Northwestern University furloughs staff, cuts executive pay and taps endowment as it eyes ‘significant shortfall’ due to coronavirus pandemic

© Chris Walker / Chicago Tribune/Chicago Tribune/TNS Northwestern University' is taking more measures to deal with the financial fallout of the pandemic.

Northwestern University on Monday announced a series of new cost-saving steps spurred by the coronavirus pandemic that include furloughing about 250 workers, suspending contributions to employee retirement plans and spending more of its endowment.

In a message to the campus community, Northwestern leaders outlined the additional measures and projected the school will experience $90 million budget shortfall this year.

“Even if we resume on-campus activity in the fall, as we hope to do by phases, we are likely to see a significant shortfall in the 2021 fiscal year as well, perhaps as great as or greater than what we are experiencing this year,” said the message, which was signed by President Morton Schapiro.

As part of its plan, NU is also cutting leadership pay between 10 and 20%. In addition to dipping deeper into its endowment, NU will suspend 5% automatic contributions and 5% matched contributions to retirement plans for faculty and staff and furlough staff who can’t complete their work remotely.

© Chris Walker/Chicago Tribune/Chicago Tribune/TNS Northwestern University' is taking more measures to deal with the financial fallout of the pandemic.

Monday’s announcements comes after NU put a first round of cuts in place. That included a hiring and salary freeze, reductions in discretionary spending and the delay of nonessential construction projects.

Though the U.S. Department of Education has awarded stimulus money to universities struggling during the pandemic. NU turned down an allocated $8.5 million, following the lead of other wealthy schools such as Harvard and Yale.

In Monday’s message, Schapiro said he will take at least a 20% pay cut, along with the interim provost and the vice president for business and finance. Deans are seeing pay slashed by 10%, while other university leaders and senior staff members in Schapiro’s office are also choosing to take reductions.

“We expect to see repercussions from the pandemic for some time,” the message said. “Most of our work involves bringing large numbers of people together — in classrooms, dormitories, hospitals, libraries, laboratories, meeting rooms, concert halls and athletic arenas. As such, a pandemic places extreme pressure on all our major functions and on associated revenue streams.”

The message did not specify how much more of the school’s $10.8 billion endowment will be tapped during the pandemic, but in 2019, its payout rate was 5.25%. University contributions to retirement plans will stop between June and extend through at least the end of 2020. As for the furloughs, which are expected to continue through the summer, NU said it will begin notifying affected staff members today and will try to recall workers as soon as possible.

echerney@chicagotribune.com

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