We start this blog with a quiz:
Can you identify which of these pictures shows Swine engaged in a porcine Feeding Frenzy?
It was, of course, a trick question.
The correct answer is “Both”.
Five Penn State Board of Trustees members joined in a conference call on Wednesday, June 19, 2019 and approved of a plan to pay even more to PSU administrators.
You can listen in to the 4 minute conference call by clicking on the link below.
The schemes being discussed, and approved (with no discussion or dissent), in this Board of Trustees Committee Conference Call are the creation of:
401(a) Plans – commonly know as “Money Purchase Plans”….. which allow for an additional amount, up to $55,000 each year for each person, to be added into a tax-deferred account for highly-compensated employees.
415(m) Plans – commonly known as “Excess Benefit Plans”…. which are a bit more convoluted – but allow for funds to be given (tax-free) to the employees of a distinct class, until the amount given would produce a $225,000 annual benefit ($225,000 every year for the rest of their life).
Why are these plans being created?
Good question…. and here is the answer:
The Internal Revenue Service, through IRS Code 415, creates limits as to how much $$$ can be given to employees (and how much $$$ employees set aside from their own paycheck) into tax-deferred retirement plans.
These IRS rules are why you can only put so much money into your 401(k)s and other retirement plans.
Section 415 (m) plans, also known as Excess Compensation plans, like the ones approved by the PSU Board – allow Penn State to work around those IRS rules, and to put aside even more $$$ – a LOT more $$$ – into tax-deferred retirement accounts for specific highly-compensated employees.
That means more $$$$ for folks like Penn State President Eric Barron, and the dozens of Administrative executives like Nick Jones, Damon Sims, David Gray, Steve Dunham, Sandy Barbour, etc.
These are NOT like the typical retirement plans established for “rank-and-file” employees.
In order to work around the IRS regulations – and pay these huge additional $$$s to select employees – an organization, like Penn State, must first segregate a specific group as belonging to a “Distinct and Separate Class” of employees.
This is one of the reasons, as I alluded to in my earlier Blog wrt Sandy Barbour’s grotesque new contract, that her title was changed from “Athletic Director” to “Vice President, Athletics”.
“A 415(m) excess benefit plan must be offered to all employees whose contributions would otherwise be limited by IRC Section 415. the 415(m) component is considered nonqualified deferred compensation and the contributions basically sit on top of a supplemental executive retirement plan.
Although the plans are generally offered to all employees, they are often intended primarily as a supplemental plan for highly compensated employees who wish to defer compensation or for whom the employer wants to make contributions in addition to the amount that Sections 402(g) and 415(c) permits to be contributed to 403(b) or 401(k) plans.“
Hey, you’d be laughing too.
You would be very happy if –
in addition to being the most highly-paid public University President in the nation, or the most highly-paid public University Athletic Director in the nation (excuse me, Vice President of Athletics), or any of the dozens of grotesquely compensated University Administrators –
you were now going to have an even bigger dollop of slop placed into your trough.
When the Trustees on the Penn State Board approve – unanimously, and without discussion or dissent – of these grotesque expenditures….. while Penn State students pay the highest in-state tuition fees in the nation:
Do they even understand what they are approving?
Doubtful that any but a small minority even know what they are doing, or why they are doing it.
How do they manage to maintain their look of concern and “sincerity” when they stammer on about keeping costs under control?
It must help if you are a completely disengaged, self-absorbed scoundrel.
A PARTIAL list of Penn State’s Vice Presidents – only the Vice Presidents who are part of Barron’s “President’s Council” – are listed below.
These are the same folks who tell us – on a regular basis, and with the utmost sincerity – that they are doing everything possible to reduce costs and provide affordable tuition and a quality education to the Sons and Daughters of Pennsylvania:
Eric Barron, President
Nick Jones, Executive Vice President
Sandy Barbour, Vice President for Intercollegiate Athletics
Kathleen Bieschke, Vice Provost for Faculty Affairs
O. Richard Bundy III, Vice President for Development Relations
Stephen Dunham, Vice President and General Counsel
Lorraine Goffe, Vice President for Human Resources
David Gray, Senior Vice President for Finance and Business/Treasurer
Frank Guadagnino, Vice President for Administration
Madlyn Hanes, Vice President for Commonwealth Campuses
Craig Hillemeier, Senior Vice President for Health Affairs
Tracey Huston, Vice President for Outreach
Michael Kubit, Vice President for Information Technology
Lawrence Lokman, Vice President for Strategic Communications
Zachery Moore, Vice President for Government Relations
Robert Pangborn, Vice President for Undergraduate Education
Neil Sharkey, Vice President for Research
Damon Sims, Vice President for Student Affairs
Marcus Whitehurst, Vice Provost for Educational Equity