University faces $166 million deficit, extends employee furloughs and pay cuts

The University of Minnesota is extending pay reductions and furloughs into June 2021, due to an expected budget shortfall of around $166 million.

University faces $166 million deficit, extends employee furloughs and pay cuts

Hailee Schievelbein

Hana Ikramuddin and Izzy Teitelbaum

The University of Minnesota is extending pay reductions and furloughs into June 2021, due to an expected budget shortfall of around $166 million.

The Systemwide Furlough and Pay Reduction Program, which was created during the summer, is expected to save the University over $45 million. The plan will continue to impact pay and hours for employees earning over $60,000 a year, with higher paid employees seeing larger cuts.

“We truly did consider the financial impact of these decisions on our employees. These are significant actions that do impact employees personally and in their work. And we took that to heart as we discussed these measures,” said Interim Vice President for Human Resources Ken Horstman at the Dec. 10 Board of Regents meeting.

The Finance and Operations Planning Work Group was tasked in April with generating saving options for the University in response to the pandemic, serving as an advisory group to the University’s administration.

The University implemented several measures to cut costs throughout the pandemic, including a hiring freeze, which is estimated to decrease hiring by roughly 36%, and a Retirement Incentive Offer, which gave employees benefits for retiring by Jan. 15.

“I do want to acknowledge that when we talk about the words and the terminology, that it does equal real people and real lives. So, when we’re thinking of all the salaries that we are saving, it does impact people,” Regent Ilean Her said at the board meeting.

Oliver Williams, a faculty senator and professor of social work at the University, said he is willing to undergo the ongoing pay cut, because it helps the University manage the impacts of the pandemic. Williams also voted to approve Gabel’s temporary pay cut plan at the June University Senate meeting.

“It’s a way to be able to deal with the challenges of the pandemic and how universities are taking a hit as a consequence of it,” Williams said. “That’s our reality right now. My take on it is it’s a way to be able to share the pain and I think that’s the right thing to do.”

Faculty Senator and history professor William Jones said he is glad that the furlough and pay reductions place the financial burden on higher earning University employees. He said he and his partner were not impacted too harshly by the cuts.

“I was glad that [the cuts] were sort of staggered,” he said. “My spouse and I are both University faculty and so it sort of hit our household doubly.”

Emily Becher, who works in the University’s Extension Center for Family Development, said that she and many other professional and administrative staff were not surprised to hear that the plan would continue. She also said she was happy with the way the financial burden was spread across faculty and staff.

“To know that it seems to be equitably implemented feels important and makes it feel better,” Becher said. “I don’t think any of us were surprised, I mean I think all of us assumed that it was going to be, you know, that there was going to be another six months because … no one thinks that we’re doing great financially.”