University of Kentucky President Eli Capilouto has refused a faculty group's request to end a little-known perk for administrators that has cost about $1.5 million since 2006.
Capilouto did pledge Monday to stop the extra retirement benefit for future administrators, but that concession did not placate rank-and-file workers worried about layoffs and other budget cuts.
Under the policy, which has been around since the 1970s, UK pays the equivalent of 15 percent of administrators' salaries directly into their retirement accounts. For everyone else, UK matches an employee's 5 percent retirement contribution with a 10 percent allocation.
In the 2011-2012 school year, the perk was given to 21 administrators at a total cost of $296,134. Recipients included Capilouto, Interim Provost Tim Tracy and the vice presidents of finance, health care, facilities, commercialization and diversity, according to documents obtained by the Lexington Herald-Leader using the Open Records Act.
The University Senate asked President Capilouto to end the practice in a letter two weeks ago that included a series of recommendations to help ameliorate two rounds of budget cuts. The recommendations included pay cuts for top administrators, which Capilouto rejected.
During a lengthy meeting with faculty on Monday, Capilouto said the extra retirement benefit would not be offered to future administrators. For example, new General Counsel Bill Thro, who started in October, will not get the perk.
UK spokesman Jay Blanton said Capilouto decided against cutting the benefit for present recipients because "he also believes strongly he shouldn't go back on incentives that were promised in the past."
University Senate Council chairwoman Lee Blonder said she was glad the president discontinued the practice for future administrators.
"But he does have the authority to eliminate it for everyone, and that could save lecturer and staff positions," Blonder said. "I speak for many of us who feel this perk should not be afforded to anyone."
The University Senate found out about the perk only a couple of years ago, said Senator Connie Wood, a statistics professor.
"It was not widely known this policy was in effect, and I'm glad he's making strides to minimize its effects on the budget," she said.
UK laid off 140 employees and eliminated dozens of other vacant positions in June because of financial pressures caused by declining state support, officials said. A second round of budget cuts is expected soon.
The retirement benefit is spelled out in administrative regulations, said T. Lynn Williamson, UK's associate general counsel.
"The basic concept is that you're trying to attract and retain senior level administrators, so it was put in there for that reason," Williamson said.
Williamson said the policy has changed over the years, but in the past, the benefit has been offered mostly to vice presidents.
Its costs have grown over the years. In 2006, the benefit was given to 16 people, including President Lee T. Todd Jr., at a cost of about $200,000.
For top earners, it can mean a sizeable amount of extra money in retirement accounts. For example, UK HealthCare Executive Vice President Michael Karpf received an extra $39,428 for his retirement account in 2011-12. That money was in addition to his annual salary of $792,451.