Trustees approve bond refinancing
September 25, 2013
The Ball State Board of Trustees today approved a proposal that will allow the university to issue about $39 million in bonds to finance construction of the Central Campus Academic and Utility Project, Phase II; complete the Geothermal Conversion Project, and include the refinancing of existing Student Fee Bonds that would save taxpayers about $1 million.
“This refinancing helps us achieve two key objectives: provide a quality environment for our students and continue our tradition of good fiscal stewardship,” said Randy Howard, vice president for business affairs and treasurer.
Trustees also approved issuance of housing and dining system revenue bonds to finance the expansion and renovation of Johnson A residence hall. The renovation of Johnson A is the latest step in a comprehensive plan to renovate or rebuild Ball State’s residence halls. Howard said the bond sale would not exceed $35.7 million plus expenses related to the construction, such as financing costs, insurance and other incidentals.
The board also approved a proposal to delegate authority to the president or vice president for business affairs, or their designees, to develop procedures for strategic purchases of goods and services that don’t lend themselves to traditional procurement practices. Some of these include energy-saving purchases, commercialization activities and international commerce. The goal is to give the university greater agility for strategic purchases that benefit the institution.
Trustees also discussed a proposal to award a new contract for all of the university’s ancillary benefits to a single vendor. These ancillary benefits include life insurance for active and retired employees, accidental death and dismemberment, long-term disability, short-term disability and voluntary life insurance. By aligning the terms of these contracts and bidding them out together, the university would be able to generate significant savings for both the university and its employees.
Awarding the contract to The Hartford, which offered the best overall package of rates and services, would reduce ancillary benefits costs by nearly $950,000 per year. These savings would be shared between employees and the university in the form of reduced premiums (the university pays 75 percent of the premium and the employees pay 25 percent, except for voluntary benefits).
Howard also presented some results of the Employee Benefits Survey and Peer Benchmarking study conducted earlier this year. The survey showed that Ball State employees place the highest value on health coverage and wanted to keep their health insurance premiums as low as possible. Retiree life insurance was one of the least valued benefits, and a comparison with peer institutions showed that most universities no longer offer this benefit.
Informed in part by these results, the university proposed to phase out retiree life insurance over almost a 17-year period for active full-time,benefits-eligible employees who retire after June 30, 2015. The delay is intended to give these employees time to evaluate the changes and make important decisions. Current retirees, and eligible employees retiring before July 1, 2015, would retain the current retiree life insurance benefit (which has a maximum value of $37,500), with only a slight increase in monthly premiums, from $2 to $4. Retirees have not seen a change in premiums since 1985, Howard noted. Full-time, benefits-eligible employees retiring between July 1, 2015 and July 1, 2030 would see a reduced benefit that starts at $28,000 then changes at five year intervals to $19,000, $10,000, and finally no benefit for those retiring after June 30, 2030.
The university would reinvest a portion of its share of the savings from these initiatives by reducing the health insurance premiums paid by active employees by $108 per year. This move would shift an additional $108 from the employee share of the premium to the university share of the premium.
“We want to put the majority of these savings into health care premium savings,” Howard said. “In short, we are being good stewards of our limited resources and reallocating a portion of them to benefits that our employees want. These decisions help us attract and retain employees, balance the budget, and protect those benefits that our employees value the most.”
The combination of small actions like this $108 savings, reduced ancillary benefits premiums for employees (that could range from $30 to $300 per year), the $30 reduction in parking permits and the $60 health care rebate that previously has been approved by the board, add up to significant savings for employees.
In addition to the reduced health insurance premium, a portion of the savings also would be reinvested to increase the maximum employee life insurance benefit from $75,000 to $125,000. Howard said that while most employers do not offer retiree life insurance, they were offering larger amounts of life insurance for active employees.
Finally, although not contractually obligated to do so, the university has proposed passing on some of the savings in the form of a one-time cash payment to current benefits-eligible employees who are still at the university in January of 2016. The exact amount would depend on an employee’s years of service and would range from $175 to as high as $2,025.
In other business, the board discussed proposed changes to the university’s 2014 health care plan, including proposed premium rates and a continued focus on employee wellness initiatives. On average, active employees would see only a 2.6 percent increase in their premium after the $108 savings even though most national surveys were suggesting employee premiums would increase from 6 percent to 10 percent.