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U-M leadership shares plan to address COVID-19-related financial challenges

April 21, 2020

Plans for preserving financial resources include a five-to-10-percent pay reduction for leadership, hiring freezes and no employee base salary increases.

The University of Michigan will freeze hiring, and employees’ base salaries will not increase through the end of the 2020-21 budget year, as it works to preserve financial resources in the face of reduced revenue and unpredicted expenses related to the COVID-19 pandemic.

In an email to all three U-M campuses and Michigan Medicine on April 20, President Mark Schlissel told faculty and staff that the university estimates anticipated losses of $400 million to $1 billion through the end of the 2020 calendar year. In addition to the hiring and pay freezes, President Schlissel outlined several cost savings measures, including voluntary programs for furloughs and reduced hours, postponement of construction projects, and the suspension of all non-essential expenditures.

University of Michigan-Dearborn Chancellor Domenico Grasso followed with an email sharing specific details for the Dearborn campus. “As President Schlissel shared, the pandemic has adversely affected all members of the University of Michigan family. We at UM-Dearborn strongly support the guiding principles outlined in his letter,” Grasso said.

Grasso shared additional strategies that UM-Dearborn leadership has put into place to mitigate financial risk during the remainder of the current fiscal year (FY20) and through the next fiscal year (FY21), including: 

  • Freezing of all reserve funds in the colleges and units for exigent senior leadership discretionary deployment.
  • Reassignment of staff to facilitate highest priority campus needs and to support pay continuity.
  • Stoppage of all non-essential projects unrelated to health, life and safety. 
  • Reducing spend on utilities, general supplies, vendor services and other non-critical expenses. 

The UM-Dearborn leadership team is updating the budget plan for next year, Grasso shared, recognizing that “without prophylaxis, therapeutics, or widespread testing, the pandemic might last into the summer months of 2021 and beyond.” He outlined additional budget-saving initiatives being considered for the Dearborn campus for FY21 to help mitigate financial risk, including: 

  • Requiring colleges and units to allocate 1 percent of their budgets for redistribution (or keeping as an insurance reserve), as determined by senior leadership.
  • Voluntary salary reductions for senior leadership. Grasso has volunteered to reduce his salary by 10 percent; all of the senior officers and others on the UM-Dearborn leadership team have also volunteered to reduce their salaries by 5 percent. This reduction is effective May 1 through the end of the calendar year. 
  • Reviewing all existing projects (capital and non-capital) and deferred maintenance plans to conserve and otherwise deploy resources effectively. No new capital projects will be initiated.
  • Reviewing our non-compensation contracts with a view for reductions, including third party leases and consultancies.
  • Continuing development of a robust strategic enrollment management plan to maximize enrollment.
  • Updating the preliminary FY21 budget for submission to the Regents, with the following measures:
    • Implementing pricing and financial aid strategies to better support enrollment and student success. 
    • Developing scenarios for enrollment financial impacts over the next three weeks during registration. 
    • Carefully assessing the application of CARES Act award to support continued operations and student enrollment and success.

Recognizing that UM-Dearborn is in Wayne County, in the epicenter of the coronavirus outbreak in Michigan, Grasso shared that the health and safety of students, faculty and staff remains paramount in campus planning and decision making. “When public health parameters indicate an appropriate abatement of infection, in coordination with President Schlissel, we will initiate a reopening of campus. Minimizing risk, we will begin with employees who can return safely within prescribed guidelines.” 

Grasso acknowledged the work of the campus community throughout the crisis, saying, “I take great pride in how valiantly our university has taken on the challenges presented by the pandemic. Resolve and perseverance and steady optimism are part of the University of Michigan-Dearborn’s DNA. In keeping with our core mission, I believe we have served our students admirably during this pandemic and I have every confidence that we will continue to do so.”

 

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