Temporary FY21 Salary Reduction Plan Background
In his May 26 message to the OSU community, President Ray noted several actions the University will take to close a significant anticipated gap between Corvallis and Cascades Education and General (E&G) revenues and projected expenses. Among those actions is a temporary reduction in the salaries of unclassified employees (academic and professional faculty) that would save about $10M to $12M in salary and associated OPE costs. The reduction would not begin before August 1, 2020.
Provost Feser and Vice-President Green wrote campus on July 28th noting the university would be delaying the implementation of the temporary salary reduction program until Sept. 1, 2020. At that time, the university estimated that the FY21 Corvallis E&G Budget could suffer a budget shortfall ranging from $38 million to more than $60 million depending on enrollment and state and federal support. OSU auxiliary units, including housing and dining services, transportation services, printing and mailing services, and athletics may fall short of revenues by as much as $100 million. However, there was considerable uncertainty in these estimates, so delaying implementation of reductions for academic faculty made sense.
Since then, the Legislature has made commitments to maintaining funding for the public universities in a special session on August 10th and Ecampus enrollment growth has been strong. However, undergraduate credit hour enrollments in Corvallis were down about 10% before the August 11th announcement that instruction in Corvallis would be largely remote in fall term. Estimates of revenue now, taking into account expected erosion of enrollments, project a $55M gap to normal expenses. While the estimates remain uncertain, the size of the revenue shortfall is such that the university will proceed with the temporary salary reduction for academic faculty and professional faculty on September 1st. Salary rates would change on September 1st and impact paychecks after that date.
The level of the salary reduction was planned to vary depending on the size of the shortfall. At the projected budget gap of $55M, the planned savings in salary and incremental OPE is about $14.6M.
Effective Dec. 1, 2020, the university will suspend the temporary salary reduction program for professional and academic faculty. Upon suspension, the program will have been in place for four months and saved $4.2 million, which helped forestall some reductions to programs and employment that would otherwise have been necessary.
Salary reductions for senior academic and administrative leaders that have been in place since July 1 will be suspended on Jan. 1, 2021, after saving $891,000. Because financial conditions in OSU Athletics remain extremely challenging, salary reductions for senior administrators and professional faculty within OSU Athletics and all coaches will remain in effect through June 30, 2021.
From the Provost - OSU to Suspend Salary Reduction Program
Salary Reduction Estimation
Marginal Salary Reduction Rates
Salary Reduction Examples
Who is included?
Please send your comments and questions to Trina.Young@oregonstate.edu.