12/8/98

CONTACT: James Robinson, News Service (650) 723-5675;

e-mail jamesrob@stanford.edu

Stanford to alter tuition benefits for employees

Responding to changing regulations that will reduce federal funding, Stanford is moving toward reducing the tuition benefit it provides to children of university employees, although current faculty and staff will not be affected, a committee told the Faculty Senate on Dec. 3. At the same time, staff will enjoy a new benefit to defray the cost of their own education.

Current employees will continue to receive a maximum annual tuition benefit for their children equivalent to half the cost of Stanford's tuition. But for employees hired after Sept. 1, 1999, the benefit will drop to a maximum of $4,000 a year.

A new program, the Staff Tuition Reimbursement Program, will give employees an annual benefit of up to $2,000 in tuition to pursue an undergraduate or graduate degree at an accredited institution while they work at Stanford. The staff tuition benefit will begin Sept. 1, 1999; employees must work at Stanford six months before they qualify for it.

The current Staff Tuition Assistance Program, which reimburses employees for continuing education courses, will not be affected by the new program.

The changes were outlined last week at a meeting of the Faculty Senate by Jim Franklin, associate vice president of total compensation; Alan Garber, professor of medicine and current chairman of the senate's Faculty and Staff Benefits Committee; and Robert Flanagan, associate dean of the Graduate School of Business and 1997-98 chairman of the committee.

Franklin said the reduction in the tuition program for children was made necessary by changes in federal regulations that will mean a loss to Stanford of $1.8 million a year in federal money it was using for the program. In fiscal year 1998 the total program cost was $5.4 million.

While the program in fiscal year 1998 allowed children of faculty and staff to receive as much as $10,650 for tuition, the average annual benefit that year was $6,816, with 786 students using the program, Franklin said.

The $4,000 limit is expected to rise over time to take inflation into account, Franklin said. The entire program will be reviewed in five years.

The committee analyzed a number of issues as it considered changes to the tuition program. It could not conclude that reducing Stanford's benefit would harm the university's ability to recruit faculty because other universities offer a variety of programs, many of which are less generous. Those programs are also expected to change as a result of the new federal regulations.

Provost Condoleezza Rice said she doubted recruitment would be hampered by the reduction in the tuition benefit or that salaries would have to increase to make up for the lowered benefit.

"It's variable when you're recruiting somebody as to whether this benefit comes into play at all," she said, noting that only 7.5 percent of those eligible faculty and staff use the benefit in a given year and that only 35 percent of university employees are even eligible to use it.

Of the Stanford employees who benefited from the child tuition program in fiscal year 1998, 30 percent were faculty and senior staff; 34 percent were exempt staff; 31 percent were non-exempt staff and bargaining unit; and 5 percent were retirees.

Franklin said the cost of the overhauled program ‚ tuition for children as well as staff ‚ will, in the near term, be greater than the cost of the current program because of the large number of employees "grandfathered" under the program's existing terms. Over the long term, however, the cost will decrease because of the reduction in benefits.

Asked about the expected demand for the program that will pay tuition for university staff furthering their education, Flanagan said that based on other Bay Area employees' use of similar programs he doubted the cost would be high.

Rice said the benefit could be especially useful for the information technology area, where there are many young employees for whom "the child tuition benefit has absolutely no appeal. We had to do something to broaden the capacity to attract people."

Engineering Professor Jeffrey Koseff said he was concerned the reduction of the tuition benefit for children would make attracting new faculty even more difficult than it already is because of the high housing costs in the area.

"This is one benefit that certainly removed a pressure, to a degree, from that enormous budgetary issue that they have to face when they come," he said.

Rice agreed that housing poses a serious problem, but she said it would exist whether or not the tuition benefit remained the same.

"The fact is, the housing market that we find ourselves in is one in which people are not actually, I think, able to make the kind of calculation that you're talking about, that is, what they're going to have to put aside for college. They're facing a problem of the absolute difficulty ‚ absolute impossibility, in some cases ‚ of getting into this housing market," she said.

Koseff also underscored the importance of increasing the lowered tuition benefit to take inflation into account.

"That really is very important, because $4,000 five or six years from now just doesn't look quite as attractive," he said.

-30-

By James Robinson