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Dear Steve,
Thank you for your letter. You raise a number of important issues, each of which merits a thoughtful response. Let me try to address them by first describing the process we use at MIT for considering changes in benefits policy. By the way, most of what I know about this topic dates from my days as faculty chair.
There exists a little known committee at MIT that is formally described as the Strategic Review of Benefits Committee. For years it was chaired by Bill Dickson. I assume that John Curry will chair it in the future. Other members of this committee include the Chair of the Faculty, the Chair of the Committee on Faculty Administration, the Deans of at least two schools (during my term as Faculty Chair they included Engineering and Science), the Vice President for Human Resources, the Director of Benefits, and the personnel director for Lincoln Labs. The SRB as it is known, meets a few times a year (or more if necessary) to review our benefits policy. Many things can motivate a review of our benefits package: changes in federal law or government reimbursement policy, changes in the labor market, changes in the preferences of members of our community, the budget, etc.
The SRB does not act with power. Rather, it reviews the benefits package and makes recommendations to the President and the Executive Committee of the Corporation. As a practical matter, no major change in benefits is considered without discussion at Academic Council. In addition, it is common for the Committee on Faculty Administration to also discuss (or even initiate) changes in the benefits package. Major changes also tend to get discussed in other forums. For example, Roy Welsch during his term as chair of the Committee on Faculty Administration raised the question why the pension plan offers members so few investment options. (Members of the plan can only elect to invest in the fixed or variable fund. By contrast, most institutions are now offering a host of investment options through third party managers.) This action by the CFA has prompted consideration of outsourcing the management of the plan to a private firm in order to be able to offer investment choice comparable to that available at many of our peer institutions. No decision has yet been made on this issue, although it has been presented for discussion at the Faculty Policy Committee. In addition, presentations of the alternatives are being made to each of the School Councils, to departments, and to other faculty groups [see From The Faculty Chair]. My point in describing this process is to give you some sense that decisions about benefits are not made arbitrarily or without faculty input. To the contrary, the faculty members of the SRB as well as the Deans play a very important role in helping to shape benefits policy. The Deans are especially sensitive to the recruiting and retention issues that you describe in your letter.
How is it that this group decided to recommend a change in the policy governing partial reimbursement for graduate student tuition for children of MIT employees? A review of this benefit revealed that it was used relatively sparingly. Moreover, because the vast majority of graduate students at MIT are funded through traditional graduate student awards, providing a benefit for children of employees turned out to be more of a benefit to departments rather than to the employee. In effect, the graduate children's scholarship benefit typically offset another graduate student award. In those cases where it did not, students were enrolling disproportionately in professional degree programs such as Sloan where we typically assume that students finance their own graduate education without parental support. In short, this benefit did not seem to help much in either recruitment or retention of faculty.
Ironically, the change in the graduate student tuition program was also motivated by a desire to redress a problem that arose through grandfathering of people under the old children's scholarship program. Prior to 1978, all MIT employees could send their children to MIT tuition-free. In 1978, the policy was changed to restrict this benefit to children of tenured faculty and those employees hired before 1978. This grandfathering has produced a number of inequities with people hired just a few months apart enjoying vastly different benefits. Two people may literally work in the same lab together for over twenty years, but if one had the good fortune to be hired before 1978, their kids would go to MIT tuition-free while the other did not.
This situation illustrates one problem with grandfathering - it creates two classes of employees, and in the process, often breeds resentment. The SRB wanted to address this problem, so it eliminated the partial graduate tuition benefit to pay for extending the free MIT tuition benefit to all employees. I think there is one other consequence to grandfathering that we should acknowledge. If we formally adopt a policy of grandfathering for all benefits, not only do we create the kinds of problems noted above, but we also may make the institution reluctant to experiment with certain types of benefits. If we routinely grandfather as a matter of policy, then benefits become a ratchet function. This may make future administrators hesitant to extend new benefits if they believe these benefits can never be modified regardless of the circumstances. Grandfathering for everything also makes benefits administration cumbersome.
Before turning to the issue of trust, let me comment specifically about the future of the children's scholarship program. In my mind, this program differs substantially from the graduate scholarship program that only applied to offspring who did graduate work at MIT. Many of us have kids, and I would venture that almost all the children of faculty and the vast majority of children of staff will go to college. Moreover, most of these kids will look to their families for financial support through the college years, and colleges and universities will expect families to provide this support. Most people begin saving for this expenditure when their kids are quite small. For those of us fortunate to work at MIT, the children's scholarship program strongly influences our planning for this expenditure. In contrast to the graduate tuition program, it is a very important benefit for both recruiting and retention. We all count that it will be there when we need it.
In addition, it is worth noting that the Institute has continued to support the children's scholarship program even though the federal government recently moved to disallow this expenditure in our indirect cost recovery. In effect, this action substantially raised the cost of the program to the Institute by the amount of the overhead rate. Notwithstanding this vastly increased cost, the program was not touched. For these reasons, I cannot foresee the circumstances under which the Institute would materially change this benefit. Does this mean that it will exist in perpetuity? I cannot say this with certainty any more than I can tell you that any other MIT policy will never change. However, I can say that those of us with responsibility for such decisions completely understand and appreciate the degree to which faculty have relied upon the existence of this benefit in their own financial planning. As someone with kids who have yet to go to college, I don't worry about whether the children's scholarship program will be there when I need it.
Trust is essential to the future of MIT. One reason that MIT is a special place is that historically we have not drawn sharp distinctions between faculty and administration. During most of my 22 years as a faculty member, I have felt that the administration's interests were reasonably well aligned with my own. To be sure, there were occasional events that turned out hundreds of faculty members at a faculty meeting (myself included) but fortunately these have been exceptional, not routine occurrences. Candidly, reengineering also strained the relationship between faculty and administration. When Chuck asked me to join the ranks of the senior administration, I did so in part because I thought I could contribute to improved communication that is so essential to preservation and restoration of trust. I know that Chuck and Bob Brown also deeply value the special relationship that has existed between faculty and the administration. We all are committed to preserving and enhancing this relationship.
Thanks again for writing. I hope I have shed some light on some of the issues you have raised. If I have not, please let me know. In the spirit of better communication, let's continue the conversation.
Best regards,
Larry
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