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Major Cost-Cutting Begins in Response to Covid-19, With Faculty and Staff Furloughs and Pay Cuts

The long-term economic impact of the pandemic is uncertain. But colleges are taking steps now to offset deep revenue losses.

By  Eric Kelderman
April 18, 2020

Weeks after colleges across the country shut down campuses in response to the spread of the novel coronavirus, there is little to indicate that anything approaching normal will happen on most campuses through the summer and possibly into the fall.

Coronavirus seen under electron microscope
Coronavirus Hits Campus
As colleges and universities have struggled to devise policies to respond to the quickly evolving situation, here are links to The Chronicle’s key coverage of how this worldwide health crisis is affecting campuses.
  • Here’s Our List of Colleges’ Reopening Models
  • Students’ Trust in Their Colleges Held Steady During Covid’s Early Days, Study Finds
  • As More Stressed-Out Students Consider Dropping Out, Surgeon General Pushes College Leaders to Ramp Up Support

The only certainty is that the disruptions caused by the pandemic will lead to budget shortfalls and cost-cutting at institutions of all types, probably for many months to come.

The institution taking the broadest steps, so far, is the University of Arizona, which is projecting a $250-million loss in revenue because of the coronavirus, including $66 million by the end of its fiscal year, on June 30. Arizona announced on Friday that it would offset revenue losses with furloughs or direct pay cuts for nearly all employees until the summer of 2021.

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Weeks after colleges across the country shut down campuses in response to the spread of the novel coronavirus, there is little to indicate that anything approaching normal will happen on most campuses through the summer and possibly into the fall.

Coronavirus seen under electron microscope
Coronavirus Hits Campus
As colleges and universities have struggled to devise policies to respond to the quickly evolving situation, here are links to The Chronicle’s key coverage of how this worldwide health crisis is affecting campuses.
  • Here’s Our List of Colleges’ Reopening Models
  • Why This Fall’s Campus Housing Shortages Could Be Different
  • Questions Linger After Another Million-Dollar Payout for a College President’s Exit

The only certainty is that the disruptions caused by the pandemic will lead to budget shortfalls and cost-cutting at institutions of all types, probably for many months to come.

The institution taking the broadest steps, so far, is the University of Arizona, which is projecting a $250-million loss in revenue because of the coronavirus, including $66 million by the end of its fiscal year, on June 30. Arizona announced on Friday that it would offset revenue losses with furloughs or direct pay cuts for nearly all employees until the summer of 2021.

Robert C. Robbins, Arizona’s president, said the decision to cut pay was a difficult one but would keep employees working during the crisis. “We could do this now or we could fire a bunch of people,” he said. “Nobody wants to fire a bunch of people.”

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Taking major steps now is also meant to provide some certainty rather than a piecemeal approach that keeps everyone guessing what could happen next, he said. The furlough plan is based on the assumption that campus will open in the fall. If that doesn’t happen, Robbins said, then cost-cutting would have to go further.

From May 11, 2020, to June 30, 2021, staff and faculty members who earn up to $150,000 a year must reduce their work hours each pay period. Employees who earn up to $44,499, for example, must each reduce their work time by a total of 13 days over that period — the equivalent of a 5-percent pay cut. Those amounts double and triple for employees at higher pay levels.

Those who earn more than $150,000 annually at Arizona will see a 17-percent pay cut, and that increases to 20 percent for employees who are paid more than $200,000 a year.

The economic effects of the pandemic are expected to take a deep toll at many private colleges that depend heavily on tuition revenue. Valparaiso University, a private, faith-based institution in Indiana that enrolls about 4,500 students, was already facing financial troubles and made cuts in its music program and dropped the men’s soccer and tennis teams in November. This week Valparaiso announced furloughs for nearly 200 full- and part-time employees and pay cuts for many others through the end of July. The president, Mark Heckler, has taken a voluntary 30-percent pay cut, according to news reports.

But Arizona’s actions show that even top-flight flagships are at risk. The University of Arizona is the state’s land-grant institution and a member of the prestigious Association of American Universities.

In recent weeks, other university systems and individual colleges have taken similar steps or announced plans to consider them. The University of Wisconsin system office announced that its nearly 600 employees would be furloughed one day a month until June 2021, according to a report by the Wisconsin State Journal. The system’s individual campuses will each decide whether to furlough their own employees, the report said.

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In Vermont, where higher education has struggled for years with declining enrollment, the chancellor of the state-college system has announced a plan to close three campuses and lay off some 500 employees, according to a report by the nonprofit news site VTDigger. Trustees later said they would postpone their decision by at least a week after pushback from the public and state lawmakers.

Update (April 20, 2020, 10:55 a.m.): Updated (4/20/2020, 10:55 a.m.) with news that the Vermont state-college system has postponed its vote and (4/19/2020, 2:10 p.m.) with comments from the president of the University of Arizona.
We welcome your thoughts and questions about this article. Please email the editors or submit a letter for publication.
Eric Kelderman
Eric Kelderman covers issues of power, politics, and purse strings in higher education. You can email him at eric.kelderman@chronicle.com, or find him on Twitter @etkeld.
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