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Latest from President Bruininks on Furloughs

I post this here for information. It is available on the U's web site, but the outside world may have trouble finding it.

[I will not comment on, or highlight, very objectionable parts of this message.]

Dear Colleagues,

In January, I shared with you the sobering fiscal realities the University of Minnesota faces as a result of the global economic downturn and the state's significant budget shortfall through the next biennium. As expected, the governor's February 15th budget recommendation included an additional cut of $36 million to the University of Minnesota's budget. This comes on the heels of an $80 million cut last year and erases 10 years of incremental state funding increases, reducing our state funding base to the lowest level since 2001 ($591 million). The new proposed state cut and our ongoing financial obligations create a total budget shortfall of $132.2 million for 2010-11:

* 44 percent ($59 million) of this shortfall results from increased annual costs, consisting of $32 million to address compensation, including a 2 percent compensation pool increase and payments to the fringe pool; and $27 million to support financial aid and scholarship commitments, academic investments, facilities costs, and other essential expenditures.
* 31 percent ($41 million) results from a 27th pay period necessitated by the payroll calendar every 11 years. (The impact of this cyclical expense was magnified by the economic downturn and deep state budget cuts; nevertheless, a long-term plan to resolve this problem on an ongoing basis will be in place within the next year.)
* 25 percent ($32.2 million) results from the governor's proposed budget cut. (The actual number here is smaller than the governor's reduction of $36 million due to this year's appropriation being $3.9 million lower than next year's appropriation; the governor was required to reduce from next year's larger number.)

As a result, the leadership of the University has spent the past several months modeling a number of solutions to the challenges related to compensating our employees. After extensive analysis and discussion, we narrowed the alternative compensation options to a proposed plan, and last month, we began to consult with the University community--including the Senate Committee on Faculty Affairs, the Senate Committee on Finance and Planning, the Faculty Consultative Committee, the Civil Service Committee, the Council of Academic Professionals and Administrators, and our union-represented faculty and staff. On March 4, we presented the initial plan to the entire University Senate for consultation. A number of robust discussions following that meeting have yielded a new option, which we believe strikes a good balance between meeting our immediate budget objectives and impacting all of our employees in a moderate and equitable way.

Under this new plan, proposed by faculty leaders late last week, all employees systemwide would take the equivalent of a 1.15 percent decrease in pay for fiscal year 2011 (FY11), July 2010 through June 2011. As proposed, this is a temporary reduction for FY11 only and would be implemented differently based on employee group:

* In the case of hourly (civil service and union-represented staff) employees, this reduction in pay would be implemented in the form of a mandatory, three-day furlough during the last week of December to facilitate a weeklong shutdown of our campuses (except essential facilities and services) in order to reduce energy and operating costs with minimal disruption to students. A three-day furlough is roughly equal to the 1.15 percent decrease in pay that staff groups will be asked to absorb. Hourly employees would not be expected to work hours for which their pay has been reduced.
* All other employee groups, including all faculty and academic professional and administrative (P&A) employees, would see a 1.15 percent reduction in pay with no reduction in their assigned duties. These employee groups would be expected to address with their supervisor or responsible administrator how their duties will be accomplished during the campus shutdown in late December.
* Senior administrators systemwide (including deans, associate and assistant vice presidents, vice provosts, vice presidents, vice chancellors, chancellors, senior vice presidents, and the president) would take an additional 1.15 percent decrease in pay, bringing their total temporary reduction in pay to 2.3 percent.
* Additional voluntary furlough days would be available to all employees (not to exceed the equivalent of a 10-day reduction in pay).
* The savings realized by these reductions in pay will remain in the appropriate campuses, colleges, or units.

It is important to consider this plan in the context of the overall budget plan for next year and the financial outlook for 2012 and 2013. As referenced above, next year's budget plan includes funds to pay the 27th pay period for all eligible employees and to offer a 2 percent compensation pool. This compensation pool delivers a 2 percent increase for all union-represented staff employees and all civil service employees beginning with the new pay year this summer. It also provides for increases determined at the collegiate or unit level for faculty and academic professional and administrative employees, effective January 2011. A 2 percent compensation increase is in line with increases provided to state employees and many local units of government. The six-month delay in compensation increases for faculty and P&A employees provides substantial savings to the colleges and units while still enabling us to offer permanent increases in base compensation.

One additional note about process: You may be aware that the Faculty Senate must vote to approve any proposed reduction in faculty pay. For that reason, the Faculty Senate will take up this proposal at a special meeting on Thursday, March 25, and will be asked to approve a temporary reduction in salary of 1.15 percent for faculty next year. It should be noted that those faculty members currently covered by a collective bargaining agreement are not impacted by this vote, and separate discussions are underway with them. If the faculty pay reduction is approved, we will proceed to implement the plan as outlined. If there is not a vote in support of a reduction in pay for faculty, our budget plan going forward will necessarily include deeper college- and unit-level cuts, which will inevitably lead to additional job losses.

All of the options we explored involved serious trade-offs, especially when facing the real prospect of more budget cuts, which may impose additional limits on our ability to compensate our employees in the next biennium. I understand that this plan poses administrative and personal challenges for all of us, but it also moderates the impact of necessary one-time budget cuts on any one unit or employee group, retains and rewards hard-working colleagues over the long term, enables us to maintain our quality and competitiveness, helps to avoid additional unplanned job losses, and reduces our budget challenge to a much more manageable sum.

The Office of Human Resources has begun to address many of your questions and concerns in these frequently asked questions (FAQ). We will continue to refine and expand the FAQ as the compensation and budget plans roll out and new questions arise. I want to assure you that we are working hard to address our current and long-term budget challenges. Thank you once again for all of your hard work--it is my privilege to serve with you.

Sincerely,

Robert H. Bruininks
President

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