Cuts, layoffs loom as U. of Kentucky faces $70M shortfall
The University of Kentucky faces layoffs, furloughs and instructional cuts as the flagship school contends with a $70 million budget shortfall resulting from declines in enrollment and short-term investments.
Calling challenges caused by the coronavirus outbreak more daunting than any the institution has faced in decades, President Eli Capilouto told the campus that the university has begun laying off employees and furloughing others for up to 90 days, and canceling merit raises after seven years of salary increases.
“Many of these decisions will cause pain. They will require shared sacrifice,” Capilouto said in the campus message. “But they are necessary if we are to meet our financial obligations, honor our principles of education, research, service and healthcare, and lay a foundation for the future.”
The shortfall is also a result of ongoing financial commitments, such as scholarships, health premiums for employees, and a commitment to raise starting wages for workers to $12.50 an hour, Capilouto said.
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Other measures the university is taking include:
- Continuing a hiring pause that was announced several weeks ago.
- Reducing for one year the university’s retirement contributions to individual employees from 10% of the employee’s salary or wages to 5%.
- Delaying expansion of a planned family leave policy.
- Delaying plans to make participation in the university’s retirement program mandatory for certain new employees.
- Moving forward with shared services for several key areas and exploring additional areas in the coming months.
“We will be challenged and tried in ways most of us have never experienced,” Capilouto said. “We will get through this. We will be innovative and resourceful. We will find new ways and create new approaches to meet daunting challenges.”
College furloughs and layoffs elsewhere
Of course, the University of Kentucky is not alone. Leaders of the University of Missouri System announced in a message to campus that the state will withhold $17 million in funding for the fiscal year that ends June 30, and the outlook for the next year is unclear.
Leaders of every university division, college and school are now developing plans to cover the $17 million shortfall and to cut spending by 12.5% for fiscal year 2021.
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The university has already restricted spending and hiring and eliminated raises while many university leaders have taken voluntary pay reductions.
Layoffs, furloughs and reorganizations are likely to follow in the coming weeks and months, the leaders said in a statement.
The University of Arizona, anticipating a $66 million loss, has also announced a system of furloughs and salary cuts that requires more highly paid employees to spend more time away from the school, the student newspaper, The Daily Wildcat, reported.
For example, employees making up to $44,449 a year will be furloughed for 13 days between May 11, 2020, and June 30, 2021.
Employees earning between $75,001 and $150,000 a year will be furloughed for a total of 39 days. Employees making $150,001 to $199,999 a year will have their salaries reduced by 17%, according to The Daily Wildcat.
“Because we are only a month into this crisis, we cannot know the full extent of its effects, but our most credible shortfall projections exceed $250 million,” President Robert C. Robbins said in an email to campus, according to the newspaper.
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The Nevada System of Higher Education earlier this month cut spending by $124.7 million over the next two years and has used $60 million in CARES Act funding to cover budget gaps.
In making the cuts, system leaders tried to avoid layoffs and reduce the impacts on low-income students.
The system’s academic and administrative faculty will also see furloughs and salary reductions, the system says.
UB’s coronavirus page offers complete coverage of the impacts on higher ed.