University to Cut Employee Pay Rates and Refund Students: Estimates $10 Million in Losses

In a recent email to faculty members, University President Steven Kaplan said the university expects to lose $10 million in room and board credits and refunds for the spring semester. The campus shut down earlier this month as a precaution against spreading COVID-19.

The email was sent on March 25.

“While we will not know the full extent of the financial impact on the university for some time, we do know that it will be substantial and that we need to take action now to sustain our ability to provide a world-class education in the immediate and long-term future,” Kaplan said in the email.

In the email, Kaplan said that in addition to the $10 million loss, the university could lose up to $5 million during the school’s two summer semesters. However, “we can minimize that loss if we can teach most, if not all, of the summer courses online.” said Kaplan.

In an email answer to the Charger Bulletin, Kaplan said that as of now, there would be no refund for expenses such as parking passes and activity fees.

The money, he said in his email answer, “will be refunded to graduating seniors and students who will not return and credited to the accounts of returning students on a prorated basis, based on the time away from campus after spring break.” Those will be determined on a case-by-case basis, he said.

Kaplan said the process is still being reviewed.

“As you can imagine, every student presents a different profile, depending on financial aid, type of housing and other factors,” he wrote to the Charger Bulletin. “We will let students and families know when we know more specifics about the program.”

As a result of the financial losses, Kaplan and his senior leadership have decided to reduce employee pay and salaries beginning in April. According to Kaplan, the cut percentage depends on each employee’s salary and can range from 3% to 9%.

In addition, employees will keep medical benefits, but employer contributions to the university’s retirement plan will be suspended. Kaplan said the university is also “reducing the number and scope of capital projects for the coming year.”

But in his answer to the Charger Bulletin, Kaplan said, “there are currently no plans to layoff faculty members, but in the event any employee is laid off they can apply for unemployment benefits.”

Kaplan told the Charger Bulletin that reactions to the pay cuts have been “mixed.”

Some faculty have said they understood the cuts may help preserve jobs, while others “expressed disappointment and anxiety about their own personal situations and how the salary reductions will impact them and their families. Our approach was to be as fair and equitable as we could in asking every member of our faculty and staff to share the burden of addressing the significant financial losses the university is facing,” Kaplan said.

The pay cuts will be in effect, at least until June 30.

In his March 25 email, Kaplan said: “Please understand that what I have outlined may be only the beginning of difficult financial decisions we make in the short-term.”

Kaplan told faculty members that he is working with political leaders to include higher education relief in the stimulus packages currently being brought to Congress, but “even if we are fortunate enough to get some assistance, it will not come close to closing our financial loss,” said Kaplan.

“My commitment to you is that we will do everything possible to restore changes to your benefits and salary at a future date,” said Kaplan.

Kaplan said he and others are still “assessing the total financial impact to the university.”

“We need to understand how much relief the university can expect from the federal government through the various stimulus packages coming out of Washington,” he said.

In order to minimize further budget losses, Kaplan said that, among other measures, the university will fill staff and faculty vacancies on a case-by-case basis. He said all budgetary measures are meant to keep the university viable.

“Only when all of that is considered can we make a determination as to whether additional reductions will be needed,” Kaplan said. “It would not be fair to speculate on what additional measures we might need to take at this time.”