University of Akron trustees OK budget with $44M in cuts
University of Akron trustees voted unanimously Wednesday to approve a budget for fiscal year 2021 that calls for $44 million in cuts and $29 million in lost revenue compared to last year.
UA President Gary Miller told board members the budget would likely need to be revised, pending changes in enrollment, reductions in state funding due to the coronavirus pandemic and on-going arbitration with a faculty union. Miller also warned that the school might have to dip into reserves by as much as $32 million.
The university expects a 15% drop in enrollment – a loss of about $20 million – and an 8.8% drop in state funding, or $8.69 million, Miller said.
The budget for fiscal year 2020 included $246.84 million in revenue, while the budget passed Wednesday expects $217.21 million in revenue, for a difference of more than $29.6 million.
“In my time in higher education, I have never seen a single-year reduction of this magnitude,” Miller told trustees.
This year’s budget calls for $186.17 million in expenses, compared to $230.34 million last year. Of the $44.17 million in cuts, about $35 million came from payroll and other compensation for employees.
Miller said the $44 million in cuts are expected to be permanent, and were decided in collaboration with Provost John Wiencek, deans and department chairs. The cuts came from reducing the size of the workforce; eliminating unfilled positions; reducing the university’s portion of healthcare premiums for staff, contract workers and police; eliminating retiree dependent healthcare for staff and contract workers; reductions in operations and utility expenses; and reducing university support of athletics, Miller said.
Additionally, unions representing staff and police agreed to temporary pay reductions, and Miller, his cabinet members and some athletic coaches voluntarily agreed to temporarily reduce their salaries. The board previously approved temporary salary reductions for non-union faculty, academic administrators, staff and contract employees, including those in athletics.
The budget passed Wednesday did not take into account $9.5 million that the university received through its coronavirus relief fund from federal CARES Act and state money. Miller said the funds would come in as revenue and be written off as an expense, and have no net impact on the bottom line.
The budget also did not account for the $16.4 million that Miller said the university would save due to 178 layoffs as part of a proposed union contract with the Akron chapter of the American Association of University Professors, or AAUP.
AAUP members voted earlier this month to reject the contract with the administration, which called for eliminating the jobs of 96 unionized faculty, a law school faculty member, 60 staff members and 21 contract employees. The rejection triggered an arbitration process that is expected to take place over the coming months.
Miller, who publicly urged union members to ratify the proposed contract, said Wednesday the arbitration process could be costly for the university.
“Were the university not to prevail in that arbitration, the most likely outcome would be a reversal of the reductions in force requiring an immediate reinstatement of those faculty members at a cost of over $8 million in this fiscal year,” Miller told trustees. “Given the variability in revenue and expenses possible in the coming months, we caution the board that the draw on reserves could range from $7.8 million to as much as $32 million.”
Miller said the university’s reserves, which total about $65 million, are not to be considered a “rainy day” fund.
“It is not a pot of money we can draw from to weather a significant crisis. Retaining sufficient reserves is an obligation you have,” Miller told trustees. “The presence of these funds are absolutely required to back up our debt and our operational responsibilities.”
The union has announced it will take two grievances to arbitration: the university invoking a clause in the union contract that allows for layoffs, pay cuts and furloughs of faculty members, regardless of tenure or rank, and UA invoking the contract’s “force majeure” clause, which says that “unforeseen, uncontrolled and catastrophic circumstances” beyond the control of the university could make implementing parts of the bargaining agreement impossible or unfeasible.
Akron-AAUP President Pam Schulze said the union plans to begin negotiations for a new contract in the near future, since the current contract expires on Dec. 31.