Highest-Paid Employees Face Temporary Salary Reductions; Hiring Freeze Remains in Place
Similar to this semester, most classes in the spring will be held online, a thorough COVID testing program will be in place and students will live in single residence hall rooms, UMD President Darryll J. Pines announced.
President Darryll J. Pines, Senior Vice President and Provost Mary Ann Rankin, Vice President for Administrative and Finance Carlo Colella and Associate Vice Provost of Academic Affairs Cynthia Hale sent the following email to the campus community today.
Today, we write to you all to share the latest update that the COVID-19 pandemic has had on the university budget. We want to assure you that our decisions are being guided by a commitment to sustain the excellence of our education, research and service missions, protect the health, safety and well-being of our campus community, and minimize the impact to the most vulnerable of our community. We are extremely grateful for all the work that many of you have done during these incredibly challenging times in our university’s and nation’s history.
Impact of Pandemic on University Budget
The effects of COVID-19 on our fiscal year 2021 campus budget are significant and projected to be approximately $292 million.This budget shortfall is approximately divided one-third to state-supported losses, and two-thirds to those losses associated with auxiliary units and other non-state activities. As detailed below, we plan to mitigate much of these financial impacts of COVID-19 through a series of measures that include short-term borrowing, federal funding, base budget cuts, payroll reductions, energy and travel savings, and deferred maintenance costs for renovation projects for fiscal year 2021. However, compared to financial pressures that the University of Maryland has faced in the past, the current financial situation is distinct in five ways:
Our financial challenges fall into two broad categories.
We believe it is both realistic and prudent to anticipate that serious financial challenges will likely persist into the next several fiscal years.
Guiding Principles and Priorities
In consultation and with input from many campus community stakeholders, including the University Senate leadership, the Senate Executive Committee, the Senate Committee on University Finances, broad based task forces and working groups, and the University System of Maryland (USM), we adopted the following guiding principles and priorities to help inform our final budget decisions:
1. The university must protect the health and safety of its students, faculty, and staff.
2. The university must protect the most vulnerable members of its community.
3. The university must ensure the research and teaching missions.
4. The university must permit flexibility in the implementation of budget reductions.
5. The university must be fully transparent about its path forward.
6. The university will execute a balanced approach to budget reductions.
Budget Mitigation Measures
Following the above guidance and priorities, we previously implemented a number of mitigation strategies to limit the financial impact of COVID-19 for FY21:
Temporary Salary Reductions
While significant, the budget mitigation measures outlined above are not sufficient to fully address the severity of the current budget shortfall. Therefore, we will implement temporary salary reductions on all employees with annual salaries greater than $150,000. A graduated temporary salary reduction will be implemented ranging from 0% at $150,000 and incrementing to 10%. The total reduction for each affected employee will be calculated on the FY21 base salary. Retirement contributions will not be impacted. The reduction will be distributed evenly for the remainder of FY21 starting with the pay period beginning Sept. 27.
While we realize that any temporary salary reduction is regrettable, we are pleased that nearly 90% of the university’s employee workforce will see no reduction in salary at all.
To demonstrate solidarity with employees, President Pines has voluntarily agreed to increase his salary reduction to 15%.
Detailed information on the temporary salary reductions will be distributed shortly.
Earlier this year, we received $21,490,713 in federal funding through the CARES Act, $10.75 million of which was allocated directly to student emergency aid. The remainder was used to offset costs associated with FY20 expenses related to COVID-19. We also received state CARES Act funding of $5,443,399 for FY20 costs. We understand the state intends to provide additional CARES Act funding to us in FY21.
Even as we implement this comprehensive strategy to address our current shortfall, we acknowledge that there may be additional midyear cuts. Some auxiliary units may need to take additional budget reduction measures this year. Due to the ongoing fiscal uncertainty nationwide, we are expanding our advocacy efforts with our state and federal delegations, while also working closely with our higher education colleagues across the country. Unfortunately, even with these efforts, a positive outcome is not guaranteed.
We realize this news contributes to an already stressful time. We remain committed to shared governance, transparency in our decision making and listening to your concerns. Our University of Maryland family comprises a strong local, state, national and global community—students, faculty and staff, and a worldwide network of almost 400,000 alumni and friends. With a diverse community working collaboratively toward shared goals, there is no obstacle that cannot be overcome.
Our community is TerrapinSTRONG! Together is the only way to succeed.
Darryll J. Pines
Mary Ann Rankin
Senior Vice President and Provost
Vice President for Administrative and Finance
Associate Vice Provost of Academic Affairs
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