Contacts are underway to develop a government assistance plan to help the Hebrew University of Jerusalem, which has been weighed down financially by defined-benefit pension obligations of 12.6 billion shekels ($3.2 billion). These are expenses that are paid directly out of the university’s coffers, without any employee contribution. The university has made the shift with newer employees to simply contribute to pension funds to which the employees also contribute.
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The Finance Ministry and the Planning and Budgeting Committee of the Council for Higher Education have undertaken discussions to settle the university’s obligation by providing government funding for a portion of the amount that in practice would have it fund pension payments to faculty on a regular basis in the coming decades. It would come in return for agreement by Hebrew University faculty to less advantageous retirement terms than what they currently get, which are considered particularly generous. For its part, the university would be required to sell off some of its assets. The university has a range of property holdings around the country, some beyond the confines of its campuses.
The Finance Ministry and the Planning and Budgeting Committee acknowledged working in recent months to develop solutions to the university’s financial situation, saying: “At this stage various options are being examined and when a final plan is developed, we will advise accordingly.” The university is expected to finish this year with an annual deficit of about 20 million shekels after wrapping up 2013 with a balanced budget. This year, the university had to spend 655 million shekels – a quarter of its budget – on pension payments. As a first step, the university would be required to raise between 750 million shekels and 1.5 billion shekels. The university has commissioned the services of an appraiser to assess the value of major holdings that it has in Jerusalem, including dormitories, apparently in advance of their possible sale or transfer to a new pension fund that would be established as part of the plan and would be responsible for actual payment of the defined-benefit pension payments.