Thursday, February 22, 2024

Additional MSU salary, retirement cuts on the table due to COVID-19

May 12, 2020
<p> The Hannah Administration Building on Aug. 23, 2019, in East Lansing.  </p>

The Hannah Administration Building on Aug. 23, 2019, in East Lansing.

Photo by Sylvia Jarrus | The State News

While Michigan State executives are taking a pay reduction, including President Samuel L. Stanley Jr., the university is seeking deeper cuts given a projected 11% drop in revenue. The latest update includes a proposal to cut retirement plan contributions and discussion of scaled back campus-wide salary reductions.

MSU set a $1.5 billion budget for the 2019-2020 school year. According to the announcement, in the 2020 fiscal year, the university has seen a $50 to $60 million loss in revenue in its general fund budget, and anticipates an additional $150 to $300 million in the 2021 fiscal year, which begins July 1.

Stanley had previously announced that all MSU executives will be taking a 2% to 7% temporary pay cut based on salary levels. This is anticipated to run until May or June, but could last a full year. 

"As you know, the costs of this crisis to the university are substantial. We are not alone," Stanley said in the May 11 update. "The pandemic has thrown all of higher education into unprecedented circumstances, and all of the universities within our peer group are reporting significant shortfalls in this fiscal year as well as significant budget cuts for the next fiscal year."

These cuts will be affecting Stanley's salary as well. At his approval meeting, MSU President's Employment Contract set Stanley's base salary at $800,000. He will now be taking a 10% pay reduction, effective immediately. 

MSU will also implement a minimum 3% budget reduction to academic and administrative units, according to the update. 

Additionally, the May 11 statement said they are considering proposing campus-wide gradual salary reductions for all other employees and reducing MSU’s "above-the-match retirement plan contributions." 

Stanley, Interim Provost Teresa Sullivan and Executive Vice President Norman Beauchamp are working with academic governance leadership and the deans to discuss proposals for compensation from its faculty and academic staff and will later be finalized.

"Given all of the hard work you have been putting in during this time ... it is very difficult for me to ask even more of you," Stanley said in the statement to employees. "But I do need to ask you for greater sacrifices to address the current situation and preserve the long-term strength of our great university.”

In order to address the financial impacts, Stanley listed that MSU has already implemented a hiring chill, limited travel and reduced or eliminated consultants wherever possible.

Although these cuts are for the 2021 fiscal year, Stanley said that the scope of the pandemic and its financial implications might cause these cuts to continue past the fiscal year.

correction: the headline was updated for the correct spelling of additional

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