “doubts that tenure promotes quality” (Inside

Higher Education, 2007), and post tenure review (NEA, 2002).

The NEA (2002) reported, “New campuses have been created in Florida and

California that do not have faculty tenure.”

Term contracts are seen as affording flexibility and placing emphasis on the

classroom, not on research or publishing (Patton, 2007).

Term contracts concerns noted were lack of job security and obstacles to academic

freedom (Holub, 2003; Kane, 2004); that it is not clear whether or not it is creating a

“caste system” (Patton, 2007); and doubts that “contract employees can form as close

of a relationship with their department or institution as tenured faculty seem to enjoy”

(Patton, 2007).

Survey of Benchmark and Surrounding States

The survey showed a variety of faculty appointments now in use.

Several states and/or colleges reported having no tenure track, for example:

Virginia (Community College System – 23 colleges) uses annual or multi-year

contracts.

Specific colleges in Indiana, Michigan, and Missouri.

Compilation of Kentucky Revised Statutes and KCTCS Policies and Procedures

KCTCS Data: New Faculty Appointments by Employment Status Categories

From 1999-2000 through 2006-07, 20+ to 40+ tenure track faculty were appointed

annually; tenure track contracts began to decline in 2006-07 (from 44 in 2005-06 to 30 in

2006-07).

From 2004-05 through 2006-07, six to 90 term contract faculty were appointed annually;

term contracts have increased each year (from six in 2004-05 to 90 in 2006-07).

Faculty Appointment Process Update, Fall 2008

o At its June 12, 2008, meeting, the Board’s Finance, Technology, and Human Resources

Committee requested that additional information related to the faculty appointment process be

provided at the September 2008 Board of Regents meeting.

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o Presented at the September 25-26, 2008, meeting, the Faculty Appointment Process

Update consisted of the following sections:

Tenure

Concepts in various sources reviewed focus on academic freedom, due process,

and shared governance.

In determining tenure, universities generally focus on research/publishing and

teaching/advising, while community colleges focus on teaching/advising and

service to community.

KCTCS Promotion and Tenure Process

Both full-time term contract faculty and tenure track faculty participate in the

promotion process, which includes peer review, administrative recommendation

and/or action, and final action (ratification) by the KCTCS Board of Regents.

Faculty Appointment Survey

2007 survey (see 2007 report above).

Kentucky Higher Education Practices

Five of the other Kentucky state postsecondary institutions reported using both

tenure track and non-tenure track contracts – University of Kentucky, University

of Louisville, Eastern Kentucky University, Western Kentucky University, and

Northern Kentucky University.

KCTCS Tenure Trend Data

Tenure track contracts continue to show an overall decline from the high of 44 in

2005-06 to 32 in 2007-08.

Term contracts continue to show a steady annual increase from six in 2004-05 to

109 in 2007-08.

Tenure Accountability

Post Tenure Review - Suggested elimination of biennial ratings for faculty.

Criteria for Tenure Track Positions - Suggested establishing criteria based on

funding, academic discipline, and program enrollment trends.

Appointment and Removal Process – Listed current practices (non-

renewal/terminal appointments, reassignment, phased retirement, and voluntary

reduced work schedule).

Appendix

Selected Kentucky Revised Statutes.

Selected KCTCS Board of Regents Policies.

Recommendation Requested o At the September 2008 Board meeting, the Finance, Technology, and Human Resources

Committee requested that a recommendation regarding the faculty appointment and

tenure process be brought forward at a future Board meeting.

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Proposed Policy Revision

The proposed revision of KCTCS Board of Regents Policy 2.0 KCTCS Employment shows

employment status categories separated into two distinct sections – one section for employees

appointed prior to July 1, 2009, and one section for employees appointed effective on or after

July 1, 2009. The new section for employees appointed effective on or after July 1, 2009, has

two employment status categories – term contract and “at will”. New KCTCS regular full-time

faculty and staff will be appointed as term contract status employees.

Term contracts are issued for one to four year periods in accordance with Kentucky Revised

Statutes 164.360. Years of service for determining contract length have been added to both

sections of the policy. Technical edits have been made as needed.

Under this proposed revision, the KCTCS Board of Regents would no longer grant tenure to

faculty after the current 168 eligible tenure track faculty have completed the promotion and

tenure process or received terminal contracts. The current tenure track pipeline will be

processed through 2014.

Considerations/Rationale

Based on a thorough discussion, research, and analysis, the proposed revision in policy is made

with consideration of the following:

Current trends in higher education related to the granting of tenure.

Academic freedom for faculty.

Impact on recruitment and retention of quality faculty.

Impact of changing student and industry needs on academic programs.

Consistent use of employment status categories for faculty and staff.

The need for flexibility and accountability in both academic programs and faculty.

Faculty hiring trends for KCTCS for 2000-2008 (see Attachment A).

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Rationale relative to this proposed revision includes:

Literature reviews conducted in 2002 and 2007 show the restructuring of faculty

appointments to include term contracts.

o The change is attributed to “growing financial pressures, … lower costs of hiring

nontenure-track faculty members, and increased flexibility … in the face of uncertain

economic times and the end of mandatory retirement for tenure-track faculty members

(that took place in 1994)” (Ehrenberg, 2005).

o Term contracts are seen as affording flexibility and placing emphasis on the classroom,

not on research or publishing (Patton, 2007).

State surveys conducted in 2002 and 2007 show states and/or colleges which have no tenure

track, such as Virginia, Indiana, Michigan, and Missouri.

o Contract/Tenure Ad Hoc Committee Report, June 2002

o Faculty Appointments Report, September 2007

o Faculty Appointment Process Update, Fall 2008

Programs needs are changing rapidly.

o From 1998-2008, KCTCS colleges have developed 2,934 programs

(2,328 certificates/option, 156 diplomas, and 450 associate degree/options).

o During the same time period, KCTCS colleges have deactivated 238 programs

(143 certificates, 57 diplomas, and 38 associate degrees).

The use of term contract faculty allows KCTCS to be more responsive to academic program

needs and demands.

KCTCS colleges have increased the use of term contract; there has been no impact on

recruiting quality faculty.

o 281 term contract faculty were appointed from 2004-05 to 2007-08.

o Of those 281 term contract faculty, 109 were appointed in 2007-08.

KCTCS colleges have decreased the use of tenure track contracts.

o 147 tenure-track faculty were appointed 2004-05 to 2007-08.

o Of those 147 tenure track faculty, 32 were appointed in 2007-08.

Shared governance is assured to faculty through the faculty senate process, as stated in the

Kentucky Postsecondary Education Improvement Act of 1997 and KCTCS Board of Regents

Policy 1.4 Internal Governance Structure: KCTCS Senate.

KCTCS policies and procedures apply to both term contract faculty and tenure track faculty,

for example:

o Faculty performance review process.

o Promotion process and promotion criteria.

89

KCTCS culture provides for and embraces academic freedom, with policies/processes in

place for faculty appeals if needed in this regard.

o Academic freedom is assured to faculty and students through the KCTCS Board of

Regents Policy 2.9.1.2 KCTCS Academic Freedom Policy, which includes appeal

processes for faculty and for students.

Due process rights for faculty are assured through Kentucky Revised Statute 164.360, which

states that “… no … faculty member shall be removed except for incompetency, neglect of or

refusal to perform his duty, or for immoral conduct.”

Likewise, KCTCS policies assure faculty and staff due process rights during the contract

period – for example:

o KCTCS Board of Regents Policy 2.16 KCTCS Personnel Dispute.

o KCTCS Administrative Policies and Procedures 2.16.2.1 Faculty Appeals through the

KCTCS Senate Advisory Committee on Appeals (KCTCS Senate ACA).

o KCTCS Administrative Policies and Procedures 2.16.2.2 Complaint Resolution

Procedure.

Adoption of one employment status (term contract) for faculty and staff provides greater

consistency in hiring practices and application of human resources policies.

While the expectation for postsecondary education has increased in Kentucky, the state’s

relative commitment to postsecondary education has decreased.

o In fiscal years 1998-00, the first biennium for KCTCS, postsecondary education received

15.5 percent of the state general fund appropriation.

o In the 2008-10 biennium, the appropriation for postsecondary education has been reduced

to 13.7 percent of the general fund appropriation.

To date, KCTCS has experienced significant budget reductions from fiscal year 2001-02

through fiscal year 2008-09, amounting to $ 31.5 million. The amount and nature of the

reductions are noted below, with the recurring funds ($25.6 million) impacting the base for

future years.

Fiscal Year Budget Reduction

2001-02 $ 3.3 million (recurring)


2003-04 $ 5.9 million (non-recurring)




With the volatility of the global economy as well as the state and national economy, rapid shifts

in the job market, and emerging new job markets, flexibility in the employment of faculty and

staff is essential in continuing to build a comprehensive community and technical college

system for the 21st century.

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Note: Faculty Employment Status Definitions were refined in March 2005.

New KCTCS Faculty Appointments by Employment Status Category as of November 2008

Attachm

ent A

PROPOSED POLICY REVISION KCTCS BOARD OF REGENTS POLICIES

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STRIKETHROUGH VERSION 2.0 Kentucky Community and Technical College System Employment With the establishment of the Kentucky Community and Technical College System through the Kentucky Postsecondary Education Improvement Act of 1997 (in sections of KRS Chapter 164), KCTCS is authorized to employ individuals in furtherance of its mission. The KCTCS President is authorized to promulgate administrative procedures to implement this policy.

2.0.1 Employment Status Categories

2.0.1.1 Employment Status Categories For Employees Appointed Prior to July 1, 2009

Employment status determines an employee’s right to continued employment with KCTCS. Based on the process by which the faculty or staff member is employed, the employee has a designated employment status, and/or the right to earn a designated employment status. KCTCS recognizes seven (7) employment status categories:

A. Faculty Tenured Employment Status The Board of Regents may grant tenure to faculty upon recommendation by the President of KCTCS and the Chancellor. Tenure for faculty when granted by the Board of Regents in accordance with the Kentucky Community and Technical College System procedures shall be in KCTCS and not at the individual educational unit of the KCTCS colleges. Faculty members who have earned tenure under UKCCS or KCTCS have tenured employment status at KCTCS. The terms of employment are specified in the faculty member’s contract.

B. Faculty Tenure-Track Employment Status Faculty members working to earn tenured employment status while in a tenure-track (tenure-eligible) position are issued a tenure-track contract and have tenure-track employment status at KCTCS. The terms of employment are specified in the faculty member’s contract.

A. Term Contract Employment Status Faculty who are employed in a non-tenure-track position are issued a term contract. Regular full-time faculty and have term contract employment status. Regular full-time faculty may be offered a series of employment contracts with varying lengths over a long term association with KCTCS. Employment terms are as follows:

Years of Service Contract Length 0-3 1 year or less 4-6 1 or 2 years 7+ 1, 2, 3, or 4 years

Exceptions to these specified faculty employment terms must be approved in advance by the

KCTCS President or designee.

Attachment B


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Regular full-time staff may be issued a term contract and have term contract employment status.

Faculty and staff who are employed through a term contract are not eligible to earn KCTCS

continued employment status and are subject to the employment terms specified in their contract.

B. Continued Employment Status

Prior to July 1, 2003, newly hired regular status non-contract faculty earned “continued

employment status” under the KCTCS personnel system after the Introductory Period was

satisfactorily completed. Regular status non-contract staff earn “continued employment status”

under the KCTCS personnel system after the Introductory Period is satisfactorily completed.

Former UKCCS non-contract staff who exercise the one-time option into the KCTCS personnel

system are granted continued employment status.

C. Continuing Employment Status

Former 151B faculty and staff who earned “continuing employment status” under KRS Chapter

151B retain continuing employment status following their transfer to KCTCS under KRS

164.5805, including those who exercise the one-time option into the KCTCS personnel system.

D. “Status” Employment Status

Former 18A staff who earned “status” employment status under KRS Chapter 18A retain

“status” employment status following their transfer to KCTCS under KRS 164.5805, including

those who exercise the one-time option into the KCTCS personnel system.

E. “At Will” Employment Status

Temporary status contract and non-contract employees shall have “at will” employment status.

Regular status less than full-time contract and non-contract employees who are hired on or after

July 1, 2004, shall have “at will” employment status. Former UKCCS contract and non-contract

staff retain their employment “at will” status following their transfer to KCTCS under KRS

164.5807. For employees under the KCTCS personnel system who are subject to the

Introductory Period, they have “at will” employment status during the course of the Introductory

Period.


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2.0.1.2 Employment Status Categories For Employees Appointed

Effective On Or After July 1, 2009

Employment status determines an employee’s right to continued employment with KCTCS.

Based on the process by which the faculty or staff member is employed, the employee has a

designated employment status.

KCTCS recognizes two (2) employment status categories:

A. Term Contract Employment Status

Regular full-time faculty and staff shall be issued a term contract and have term contract

employment status.

Regular full-time faculty and staff may be offered a series of employment contracts with varying

lengths over a long term association with KCTCS. Employment terms are as follows:

Years of Service Contract Length

0-3 1 year or less

4-6 1 or 2 years

7+ 1, 2, 3, or 4 years

Exceptions to these specified employment terms must be approved in advance by the KCTCS

President or designee.

Faculty and staff who are employed through a term contract are subject to the employment terms

specified in their contract.

B. “At Will” Employment Status

Temporary faculty and staff (contract and non-contract) shall have “at will” employment status.

Regular less than full-time faculty and staff shall have “at will” employment status.


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2.0.2 Employee Rights

Employees hired after the establishment of KCTCS are governed by the KCTCS personnel

system rules. Employees who were transferred to KCTCS pursuant to KRS Chapter 164 are

referred to in KCTCS policies and procedures as “former UKCCS employees” and “former KRS

151B/18A employees,” respectively. Former UKCCS employees transferred to KCTCS

pursuant to KRS 164.5807 retain coverage under the personnel rules in the University of

Kentucky administrative regulations. Former UKCCS employees with tenure shall retain their

tenure. Former 151B/18A employees retain coverage under the applicable personnel rules in

Titles 101 and 780 of the Kentucky Administrative Regulations that were in effect on June 30,

1998, and adopted by the KCTCS Board of Regents pursuant to KRS 164.5805(1)(e). Former

151B employees with “continuing employment status” shall retain their “continuing employment

status.” Former 18A employees with “status” as their employment status shall retain their

“status.” These transferred employees have the right to exercise a one-time option into the

KCTCS personnel system. All employee grievances and appeals shall be under the rules

provided by the KCTCS policies and procedures.

KCTCS employees under the University of Kentucky administrative regulations who accept

other positions in any KCTCS college after June 29, 2001, retain coverage under University of

Kentucky administrative regulations until they elect to be covered by the KCTCS personnel

system. Former Cabinet for Workforce Development employees who accept other positions in

any KCTCS college after June 29, 2001, retain coverage under applicable provisions of Titles

101 and 780 of the Kentucky Administrative Regulations that were in effect on June 30, 1998,

until they elect to be covered by the KCTCS personnel system. The employee’s option into the

KCTCS personnel system shall be in writing and may be exercised at any time to be made

effective on the first day of the applicable pay period. Positions in the KCTCS System Office

shall be positions under the KCTCS personnel system; therefore, employees who choose to

accept KCTCS System Office positions shall be governed by KCTCS personnel system policies.

No one other than the KCTCS Board of Regents may alter or modify Board policies. No one

other than the KCTCS President may alter or modify administrative policies and procedures.

Any alteration or modification of policies must be in writing.

4-30-99 5-14-04

4-30-99; 6-29-01;

5-14-04

Date Approved by

KCTCS Board of Regents

Date of Last Review Date of Last Revision

(Include all dates in

chronological order)

5-14-04 (SIGNED) 5-14-04

Chair, Board of Regents Date President, KCTCS Date


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AS IT WILL APPEAR VERSION 2.0 Kentucky Community and Technical College System Employment With the establishment of the Kentucky Community and Technical College System through the Kentucky Postsecondary Education Improvement Act of 1997 (in sections of KRS Chapter 164), KCTCS is authorized to employ individuals in furtherance of its mission. The KCTCS President is authorized to promulgate administrative procedures to implement this policy.

2.0.1 Employment Status Categories

2.0.1.1 Employment Status Categories For Employees Appointed Prior to July 1, 2009

Employment status determines an employee’s right to continued employment with KCTCS. Based on the process by which the faculty or staff member is employed, the employee has a designated employment status, and/or the right to earn a designated employment status. KCTCS recognizes seven (7) employment status categories:

A. Faculty Tenured Employment Status The Board of Regents may grant tenure to faculty upon recommendation by the President of KCTCS and the Chancellor. Tenure for faculty when granted by the Board of Regents in accordance with the Kentucky Community and Technical College System procedures shall be in KCTCS and not at the individual educational unit of the KCTCS colleges. Faculty members who have earned tenure under UKCCS or KCTCS have tenured employment status at KCTCS. The terms of employment are specified in the faculty member’s contract.

B. Faculty Tenure-Track Employment Status Faculty members working to earn tenured employment status while in a tenure-track (tenure-eligible) position are issued a tenure-track contract and have tenure-track employment status at KCTCS. The terms of employment are specified in the faculty member’s contract.

C. Term Contract Employment Status Faculty who are employed in a non-tenure-track position are issued a term contract. Regular full-time faculty have term contract employment status. Regular full-time faculty may be offered a series of employment contracts with varying lengths over a long term association with KCTCS. Employment terms are as follows:

Years of Service Contract Length 0-3 1 year or less 4-6 1 or 2 years 7+ 1, 2, 3, or 4 years

Exceptions to these specified faculty employment terms must be approved in advance by the KCTCS President or designee.


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Regular full-time staff may be issued a term contract and have term contract employment status.

Faculty and staff who are employed through a term contract are not eligible to earn KCTCS

continued employment status and are subject to the employment terms specified in their contract.

D. Continued Employment Status

Prior to July 1, 2003, newly hired regular status non-contract faculty earned “continued

employment status” under the KCTCS personnel system after the Introductory Period was

satisfactorily completed. Regular status non-contract staff earn “continued employment status”

under the KCTCS personnel system after the Introductory Period is satisfactorily completed.

Former UKCCS non-contract staff who exercise the one-time option into the KCTCS personnel

system are granted continued employment status.

E. Continuing Employment Status

Former 151B faculty and staff who earned “continuing employment status” under KRS Chapter

151B retain continuing employment status following their transfer to KCTCS under KRS

164.5805, including those who exercise the one-time option into the KCTCS personnel system.

F. “Status” Employment Status

Former 18A staff who earned “status” employment status under KRS Chapter 18A retain

“status” employment status following their transfer to KCTCS under KRS 164.5805, including

those who exercise the one-time option into the KCTCS personnel system.

G. “At Will” Employment Status

Temporary status contract and non-contract employees shall have “at will” employment status.

Regular status less than full-time contract and non-contract employees who are hired on or after

July 1, 2004, shall have “at will” employment status. Former UKCCS contract and non-contract

staff retain their employment “at will” status following their transfer to KCTCS under KRS

164.5807. For employees under the KCTCS personnel system who are subject to the

Introductory Period, they have “at will” employment status during the course of the Introductory

Period.


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2.0.1.2 Employment Status Categories For Employees Appointed

Effective On Or After July 1, 2009

Employment status determines an employee’s right to continued employment with KCTCS.

Based on the process by which the faculty or staff member is employed, the employee has a

designated employment status.

KCTCS recognizes two (2) employment status categories:

A. Term Contract Employment Status

Regular full-time faculty and staff shall be issued a term contract and have term contract

employment status.

Regular full-time faculty and staff may be offered a series of employment contracts with varying

lengths over a long term association with KCTCS. Employment terms are as follows:

Years of Service Contract Length

0-3 1 year or less

4-6 1 or 2 years

7+ 1, 2, 3, or 4 years

Exceptions to these specified employment terms must be approved in advance by the KCTCS

President or designee.

Faculty and staff who are employed through a term contract are subject to the employment terms

specified in their contract.

B. “At Will” Employment Status

Temporary faculty and staff (contract and non-contract) shall have “at will” employment status.

Regular less than full-time faculty and staff shall have “at will” employment status.


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2.0.2 Employee Rights

Employees hired after the establishment of KCTCS are governed by the KCTCS personnel

system rules. Employees who were transferred to KCTCS pursuant to KRS Chapter 164 are

referred to in KCTCS policies and procedures as “former UKCCS employees” and “former KRS

151B/18A employees,” respectively. Former UKCCS employees transferred to KCTCS

pursuant to KRS 164.5807 retain coverage under the personnel rules in the University of

Kentucky administrative regulations. Former UKCCS employees with tenure shall retain their

tenure. Former 151B/18A employees retain coverage under the applicable personnel rules in

Titles 101 and 780 of the Kentucky Administrative Regulations that were in effect on June 30,

1998, and adopted by the KCTCS Board of Regents pursuant to KRS 164.5805(1)(e). Former

151B employees with “continuing employment status” shall retain their “continuing employment

status.” Former 18A employees with “status” as their employment status shall retain their

“status.” These transferred employees have the right to exercise a one-time option into the

KCTCS personnel system. All employee grievances and appeals shall be under the rules

provided by the KCTCS policies and procedures.

KCTCS employees under the University of Kentucky administrative regulations who accept

other positions in any KCTCS college after June 29, 2001, retain coverage under University of

Kentucky administrative regulations until they elect to be covered by the KCTCS personnel

system. Former Cabinet for Workforce Development employees who accept other positions in

any KCTCS college after June 29, 2001, retain coverage under applicable provisions of Titles

101 and 780 of the Kentucky Administrative Regulations that were in effect on June 30, 1998,

until they elect to be covered by the KCTCS personnel system. The employee’s option into the

KCTCS personnel system shall be in writing and may be exercised at any time to be made

effective on the first day of the applicable pay period. Positions in the KCTCS System Office

shall be positions under the KCTCS personnel system; therefore, employees who choose to

accept KCTCS System Office positions shall be governed by KCTCS personnel system policies.

No one other than the KCTCS Board of Regents may alter or modify Board policies. No one

other than the KCTCS President may alter or modify administrative policies and procedures.

Any alteration or modification of policies must be in writing.

4-30-99

4-30-99; 6-29-01;

5-14-04

Date Approved by






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INFORMATION: POLICY REVISION – KCTCS BOARD OF REGENTS POLICY Agenda Item H-5 3.7 KCTCS RETIREMENT PLAN POLICIES December 5, 2008 Background When KCTCS was established by the Kentucky Postsecondary Education Improvement Act of 1997, former community college employees transferred to KCTCS with the same 403(b) retirement plan and retiree health benefits afforded to University of Kentucky (UK) employees as outlined in Kentucky Revised Statute (KRS) 164.5807(3)(d): “All employees hired as of the effective date of the transfer shall be provided the same benefit package available for other University of Kentucky employees as it may be modified by the University of Kentucky for all employees.” Procedural arrangements were made with the University of Kentucky’s retirement vendors to transfer the applicable employees’ contracts. Former technical college employees transferred under 18A and 151B provisions and retirement benefits were guaranteed in KRS 164.5805(1)(d)4: “Employees shall be provided retirement plans in the same system where they are currently enrolled: the Kentucky Teachers’ Retirement System under KRS 161.220 or the Kentucky Employees Retirement System under KRS 61.525.” The referenced statutes then allowed KCTCS new employees to participate in either of the state retirement systems in accordance with their prevailing statutes and provisions. Retirement-Related Events (1998-2004) The following carriers were added:

Effective January 14, 1998, American Century was contracted to offer an interim 403(b) defined contribution plan based upon the University of Kentucky contribution schedule and plan. Prior to that date newly hired employees were required to participate in one of the other defined benefit plans.

Effective September 1998, following a request for proposal process, TIAA-CREF, American Century, and AETNA (now ING) were contracted as retirement plan carriers for the defined contribution 403(b) plan.

In 2001, the issue arose that although active KCTCS employees were covered for health insurance under the Commonwealth Group Health Insurance Plan, KCTCS 403(b) plan participants were not covered as retirees. This issue was resolved by amendment House Floor Amendment (1) to House Bill 370, signed by the Governor on March 18, 2003, which revised KRS 18A.225 effective July 1, 2003, by defining these retirees as covered under the Commonwealth Group Health Insurance plan.

In July 2003 as a further incentive for University of Kentucky personnel system employees to exercise the one time irrevocable option to opt-over to KCTCS personnel policies, Fidelity Investments (a UK retirement carrier) was added to the KCTCS benefit package.

Since retirees age 65 or over are not eligible to participate in the Commonwealth Group Health Insurance Plan, it was necessary to secure a carrier for this group of retirees to complete a post-retirement health package. KCTCS contracted with Anthem for a Medicare eligible plan by joining the Kentucky Employees Retirement Systems contract with Anthem, effective January 1, 2004.

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Specific KCTCS Board of Regents Actions Related to Retirement (1998 -2003)

In 1998, the KCTCS Board of Regents adopted retirement plan policies as they related to the establishment of employer and employee contribution rates for the 403(b) plan and eligibility criteria necessary to continue the employer contribution toward the cost of the employee health insurance during retirement. The policies were modeled after the UK defined contribution 403(b) plan.

The KCTCS Board of Regents provided post-retirement health insurance for employees in the KCTCS personnel system in 403(b) retirement plans, effective July 1, 2003.

The KCTCS Board of Regents revised KCTCS Board of Regents Policy 3.7 KCTCS Retirement Plan Policies August 15, 2003, for employees who participate in a KCTCS 403(b) matching plan to access their retirement plan by using their account as collateral for a loan from their 403(b) carrier before separating from service from KCTCS.

Federal Changes, KCTCS Studies, and KCTCS Board of Regents

Government Accounting Standards Board Statement Number 45 (GASB 45)

o In June 2004, Governmental Accounting Standards Board (GASB) issued Statement 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions, which established new accounting standards for post-retirement benefits other than pensions (OPEB). The requirements applied to any state or local government employer that provides OPEB, or for KCTCS, post-retirement health insurance. The accounting methodology changed from a pay-as-you-go basis to accrual-based accounting in the same manner as applied to pension plans. This accounting methodology was effective in fiscal year 2007-08. The liability for this benefit significantly increased with the recording of the Annual Required Contribution.

o Mercer (a Human Resources consulting firm) was contracted to perform an initial actuarial

report on the financial impact of GASB 45 in 2005 and for subsequent updated reports in 2006, 2007, and 2008.

o In December 2006, an update on the economic impact of GASB 45 on KCTCS of a total

obligation of approximately $153 million was reported to the Board as a result of the initial Mercer report.

o Mercer prepared an updated GASB 45 Post-Retirement Benefit Valuation Report in March 2007 showing an $18.3 million Annual Required Contribution. The impact of this liability was discussed in detail during the March 2008 Board meeting in development of the 2008-09 budget. At that time, the current KCTCS budget included approximately $2.0 million (for funding the pay-as-you-go method), leaving a need for an additional $16.3 million annually to fund this obligation.

o Mercer provided an updated report for the Benefits Study, Fall 2008 showing the impact of ending post-retirement health benefits for new employees hired with an effective date on or after July 1, 2009. The 10-year accumulated cash savings is projected at $57,260,000.

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Mercer Benefits Valuation Report, July 2006

o The employee benefits review and benefits comparison study was reported to the KCTCS Board of Regents in the President’s Report in March 2007.

o This Mercer report generated a common dollar value for benefit plans with varying plan designs and provisions. Statistical comparisons could then be made to create an objective comparison to those in selected peer groups.

o The plans that were valued and compared included:

Retirement/Savings (including post-retirement medical, stock purchase). Health/Group (medical, dental, life, and flexible spending accounts). Time Loss (vacation, holiday, personal leave, sick days, and disability).

o The peer groups chosen for comparison included: Eleven educational organizations (Austin Peay University, Eastern Kentucky

University, Indiana University, Marshall University, Morehead State University, Ohio University, University of Illinois, University of Missouri, the University of Tennessee, University of Virginia, and Western Kentucky University).

Mercer’s standard peer group (162 organizations). Regional – 30 educational organizations in states bordering Kentucky. Kentucky educational organizations (Centre College, Eastern Kentucky University,

Georgetown College, Kentucky Christian College, Morehead State University, Pikeville College, Transylvania University, University of Kentucky, University of Louisville, and Western Kentucky University).

Eighteen Kentucky private organizations. The Commonwealth of Kentucky.

o Summary Data for Retirement/Savings Plans indicate that KCTCS exceeds the median by:

Peers – 29 percent. Standard – 47 percent. Regional – 56 percent. Kentucky – 53 percent. Kentucky Organizations – 94 percent.

o The median is defined as the 50

th percentile; value equals 50 percent of the observed values

that fall below this level.

o Median exceeded for Retirement/Savings due to the choice factor at KCTCS between Defined Benefit and Defined Contribution Plans.

102

Benefits Study, Fall 2008

o At the request of the Finance, Technology, and Human Resources Committee during the June 2008 meeting, a benefits study was conducted to further investigate potential cost savings and benefit changes within the KCTCS benefits package.

o Presented and discussed at the September 26, 2008, Board of Regents meeting, the Benefits Study, Fall 2008 included: Guiding Principles

Reflecting the Board of Regents’ commitment to current faculty and staff, the initial focus for any employee benefit changes would be for NEW hires.

For an effective allocation of resources in providing a competitive benefits program, consideration would be given to those benefits that would help attract, motivate, and retain quality employees.

Summary of the Mercer Benefits Valuation Report, July 2006

Summary of the four evaluated categories and KCTCS relation to median standing (see Mercer Benefits Valuation Report, July 2006 above).

Retirement Program Trends

Mercer database information for 206 higher education entities who offer a defined contribution plan.

56 percent offer both a defined benefit and a defined contribution plan.

44 percent offer a defined contribution plan only.

0 percent offer a defined benefit plan only.

Detailed Comparison of Kentucky Educational Institutions Benefit Programs, including Executive Summary

For Retirement plans:

KCTCS offers both defined contribution and defined benefit plans as do all other institutions except UK and the University of Louisville (U of L). These two do not offer defined benefit plans.

KCTCS, UK, and U of L offer phased retirement for faculty.

UK offers phased retirement for staff.

Only KCTCS, UK, and U of L offer retiree health for defined contribution programs.

UK eliminated employer-provided retiree health insurance for employees hired after July 1, 2006.

KCTCS monthly retiree cost for single coverage is $0 to $15.30, while UK cost ranges from $58 to $588.

U of L limits employer contribution at $108.10 for those in a defined contribution plan.

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KCTCS Benefits Comparison by Personnel System

Outlines each benefit and the legal considerations on retention, change, or elimination of any benefit.

Compliance ensured with statutory mandates:

Federal: The Employee Retirement Security Act of 1974 (ERISA), Internal Revenue Service statutes, The Omnibus Budget Reconciliation Act of 1993 (OBRA).

State: Kentucky Revised Statutes (KRS):

KRS Chapter 061.00 regarding Kentucky Retirement System (KERS).

KRS Chapter 161.00 regarding Kentucky Teachers Retirement System (KTRS).

KRS 18A.225 Health Coverage - Rule Governing the Kentucky Employee Health Plan (KEHP).

KRS 164.5807 Governance and Management of Community Colleges - Transfer of Funds - Rules Governing Employees - Personnel System.

KRS 164.5805 Transfer of Assets, Liabilities and Staff Positions of Kentucky Tech System - Employee Benefits and Salaries of Transferred Employees - Rules Governing Transferred Employees.

House Bill (HB) 1 of the 1997 Extraordinary Session of the Kentucky General Assembly - Kentucky Postsecondary Education Improvement Act of 1997.

KCTCS Benefits Program Participation as of August 2008

Illustrates health and retirement system enrollment.

Defined contribution 403(b) plan constitutes 70 percent of enrollment.

Options for Consideration

For employee benefits in which KCTCS does have authority, consideration could be given to the following changes for NEW hires:

Post-Retirement Health Insurance: Eliminate for employees hired with an effective date on or after July 1, 2009.

Projected savings over a 10-year period: $57,260,000.

Consideration of decreasing employer retirement contribution in 403(b) from 10 percent to 5 percent.

Projected 10-year savings: $4,957,926.

Recommendations Requested At the September 2008 Board meeting, the Finance, Technology, and Human Resources Committee requested that recommendations regarding employee benefits (for new hires only) be presented for the Board’s consideration at the December 4-5, 2008, KCTCS Board of Regents meetings.

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Analysis of Retirement Plans, November 2008

o Prepared by KCTCS staff, an analysis of retirement plans was reviewed by the KCTCS President’s Cabinet and the KCTCS President’s Leadership Team. The analysis included the following possible options for defined contribution 403(b)

plan participants with hire effective dates on or after July 1, 2009:

Eliminate post-retirement health.

2009-10 savings: $1,380,000.

Recurring annual savings in 10 years: $13,050,000.

Accumulated cash savings over 10 years: $57,260,000.

Implement a five-year (continuous service) vesting schedule.

Using 10 percent employer contribution and no salary increase projections.

2009-10 savings: $72,780.

Recurring annual savings in 10 years: $382,095.

Accumulated cash savings over 10 years: $3,020,370.

Reduce employer retirement contributions from 10 percent to either 5 percent, 6 percent, 7 percent, 8 percent, or 9 percent.

Using no salary increase savings projections are:

2009-10 savings: Range of $206,236 (5 percent) to $479,964 (9 percent).

Recurring annual savings in 10 years: Range of $2,062,360 (5 percent) to $4,799,640 (9 percent).

Accumulated cash savings over 10 years: Range of $11,342,980 (5 percent) to $26,398,020 (9 percent).

Retirement 403(b) contribution summary: Kentucky public universities.

Employer contributions range from 7.5 percent to 10 percent.

State retirement system contribution summary.

Employer contributions range from 10.01 percent to 14.84 percent. Proposed Policy Revision The following revisions are being proposed in the KCTCS Board of Regents Policy 3.7 Kentucky Community and Technical College System Retirement Plan Policies:

For new hires on and after July 1, 2009, a five-year vesting period (60 months) of continuous service is established to be eligible to receive the employee’s accrued benefits derived from employer contributions.

For new hires on and after July 1, 2009, retiree health benefits will not be available to 403 (b) plan retirees.

Updates are shown in the paragraphs related to the Omnibus Budget Reconciliation Act of 1993 (OBRA) to keep them current.

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Considerations/Rationale

Based on thorough discussion, research, and analysis, the proposed revision in policy is made with consideration of the following:

Maintaining the existing retirement package for current employees and only implementing changes for NEW employees appointed with an effective date on or after July 1, 2009.

Consistency with the University of Kentucky decision to cease post-retirement health benefits for new employees hired on or after January 1, 2006.

Kentucky Public Pension Reform, which changed pension benefits eligibility, contribution levels, and benefit calculation for new employees hired on or after July 1, 2008, for the Kentucky Teachers Retirement System and September 1, 2008, for the Kentucky Retirement System.

Kentucky Public Pension Reform, which changed post-retirement health eligibility and employer contributions for new employees hired on or after July 1, 2008, for the Kentucky Teachers Retirement System and September 1, 2008, for the Kentucky Retirement System.

Public and private sector trends for post-retirement benefits.

Ability to attract and retain employees.

Rationale relative to these proposed revisions include:

The impact of GASB 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions, which established new accounting standards for reporting post-retirement benefits. o The Mercer Post-Retirement Benefit Valuation Report (2007) reported a resulting annual

required contribution of $18.3 million, a $16.3 million annual increase over previous liabilities beginning with fiscal year 2007-08.

An updated Mercer report included in the Benefits Study, Fall 2008, which showed the GASB 45 impact if newly hired employees effective on or after July 1, 2009, were excluded. o The report showed a $57, 260,000 savings over a 10-year period.

An analysis of current benefits expenses and census by personnel system for the Benefits Study, Fall 2008. o Illustrated that the defined contribution 403(b) plan contains :

70 percent of all KCTCS employee participate in a 403(b) plan.

2,733 KCTCS personnel system employees in the 403(b) plan.

412 UK personnel system employees in the 403(b) plan.

Both KCTCS and UK 403(b) retirees are considered in GASB 45 calculations.

106

Analysis of the 10-year impact of a five-year vesting period of continuous service for newly hired employees effective on or after July 1, 2009, based upon the past five years of employment activity - numbers hired and terminated in five years or less.

o A vesting period allows that if an employee terminates with less than five years of

participation in the 403(b) plan, they would only be eligible to access employee funds after termination. All employer contributions would be returned to KCTCS.

o A five-year vesting period is comparable with the state retirement system.

o Projected accumulated cash savings over 10 years is $3,020,370.

Review of legacy personnel system recent policy changes in regard to retirement issues. o The University of Kentucky studied post-retirement health issues during 2006-07 due to the

onset of GASB 45 accounting standards. The employer contribution for post-retirement health benefits was eliminated for

employees hired on or after January 1, 2006. However, retirees were permitted to access the post-retirement health plans at their own expense.

UK maintains a self-funded health care plan. Previously all experience for active employees and retirees were combined for premium and contribution rating purposes. Due to the new policies, the higher retiree experience was then separated out and the rate structure was calculated accordingly for this older, higher experience group, creating increased premiums and employee cost for retirees.

Example: Active employee has single UK HMO plan. As an active employee they pay $26 monthly. As an early retiree (under age 65), they pay $58 monthly for the same coverage.

Two contribution schedules were established based upon eligibility to retire by

July 1, 2007, and an Age/Service schedule was implemented for those not eligible by that date with a much higher rate schedule for those not eligible.

Example: Active employee has single UK HMO plan. As an active employee they pay $26 monthly. As an early retiree (under age 65) who meets the rule of 75 and just meets the 15 years of service criteria and is under age 60, they will now pay $482 monthly.

A Medicare Advantage plan with a calendar year benefit period (changed from fiscal

year period) and an equitable, lower employee contribution rate was implemented for retirees age 65 and older.

All retirees over age 65 and Medicare eligible pay the same employee contribution ($25 monthly) regardless of when they were eligible to retire.

107

o Pension reform for state retirement systems. Monitored Governor’s Blue Ribbon Committee meetings in 2007 to address serious

funding shortfalls in system and impact on KCTCS employees.

Monitored 2008 legislative session and HB 600, which carried forth legislative committee recommendations on changes for new employees’ contributions, benefit factors, retirement health eligibility, cost of living adjustments, as well as an introduction of a combination of defined benefit and defined contribution plans, and service purchase rules among other issues. The bill did not pass.

Monitored Governors’ Special Session (2008 Extraordinary Session of the Kentucky General Assembly) on Pension Reform, which resulted in the passage of that session’s HB 1: Pension Reform that was signed by the Governor on June 27, 2008. The majority of the changes were for new participants after July 1, 2008, (Kentucky Teachers Retirement System) and September 1, 2008, (Kentucky Retirement Systems).

Predicated by funding issues, benefit reductions were instituted for new employees and where possible for current employees. Attachment A outlines all of the resultant provisions from the HB 1: Pension Reform.

The recommended policy revisions outlined preserve the current benefit package for current personnel and honors their understanding of the compensation package offered at their hiring. Additionally, it significantly reduces future liabilities in an uncertain economic environment, enabling KCTCS to utilize its resources more effectively by making changes in line with other agencies and institutions in the public sector. Attachment B illustrates recommended changes to the KCTCS Board of Regents Policy 3.7 KCTCS Retirement Plan Policies.

108

Attachment A

109

110

111

112


113

STRIKETHROUGH VERSION

3.7 Kentucky Community and Technical College System Retirement

Plan Policies

3.7.1 Retirement Plans

KCTCS provides employees with the option to join a Defined Benefit Plan or a Defined

Contribution 403 (b) Plan. The Defined Benefit Plan includes either the Kentucky Teachers

Retirement System (KTRS) or the Kentucky Employees Retirement System (KERS). The

election to join a retirement plan must be made within 30 days of regular full-time employment.

Participation in a KCTCS retirement plan is mandatory for regular full-time employees and a

condition of employment.

3.7.2 Defined Benefit Plans

KTRS is a defined benefit plan for employees employed in selected education-related

organizations working in a position that requires certification or a degree from a four-year

college or university. KERS is a defined benefit plan for non-instructional employees working in

a position with a state university that does not require a degree or certification. The rates for

contributions and multipliers for retirement annuities are defined by state statute. An irrevocable,

one-time election is made to enter either plan. The employee must remain in that retirement

system as long as they are in a position that is covered under that retirement system.

3.7.3 Defined Contribution 403 (b) Plan

Employees that enroll in a defined contribution plan make an irrevocable, one-time salary

reduction (pre-tax) agreement when entering the plan. The employee may not withdraw from the

KCTCS Defined Contribution 403 (b) Plan as long as that employee remains eligible for plan

participation.

3.7.3.1 Contributions as a Percent of Annual Salary

By the

Participant

By the

Institution Total

5% 10% 15%

KCTCS, or its designate, will withhold the contribution of the participant from regular salary

payments, add its contribution, and remit the combined sum to the retirement plan carrier

selected by the participant for the purchase of retirement benefits. Retirement contributions are

made on the participant’s salary. Retirement benefits purchased with the combined participant

and KCTCS contributions shall become the property of individual participants immediately upon

Attachment B


114

purchase. There is no vesting period. All benefits are for the sole purpose of providing retirement

benefits, or death benefits, or both. Participants cannot access their retirement accounts until they

separate from service with KCTCS except to use their retirement account as collateral on a

403(b) loan, if allowed, from their 403(b) carrier.

An employee hired with an effective date on or after July 1, 2009 shall be subject to a vesting

schedule for employer contributions. An employee must work a total of five years (60 months) of

continuous service to be able to complete the vesting period and be eligible to receive the

employee’s accrued benefits derived from employer contributions.

In addition to other applicable limitations stated in the plan, and notwithstanding any other

provisions of the KCTCS retirement policies to the contrary, the annual compensation of each

employee taken into account under the plan shall not exceed the Omnibus Budget Reconciliation

Act of 1993 (OBRA ’93) annual maximum includable compensation limit.

The OBRA ’93 annual limit is $150,000 (currently $160,000), as adjusted by the Commissioner

of the Internal Revenue Service for increases in the cost of living in accordance with section 401

(a) (17) (B) of the Internal Revenue Code. The cost-of-living adjustment in effect for a calendar

year applies to any period, beginning in such the calendar year over which compensation is

determined. This is the determination period. The determination period may not exceed 12

months. If a determination period consists of fewer than 12 months, the OBRA ’93 annual limit

will be multiplied by a fraction, the numerator of which is the number of months in the

determination period, and the denominator, which is 12.

Any reference in this plan to the limitation under section 401 (a) (17) of the Code shall mean the

OBRA ’93 annual maximum includable compensation limit stated in this provision. The KCTCS

Retirement Plan Year is deemed to begin July 1 of a calendar year and end June 30 of the next

calendar year.

If compensation for any prior determination period is taken into account in determining an

employee’s benefits accruing in the current plan year, the compensation for that prior

determination period is subject to the OBRA ’93 annual limit in effect for that prior

determination period. For this purpose, the OBRA ’93 annual compensation limit is $160,000

(indexed from $150,000) for the first day of the first plan year beginning on or after January 1,

1998.

If by applying the above-stated percentages there would be a violation of federal or state laws, as

a result of the employee or employer contributions or both, these percentages shall not be applied

to the extent of violating applicable laws. In these cases, the amount of the employer contribution

that cannot be forwarded to a retirement plan carrier shall be paid to the employee as a temporary

salary increase for the balance of the calendar year.


115

3.7.3.2 Investments

The participant must advise the retirement plan carrier which investment options have been

chosen. If two or more options are selected with a retirement carrier, the part of the retirement

contribution that is to be allocated to each option shall be specified. A participant may change

the investment options by contacting the retirement carrier.

3.7.3.3 Termination of Contributions

Contributions on behalf of a participant in the Retirement Plan shall terminate upon cessation of

regular full-time employment or retirement.

3.7.3.4 Retirement Date

Retirement is authorized when the combination of the employee’s age and years of regular full-

time service (with a minimum of 15 years of continuous service at the time of retirement) equals

or exceeds the number 75. Regular part-time service will be counted on a pro rate basis.

Employees that are retiring must provide written notification through normal administrative

channels to their appropriate Chancellor or Vice President at least three months in advance of the

desired retirement date.

3.7.3.5 Sick Leave Conversion

Former UKCCS employees that were employed by the University of Kentucky prior to July 1,

1995, will receive a payment for unused sick leave if the accrued balance is at least 66 days. The

first 22 days will be at full pay and the remaining days will be paid at the rate of the KCTCS

retirement contribution rate which is currently 10%.

3.7.3.6 Retirement Benefits

Each participant is entitled at retirement to activate any retirement benefits that have been

accrued under the KCTCS retirement plan in accordance with the rules established by the

retirement plan carriers. In addition to lump sum or partial lump sum provisions, there will be

both annuitized and non-annuitized methods of withdrawal. There may be variances in the

retirement withdrawal options among the carriers. All retirement plan carriers do not offer the

same withdrawal options.

3.7.3.7 Periods of Service

As used in the defined contribution retirement plan, "period of service" means the number of

years of full-time employment, plus credit allowed for part-time employment, plus periods in an

approved leave of absence status. Employees can earn only one year of service per calendar year,

regardless of any extra part-time employment above the normal 37.5-hour work week within

KCTCS.


116

3.7.3.8 Contributions During a Leave

Contributions shall be made only on the actual salary the employee is paid through the KCTCS

payroll. Contributions will not be increased for partial salaries. This includes sabbatical leave.

3.7.3.9 Purchase of Service Credit

The Defined Contribution 403 (b) Plan does not have a feature that allows the purchase of

service from prior service in military, public employment, or higher education positions. This

feature is common in defined benefit plans, but is not used in a defined contribution plan.

3.7.4 Conversion of Health Insurance Upon Retirement

3.7.4.1 Defined Contribution Plan 403 (b) Plan Retirees

Employees that meet the retirement criteria will continue to receive a contribution toward the

cost of their health insurance plan. Employees under age 65 will remain on a regular health

insurance plan until age 65, while employees that retire and are eligible for Medicare will be

placed on a Medicare Supplement eligible health insurance plan.

An employee hired with an effective date on or after July 1, 2009, who retires under the

provisions of KCTCS Board of Regents Policy 3.7 is not eligible for participation in a KCTCS

sponsored retiree health plan.

Employees that retire from the Community Colleges under UK benefits at the time of retirement

will receive their health insurance credit per UK policy and participate in the UK health plans.

Any Community College employee that has retired under the UK benefits will be ineligible for

the health insurance credit available through employment under the KCTCS personnel system.


117

3.7.4.2 KTRS/KERS

Requirements for health insurance coverage in retirement are established by state statute.

Employees should contact the appropriate retirement system office for details.

9-16-98 8-15-03 8-15-03

Date Approved by





(SIGNED)

8-15-03

(SIGNED) 8-15-03



118

AS IT WILL APPEAR VERSION

3.7 Kentucky Community and Technical College System Retirement

Plan Policies

3.7.1 Retirement Plans

KCTCS provides employees with the option to join a Defined Benefit Plan or a Defined

Contribution 403 (b) Plan. The Defined Benefit Plan includes either the Kentucky Teachers

Retirement System (KTRS) or the Kentucky Employees Retirement System (KERS). The

election to join a retirement plan must be made within 30 days of regular full-time employment.

Participation in a KCTCS retirement plan is mandatory for regular full-time employees and a

condition of employment.

3.7.2 Defined Benefit Plans

KTRS is a defined benefit plan for employees employed in selected education-related

organizations working in a position that requires certification or a degree from a four-year

college or university. KERS is a defined benefit plan for non-instructional employees working in

a position with a state university that does not require a degree or certification. The rates for

contributions and multipliers for retirement annuities are defined by state statute. An irrevocable,

one-time election is made to enter either plan. The employee must remain in that retirement

system as long as they are in a position that is covered under that retirement system.

3.7.3 Defined Contribution 403 (b) Plan

Employees that enroll in a defined contribution plan make an irrevocable, one-time salary

reduction (pre-tax) agreement when entering the plan. The employee may not withdraw from the

KCTCS Defined Contribution 403 (b) Plan as long as that employee remains eligible for plan

participation.

3.7.3.1 Contributions as a Percent of Annual Salary

By the

Participant

By the

Institution Total

5% 10% 15%

KCTCS, or its designate, will withhold the contribution of the participant from regular salary

payments, add its contribution, and remit the combined sum to the retirement plan carrier

selected by the participant for the purchase of retirement benefits. Retirement contributions are

made on the participant’s salary. Retirement benefits purchased with the combined participant


119

and KCTCS contributions shall become the property of individual participants immediately upon

purchase. There is no vesting period. All benefits are for the sole purpose of providing retirement

benefits, or death benefits, or both. Participants cannot access their retirement accounts until they

separate from service with KCTCS except to use their retirement account as collateral on a

403(b) loan, if allowed, from their 403(b) carrier.

An employee hired with an effective date on or after July 1, 2009 shall be subject to a vesting

schedule for employer contributions. An employee must work a total of five years (60 months) of

continuous service to be able to complete the vesting period and be eligible to receive the

employee’s accrued benefits derived from employer contributions.

In addition to other applicable limitations stated in the plan, and notwithstanding any other

provisions of the KCTCS retirement policies to the contrary, the annual compensation of each

employee taken into account under the plan shall not exceed the Omnibus Budget Reconciliation

Act of 1993 (OBRA ’93) annual maximum includable compensation limit.

The OBRA ’93 annual limit is adjusted by the Commissioner of the Internal Revenue Service for

increases in the cost of living in accordance with section 401 (a) (17) (B) of the Internal Revenue

Code. The cost-of-living adjustment in effect for a calendar year applies to any period, beginning

in such calendar year over which compensation is determined. This is the determination period.

The determination period may not exceed 12 months. If a determination period consists of fewer

than 12 months, the OBRA ’93 annual limit will be multiplied by a fraction, the numerator of

which is the number of months in the determination period, and the denominator, which is 12.

Any reference in this plan to the limitation under section 401 (a) (17) of the Code shall mean the

OBRA ’93 annual maximum includable compensation limit stated in this provision. The KCTCS

Retirement Plan Year is deemed to begin July 1 of a calendar year and end June 30 of the next

calendar year.

If compensation for any prior determination period is taken into account in determining an

employee’s benefits accruing in the current plan year, the compensation for that prior

determination period is subject to the OBRA ’93 annual limit in effect for that prior

determination period.

If by applying the above-stated percentages there would be a violation of federal or state laws, as

a result of the employee or employer contributions or both, these percentages shall not be applied

to the extent of violating applicable laws. In these cases, the amount of the employer contribution

that cannot be forwarded to a retirement plan carrier shall be paid to the employee as a temporary

salary increase for the balance of the calendar year.

120

3.7.3.2 Investments

The participant must advise the retirement plan carrier which investment options have been

chosen. If two or more options are selected with a retirement carrier, the part of the retirement

contribution that is to be allocated to each option shall be specified. A participant may change

the investment options by contacting the retirement carrier.

3.7.3.3 Termination of Contributions

Contributions on behalf of a participant in the Retirement Plan shall terminate upon cessation of

regular full-time employment or retirement.

3.7.3.4 Retirement Date

Retirement is authorized when the combination of the employee’s age and years of regular full-

time service (with a minimum of 15 years of continuous service at the time of retirement) equals

or exceeds the number 75. Regular part-time service will be counted on a pro rate basis.

Employees that are retiring must provide written notification through normal administrative

channels to their appropriate Chancellor or Vice President at least three months in advance of the

desired retirement date.

3.7.3.5 Sick Leave Conversion

Former UKCCS employees that were employed by the University of Kentucky prior to July 1,

1995, will receive a payment for unused sick leave if the accrued balance is at least 66 days. The

first 22 days will be at full pay and the remaining days will be paid at the rate of the KCTCS

retirement contribution rate which is currently 10%.

3.7.3.6 Retirement Benefits

Each participant is entitled at retirement to activate any retirement benefits that have been

accrued under the KCTCS retirement plan in accordance with the rules established by the

retirement plan carriers. In addition to lump sum or partial lump sum provisions, there will be

both annuitized and non-annuitized methods of withdrawal. There may be variances in the

retirement withdrawal options among the carriers. All retirement plan carriers do not offer the

same withdrawal options.

3.7.3.7 Periods of Service

As used in the defined contribution retirement plan, "period of service" means the number of

years of full-time employment, plus credit allowed for part-time employment, plus periods in an

approved leave of absence status. Employees can earn only one year of service per calendar year,

regardless of any extra part-time employment above the normal 37.5-hour work week within

KCTCS.

121

3.7.3.8 Contributions During a Leave

Contributions shall be made only on the actual salary the employee is paid through the KCTCS

payroll. Contributions will not be increased for partial salaries. This includes sabbatical leave.

3.7.3.9 Purchase of Service Credit

The Defined Contribution 403 (b) Plan does not have a feature that allows the purchase of

service from prior service in military, public employment, or higher education positions. This

feature is common in defined benefit plans, but is not used in a defined contribution plan.

3.7.4 Conversion of Health Insurance Upon Retirement

3.7.4.1 Defined Contribution Plan 403 (b) Plan Retirees

Employees that meet the retirement criteria will continue to receive a contribution toward the

cost of their health insurance plan. Employees under age 65 will remain on a regular health

insurance plan until age 65, while employees that retire and are eligible for Medicare will be

placed on a Medicare eligible health insurance plan.

An employee hired with an effective date on or after July 1, 2009, who retires under the

provisions of KCTCS Board of Regents Policy 3.7 is not eligible for participation in a KCTCS

sponsored retiree health plan.

Employees that retire from the Community Colleges under UK benefits at the time of retirement

will receive their health insurance credit per UK policy and participate in the UK health plans.

Any Community College employee that has retired under the UK benefits will be ineligible for

the health insurance credit available through employment under the KCTCS personnel system.

122

3.7.4.2 KTRS/KERS

Requirements for health insurance coverage in retirement are established by state statute.

Employees should contact the appropriate retirement system office for details.

9-16-98 8-15-03

Date Approved by






123

UPDATE: FACILITIES AND CAPITAL Agenda Item H-6 CONSTRUCTION STATUS REPORT December 5, 2008

KCTCS staff has prepared the semi-annual status report on capital construction projects

approved by the General Assembly. The status report is included in the separately document

titled Facilities and Capital Construction Status Report. The report also includes an update on

other KCTCS Facilities Management initiatives.

124

125

ACTION RATIFICATION OF Agenda Item H-7 PERSONNEL ACTIONS December 5, 2008

Background

Kentucky Revised Statute 164.365 gives governing boards exclusive control of employment, tenure,

and official relations of employees.

Rationale

On March 19, 1998, the Board of Regents delegated to the KCTCS President the authority to

administer personnel actions, with such actions to be presented to the Board for review and

ratification at each regularly scheduled Board meeting.

Recommendation That the KCTCS Board of Regents ratify the personnel actions listed in the agenda materials.

126

Personnel Actions Presented to the KCTCS Board of Regents

December 5, 2008

I. Individual Personnel Actions

A. Administrative Appointments

B. Retirements

C. Promotions

D. Special Leaves with pay longer than 90 days

E. Deaths

Bowling Green Technical College

Embry Gerald, Assistant Professor, 8/29/08.

Maysville Community and Technical College

Hildebrand, Christy P., Student Affairs Specialist, 10/10/08.

II. Summary Personnel Actions

A. Academic Appointments

Adult Basic Education, 1

Automotive Technology, 2

Bluegrass & Traditional Music, 1

Carpentry, 1

Counselor, 1

Developmental Mathematics, 1

Developmental Studies, 1

Diesel Technology, 1

English, 1

Geography, 1

Information Management and Design, 1

Mathematics, 2

Mining Technology, 1

Nursing, 11

Physical Therapy Assistant, 1

Practical Nursing, 1

Radiography, 1

Reading, 1

Sociology, 1

Student Support Services, 1

127

B. Administrative Appointments

Division Chair, 1

Provost, 1

C. Reappointments

Anatomy & Physiology, 1

Art, 1

Biology, 1

Chemistry, 1

Computer Information Systems, 1

Criminal Justice, 1

Culinary Arts, 1

Early Childhood Education, 1

Electrical Engineering Technology, 1

English, 3

Mathematics, 4

Medical Assistant, 1

Nursing, 3

Physics, 1

Practical Nursing, 2

Psychology, 2

Reading, 1

D. Terminal Reappointments

Music, 1

E. Leaves of Absence

F. Retirements

Administrators, 3

Faculty, 15

Staff, 16

G. Resignations

Administrators, 3

Faculty, 13

H. Non-Renewal of Appointment

Administrators, 1

Faculty, 1

128

129

UPDATE: Agenda Item H-8 HUMAN RESOURCES December 5, 2008

The attached Human Resources update provides a summary of KCTCS:

Full-time Employees by Personnel System (Attachment A).

Full-time Employees by Employment Status Category (Attachment B).

Full-time Employees Opting into the KCTCS Personnel System (Attachment C).

Full-time Employee Distribution by Pay Band (Attachment D).

130

1,214

2,149

197

416

3,720

183

396

3,720

178

384

3,881

160

363

3,870

0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000

KCTCS Personnel System UK Personnel System 151B/18A Personnel System

87.4%

00%%,, oonnllyy 66 eemmppllooyyeeeess iinn tthhee KKCCTTCCSS PPeerrssoonnnneell SSyysstteemm

Atta

ch

men

t A

KKCCTTCCSS FFuullll--ttiimmee EEmmppllooyyeeeess bbyy PPeerrssoonnnneell SSyysstteemm

11999988 BBaasseelliinnee aanndd AApprriill 11,, 22000077 tthhrroouugghh OOccttoobbeerr 11,, 22000088

3.6%

4.0%

4.1%

4.5%

9.6%

8.3%

8.6%

9.0%

64%

36.0%

88.1%

85.9%

87.4%

86.9%

October 2008

April 2008

October 2007

April 2007

July 1998

131

Full-time Employees by Employment Status Category as of October 1, 2008

Status KCTCS

Personnel System

UK Personnel

System

151B/18A

Personnel System

Faculty - Tenured 669 221

Faculty - Tenure Track 168

Term Contract 1,234 4

Continued 1,502

Continuing 250 112

Status 35 48

"At Will" 12 138

Full-time Employees Opting into the KCTCS Personnel System as of October 1, 2008

Year UK Personnel System 151B/18A Personnel System

2000-2001 93 5

2001-2002 29 3

2002-2003 455 161

2003-2004 83 130

2004-2005 412 44

2005-2006 24 8

2006-2007 16 3

2007-2008 (YTD) 7 1

Attachments B and C

132

Human Resources Initiatives

Faculty

Below

MinimumQ2

Above

Maximum

Instructor 0 252 42 33 10 5 342 47

Assistant Professor 1 254 48 29 8 5 345 44

Associate Professor 0 472 107 43 7 10 639 72

Professor 0 417 144 50 13 2 626 66

Staff

Below

MinimumQ2

Above

Maximum

1 0 23 12 11 2 2 50 10

2 2 74 23 14 8 7 128 19

3 1 9 8 4 2 3 27 8

4 0 172 51 24 11 8 266 41

5 1 51 23 10 2 1 88 13

6 3 252 55 35 5 3 353 45

7 0 175 44 21 5 7 252 32

8 3 297 75 27 11 21 434 49

9 0 135 36 30 9 9 219 40

10 0 108 40 25 12 11 196 37

11 0 61 21 22 10 4 118 23

12 0 50 31 30 7 8 126 32

13 0 8 16 21 8 2 55 21

14 0 13 13 29 11 3 69 23

15 0 2 6 12 8 0 28 13

16 0 1 1 4 1 0 7 3

17 0 0 0 1 0 0 1 1

18 0 1 0 0 0 0 1 0

Q = Quartile

BAND

MINIMUM MARKET MAXIMUM

Employee Distribution by Pay BandOctober 1, 2008

BAND

MINIMUM MARKET MAXIMUM

TOTALEmployees within

5% +/- MarketQ1 Q3 Q4

Q3 Q4TOTAL

Employees within

5% +/- MarketQ1

Atta

ch

men

t D

133

UPDATE: Agenda Item H-9

FULFILLING THE PROMISE CAMPAIGN December 5, 2008

As of November 24, 2008, the total number of gifts and pledges recorded for the Fulfilling the Promise Campaign is 23,414. A total of 1,174 volunteers have been enlisted to serve in either soliciting divisions or service divisions; and 12,681 donors have supported the campaign. The Fulfilling the Promise Campaign total is $87,549,599. Of this amount, $34,405,730 is for featured campaign objectives; and $53,143,869 is for non-featured objectives. Ten colleges and the System Office are actively involved in the campaign. The following colleges have celebrated campaign closure: Ashland Community and Technical College, Hazard Community and Technical College, Henderson Community College, Madisonville Community College, Owensboro Community and Technical College, and Somerset Community College. Bluegrass Community and Technical College’s campaign will begin in January 2009.

At the KCTCS Board of Regents meeting, information additional information will be provided.

134

Documents

H. Finance, Technology, and Human Resources Committee Meetings... · H. Finance, Technology, and Human Resources Committee ... to the meeting. Mr. Barnes is a Student Regent