Auditors question University of Iowa retirements savings

Report also highlights appearance of conflict of interest

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IOWA CITY — When the University of Iowa reported results of its early-retirement incentive program a year ago, it estimated savings of $5.9 million in the first year and $27.5 million over five years.

In a newly released report, the UI’s own auditors wonder if those estimates were right.

Internal auditors said the accuracy is difficult to confirm because the UI did not establish procedures for monitoring the affected positions and employees over time. In fact, according to an April audit made public this week, the lack of monitoring increases the risk that projected savings won’t come true.

The Board of Regents approved the UI retirement program last year after then-UI President Sally Mason said it could help her institution avoid layoffs in the face of a regent initiative to improve efficiency at its three public universities.

About 1,400 employees qualified for the program, which required participants to be at least 57 years old and have 10 years of continuous regular benefit-eligible employment with the university. Eligible employees had a month in 2015 to apply for the incentive, which offered medical and dental coverage for five years, payment of retirement contributions for three and an additional employer contribution for another two.

The program limited “re-employment” at the UI for participants to 320 hours in five years — or one class a semester for faculty members. But after five years, any retired employee could compete for an open position.

Of the 1,400 employees eligible for the 2015 program, 360 applied and 184 applications were approved and accepted, according to the audit.

In assessing the cost savings, auditors took issue with the temporary re-employment of some of the employees. Re-employment was supposed to be approved by a vice president or dean, according to the program, but auditors found that didn’t happen.

“A judgment sample of 15 employees was selected from 27 identified with re-employment transactions,” according to the audit. “None of the 15 appointment forms were approved by the dean or the vice president.”

Additionally, the audit found one participant received payment of $1,170 as an independent contractor. That employee’s rate of pay was $30 an hour before retirement — but $90 an hour afterward as a contractor.

The savings projections did not consistently include the expense of the temporary reappointments. In fact, seven of a sampling of 15 cases did not incorporate that expense in savings projections “although the re-employment was clearly anticipated.”

And auditors noted the appearance of a conflict of interest in the program’s creation.

Susan Buckley, former vice president for human resources, and Richard Saunders, former assistant vice president for human resources, developed the incentive program, in which they later both participated.

Buckley, according to the audit, provided final review and approval for all applications. She was the highest-paid employee to take the incentive, with a salary of $242,227.

“Management should develop a plan of action to avoid the appearance of a conflict of interest in the event early retirement incentive programs are offered in the future,” the audit said.

UI officials, according to the audit, responded to the concerns by committing to address them if there are early retirement incentives again.

During their meeting next week, the Board of Regents is scheduled to consider an early-retirement incentive for its own office.

If approved, board employees at least 57 years old with 10 years of continuous employment may apply between Sept. 12 and 16. Those approved would have to fully retire by Dec. 31.

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