Michigan State University is estimating an approximately $300 million loss for the 2020-21 fiscal year due to the coronavirus. In response, they will be implementing a temporary wage reduction for non-union faculty and academic staff, and temporary retirement plan reductions.
According to a June 22 letter from President Samuel L. Stanley Jr., the wage reductions will take effect Sept. 1 and will be in effect for at least a year, but may be extended depending on the university’s financial situation.
The wage cuts are using a graduated scale ranging from 0.5% for those with the lowest salaries to 7% for those with the highest salaries.
Some MSU departments have already started furloughing employees last month. At this time, 716 employees have been furloughed, 280 of which were voluntary. MSU is still working with unions throughout the furlough process.
"While we must take these actions to preserve our university’s ability to continue its important mission, they are in no way reflective of our employees’ hard work and dedication to MSU," Stanley said in his letter. "Each of our employees is at the core of providing exceptional experiences to tens of thousands of students. In these trying times, we will continue to do our best to support employees affected by these actions."
MSU is also reducing its retirement plan matching contributions from 10% to 5% of employees’ compensation.
For employees to receive the 5% match, they must still contribute 5% of their compensation to the retirement plan.
This temporary retirement reaction also intends to only last one year and will be reevaluated.
"This was a particularly challenging decision to make, and I know it will be difficult for those affected, but hard decisions like this were needed," Stanley said. "Greater cuts in wages would have more negative impacts on individuals’ immediate take-home pay and ability to support themselves and their families. We believe this approach is a better balance for employees across the university and upholds the value of shared sacrifices."
Each unit on campus is taking a minimum of 3% budget reduction. They estimate such a cut will save MSU $20 million. The Office of Planning and Budgets has started its communications to colleges and units about the reduction process.
A number of scheduled capital projects will be on pause, which will save MSU nearly $77 million. Infrastructure Planning and Facilities has posted a list of projects on pause that they will later reconsider.
The Michigan Legislature has yet to decide higher education funding for the coming year, and Stanley said there is the risk of a significant decline in MSU’s state allocation based on forecasted large decreases in state revenue and new expenditures associated with the pandemic.
"It is our hope that most of these burdens will be temporary, and the principle that such burdens are borne together by us will preserve the excellence of Michigan State for a world that needs the best we can give, now more than ever," Stanley said. "Thank you for your sacrifices and your understanding."