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University of Arizona plans furloughs, pay cuts for most employees due to expected shortfall

Arizona Republic logo Arizona Republic 4/18/2020 Rachel Leingang, Arizona Republic
a sign on the side of a building: Two students at the University of Arizona will be charged with misdemeanors after a video showing them protesting a Customs and Border Protection event on campus went viral, UA President Robert Robbins announced Friday. © Michael Chow/The Republic Two students at the University of Arizona will be charged with misdemeanors after a video showing them protesting a Customs and Border Protection event on campus went viral, UA President Robert Robbins announced Friday.

The University of Arizona plans to furlough some employees and cut salaries for others as it faces huge budget woes caused by COVID-19, UA President Robert C. Robbins said in an email Friday.

People who make up to $150,000 will have graduated furloughs based on pay, while those making more than $150,000 will see salary cuts, a website detailing the plans says. The website says the measures would begin on May 11, 2020, and last through June 30, 2021.

Of the university's 15,000 employees, the majority will be affected by the furloughs or pay cuts, UA spokeswoman Pam Scott said in an email. A small number of employees funded by external grants or contracts can continue working full-time, and graduate assistants will keep their normal pay rates, she said. 

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Robbins said he has proposed the furlough and pay cut plan to the Arizona Board of Regents, which oversees the three state universities. Regents' policy says the board chair and executive director need to approve any furlough plans offered by the universities. 

The regents said Friday that Chairman Larry Penley and Executive Director John Arnold approved UA's plan. The universities will each independently evaluate their financial circumstances caused by COVID-19, the regents said.

“The board sincerely appreciates the dedication and commitment of all University of Arizona employees who will endure the financial hardship of the furlough and pay cuts. It is with a heavy heart that we have approved the furloughs with the burden that they create for all the UA employees. Universities are drivers of the economy, and I know that Pima County and Tucson will sadly suffer alongside the UA family," Penley said in a statement.

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Robbins and senior vice presidents at the university started taking pay cuts in March, he said in his email, a copy of which was obtained by The Arizona Republic.

Layoffs may be needed “in the future to ensure long-term financial stability of the University,” he said, but layoffs aren’t the right approach in the immediate.

The university also is taking other measures to cut costs, Robbins said. Those include halting building projects ($7 million savings), halting funding for a strategic plan ($22 million savings) and a hiring pause and delaying merit raises ($26 million savings).

The state's universities last furloughed employees and reduced pay during the Great Recession as Arizona’s state budget dealt them massive cuts.

The Republic has reached out to Arizona State University and Northern Arizona University to see if either is planning furloughs, pay cuts or layoffs.

ASU spokeswoman Katie Paquet said, "We do not have plans for furloughs, pay cuts or layoffs at this time and are still working through all financial implications for the university."

In an email to the campus community, NAU President Rita Cheng said a work group was put together to look at financial issues caused by COVID-19 and recovery. No furloughs or pay cuts were announced in the email.

But, Cheng wrote, NAU "will be financially stretched as we move into the next academic year," estimating a financial hit of between $30 million and $100 million, depending on enrollment and the status of campus events.

The Board of Regents said neither ASU nor NAU have submitted plans for furloughs to the board for approval.

Other public-sector employees, including some in Tempe and Mesa, have seen furloughs and layoffs in recent weeks.

Shortfall could exceed $250 million

In his email, Robbins said the university wasn’t immune from economic woes seen by workers across sectors throughout the country.

“Our financial losses already have been great,” Robbins said.

The university expects to lose more than $66 million by the end of the fiscal year on June 30, he said.

“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,” he said.

UA said refunds it has issued for housing, meals and parking have been "substantial." Other university functions have been "severely reduced," like recreation centers, bookstores and ticketed events like performances and museums, Scott said.

There were added expenses required for the changes COVID-19 required, like technology costs for moving 45,000 students to online learning, continued support for student workers and cleaning protocols. 

The university also expects a "significant reduction" in money coming in from tuition for summer, fall and next spring, Scott said, adding that the university is still optimistic students could return to campus in the fall. 

The furloughs and pay reductions are projected to save $93 million, Robbins said. If conditions change dramatically and other sources of funds or savings are found, the plan may be adapted, he said.

“As significant as this plan is, it will cover less than 40% of our projected shortfall through June 30, 2021, even though salaries and benefits comprise more than 60% of our spending,” he said.  

Here’s how the furloughs and pay cuts would work:

  • For people making up to $44,449 a year, 13 furlough days, equivalent to 5% of their pay
  • For people making $44,500 to $75,000 a year, 26 furlough days, equivalent to 10% of their pay
  • For people making $75,001 to $150,000, 39 furlough days, equivalent to 15% of their pay
  • For people making $150,001 to $199,999, a salary cut of 17%
  • For people making more than $200,000 a salary cut of 20%

Reach reporter Rachel Leingang by email at rachel.leingang@gannett.com or by phone at 602-444-8157, or find her on Twitter and Facebook.

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This article originally appeared on Arizona Republic: University of Arizona plans furloughs, pay cuts for most employees due to expected shortfall

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