University to implement furloughs, freezes
January 5, 2010
The University announced Tuesday that it will use “unprecedented” furloughs and wage and hiring freezes to help fight mounting economic problems resulting from lacking state
The plan will help the University cut $82 million from its operating budget to compensate for the $436 million backlogged appropriation dollars from the state.
About 11,000 employees and 75 administrators will be affected by the furlough decision.
“We are facing increasing difficulties to meet our payroll and continue operations,” said Interim President Stanley Ikenberry. “Furlough days are unprecedented. I hope that we will not walk that path again.”
The University’s vice presidents, associate vice presidents, deans of colleges, chancellors and Ikenberry himself will be required to take 10 furlough days by June 15, 2010, according to a University press release. Administrators must take two days off each month beginning in February. Athletic Director Ron Guenther is also included in this pool. Administrators are required to speak with a supervisor to decide what days they will furlough.
A furlough is a temporary leave of absence without pay.
Faculty members and academic professional staff will be required to take four furlough days by May 15, 2010, according to the press release. Staff must take one day off each month beginning in February. They can choose which days to furlough without consulting their supervisor.
Chief Financial Officer Walter Knorr said about 2 percent of each faculty member’s pay and 5 percent of each administrator’s pay would be affected by furloughs.
High-paid Illini Coaches Ron Zook and Bruce Weber will be required to take a four day furlough, as opposed to 10 days.
“I think in terms of simply administering the plan we needed to draw the line at who have administrative positions,” Ikenberry said.
The press release said the following people are not forced to take any furlough days: employees who earn $30,000 or less for their annual base, employees whose retirement agreement occurs before Aug. 15, 2010 and individuals who are paid 100 percent from grant or contact funds as of Dec. 15, 2009. The University will seek “comparable cost reductions” for Civil Service staff.
Ikenberry said he met with faculty from all three campuses before the schools closed for winter break prior to informing them of the plan Monday. He said faculty understood the decision and offered him advice.
The University also enacted a hiring freeze and postponed interim wage increases on Tuesday.
However, the University will honor job offers given to individuals prior to the announcement. There is also an exception for specific research and contract activities that require additional personnel. All exceptions must be approved by Ikenberry or Interim Chancellor Robert Easter.
In addition to the numerous layoffs occurring this year, Ikenberry said “next year isn’t any more comforting.”
In the press release, Ikenberry encouraged academic units and administrative staff to issue notifications of non-reappointment to employees whose contracts require advance notice of termination.
Ikenberry said the decision was made because the University has not received significant amounts of money from the state. He said no one is to blame for the budget crisis, and that this problem has evolved over years.
Knorr said the University had received seven percent of FY 2010’s state appropriation since last July, making the state seven months backlogged in its payments. He added that the University did not receive the its final payment for FY 2009 until Sept. 25, 2009.
“At some point we will be unable to meet payroll and complete the academic year unless there are significant payments from the state as promised,” Ikenberry said in a press release.
If the state is able to provide necessary funding, Knorr said the University would consider suspending this furlough plan.
Ikenberry said the state must make education its number one priority and increase its revenue for the University to find a long-term solution. He added that there will also be further “tough judgments” made by the University.
Ikenberry said he has spoken with legislators and they were understanding of the decision.
To conserve money and continue payroll thus far, the University set aside $20 million in reserves at the beginning of the fiscal year, according to the press release. Last November, units were directed to reduce costs by 6 percent, which yielded $45 million.
The University has not dipped into its $160 million endowment fund, which would only occur in “extreme measures,” Knorr said.
He said other areas that provide funding for the University, including private giving, federal support, tuition and auxiliary enterprises, are in good shape.
Despite requiring employees to furlough days, Ikenberry said he was confident that University students would not be affected. He said he believes staff will take appropriate days off that will not harm learning.
However, he said he was worried that prospective students might choose to attend other universities because of the decision. He added that public schools across the state are in a similar boat and are facing economic troubles.
A work group appointed in 2009 that focuses on saving cash in information technology, purchasing and consolidation of administrative support services will report its findings at the Jan. 21 Board of Trustees meeting.