Revisiting VERIP ten years later
Responding to state budget troubles a decade ago, the university launched a radical early retirement program that aimed to cut costs while maintaining educational quality

By D. Lyn Hunter, Public Affairs

24 October 2001 | When California was suffering from a severe budget crunch in the early 1990s, UC launched the Voluntary Early Retirement Incentive Program — trimming more than 10,000 staff and 2,000 tenured faculty from the university’s payroll — as a way to cut costs.

Fast forward 10 years, as the state again finds itself in dire financial straits and the university is once more looking to reduce costs. Could the university roll out another early retirement package now?

The jury is out on that issue, UC officials say.

“The key difference between now and 10 years ago is Tidal Wave II,” said UC spokesman Paul Schwartz. “We’re going to need 7,000 new faculty over the next several years to accommodate the anticipated growth in our student body.”

Enrollment was fairly level when the early retirement program, known as VERIP, was initiated in 1991 (with subsequent programs in 1992 and 1993), making it a more viable response to economic constraints, he said. But today’s projected enrollment growth makes addressing budget cuts more challenging.

“Given the state’s current and projected near-term economic picture, we will need to consider a range of options to successfully navigate this budgetary downturn,” said Schwartz. “It’s still too early to know exactly what steps will be required.”

Whether or not early retirement is reinstituted, the university has proven it can weather a dramatic cut in staff and faculty.

The three VERIPs — which offered eligible employees pension-boosting incentives to retire early — were considered very successful by many, allowing campuses to maintain academic integrity while tightening their financial belts.

“It was a brilliant way for us to meet the budget cuts,” said Carol Christ, who was provost of Berkeley’s College of Letters and Science during that time. “The campus was able to shift the expense of a large portion of highly paid faculty to a fully funded retirement system, then rehire them through recall at a much cheaper price, and continue recruiting the best faculty.”

In addition to faculty recalls, the campus used temporary instructors and departments restructured their course offerings to match available teachers and meet core curriculum needs, she said.

Berkeley lost nearly 28 percent of its faculty through VERIP, but the losses were gradually replaced in ensuing years, said Christ. The faculty has now grown to almost 90 percent of its pre-VERIP size.

Staff cuts, on the other hand, were not as successful, she said. While nearly 10 percent of Berkeley staff retired early, the work was not properly restructured.

“In our efforts to protect the academic program, efforts that I still think were right,” Christ said, “we didn’t think hard enough about the adequacy of support or the allocation of staff resources.”

Ten years ago, the use of early retirement programs was virtually unheard of at large research universities, said Ellen Switkes, UC’s assistant vice president for academic advancement. It was considered a radical move, but the weakening state budget left few alternatives.

The challenge was to provide enough incentive to reduce the workforce, she said, but not so substantial as to damage the university’s academic programs.

“There wasn’t a lot of good information available, and we had no prior experience to go by,” said Switkes. “But what happened was very close to what was needed…we were able to reduce our payroll to meet budget requirements and maintain educational quality without lay-offs or terminations.”

Beyond that, she said, VERIP provided a unique opportunity for campuses to consider major organizational changes in academic programs.

“The positions that were vacated have been filled with new faculty with fresh perspectives in emerging areas,” said Switkes. “The quality of UC’s academic programs today seems to be as high or higher than it was at the beginning of the 1990s.”