Sharing the Pain

From furloughs to pay cuts, HR pros at a state university negotiated difficult ways to make ends meet.

By Lani P. Barovick Nov 1, 2010
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Like many leaders of public higher education institutions supported by revenue from state governments, top officials at the Baltimore campus of the University of Maryland have had to deal with budgetary shortfalls during the past three years. Our leaders recognized the need to address the budget deficit and to maintain employment of our faculty and staff in difficult economic times.

Ours is the founding campus of Maryland’s university system. Today, 11 campuses, an institute and a research center span from Western Maryland to the lower Eastern Shore. The Baltimore campus, established in 1807, has grown to cover more than 60 acres with more than 60 facilities.

The university awards more than 61 percent of all first professional degrees in the state for dentistry, law, medicine and pharmacy. In addition, our seven professional and graduate schools train the majority of the state’s physicians, nurses, dentists, lawyers, social workers and pharmacists.

The Baltimore campus employs approximately 6,500 faculty and staff and has a student enrollment of more than 6,300. The nonexempt staff is organized and represented by the American Federation of State, County and Municipal Employees. Other staff and faculty are represented by senates under a separate governance provision.

Campus officials were advised three years ago that the University System of Maryland would have to reduce our fiscal budget. First, system officials suspended all merit and cost-of-living salary increases. Then, officials at the Baltimore campus reduced operating costs through energy-efficiency programs and other ways, saving nearly $3.7 million. Still, these efforts fell about $2.6 million short of meeting the required amount needed of $6.3 million. While layoffs would have provided an immediate resolution, they also would have had a devastating impact on members of the university community; this determination has been confirmed by the hardships and suffering faced by so many individuals seeking employment during the recession.

Instead of layoffs, we turned to furloughs.

Striving for Equity 

The furloughs were implemented in February during the second half of fiscal 2009, which ended June 30. The amounts of the unpaid furloughs were tiered to minimize the impact on lower-paid employees and to have greater impact on higher-paid faculty and staff. Employees whose salaries were below $30,000 were excluded from the furloughs and experienced no reduction in salaries.

Additionally, members of the uniformed security force, employees on H-1B visas, hourly and temporary employees, adjunct faculty paid by the course, graduate research assistants, graduate teaching assistants, and clinical and postdoctoral fellows were exempted from the plan. These exemptions were driven by safety concerns, statutory requirements, and the irregularity of schedules and salaries for temporary staff. More than 4,500 employees—57 percent of the total university workforce— were subject to the furloughs. The typical amount of salary reduction was 5 percent.

The furloughs were then tiered by salary levels, and employees took two to five days of unpaid furlough leave, depending on their salary tiers, through the end of fiscal 2009.

The furlough leave was scheduled in four-hour increments for each of the remaining 10 payroll periods in the fiscal year. Employees in the salary tier requiring two full days of furlough were scheduled to take leave during the first four payroll periods, employees in the salary tier requiring three full days were scheduled to take leave during the first six payroll periods, and so forth. Employees had the flexibility to schedule the four hours at any time during a two-week pay period but were restricted by federal law from carrying over the four hours to another payroll period. Employees were permitted to add to the four hours with four additional hours from another type of earned leave to take off a full day.

University officials presented their proposals to the union and the two senates. We had developed a good working relationship with union officials through two rounds of negotiations and a philosophy of open communication during the past several years. Similarly, relationships with leaders of the two senates have been cordial. These previously established relationships helped facilitate agreement on the furlough plan. Their cooperation was crucial, given that the plan needed to be implemented quickly for maximum effectiveness.

University of Maryland, Baltimore

Services:
Six professional schools and an interdisciplinary graduate school that educate students, conduct research and provide clinical services in dentistry, law, medicine, nursing, pharmacy and social work.

Ownership: State of Maryland. Top managers: Dr. Jay A. Perman, president; Lani P. Barovick, associate vice president of human resource services.

Revenue: Fiscal 2010 operating budget was $934.4 million. Sponsored research totaled $517 million in fiscal 2009.

Employees: 6,577 in fiscal 2009.

Connections:
www.hr.umaryland.edu.

Nevertheless, various questions of equity and implementation difficulties remained. The lack of flexibility in scheduling furlough time off within the current biweekly payroll period was an issue, especially for faculty and exempt staff whose responsibilities and commitments often made it difficult to schedule their absences in such a tight window of time. A Maryland attorney general’s interpretation of the federal wage and hour law indicated that failure to schedule the four-hour furlough leave during the payroll period when the employee’s wages were reduced could jeopardize the exempt status of faculty and staff. And since the shortfall was in stateprovided funding, a question was raised concerning inclusion of faculty and staff that were funded in great part by external sources. Finally, the four-hour leave requirement per payroll period caused some difficulties for employees related to commuting, child care and use of other types of earned leave to take off a full day.

Second Year, Second Plan

As a result of the restrictions and lack of flexibility of the furlough plan, we opted in the second year of the shortfall to implement a temporary salary reduction plan instead. With the temporary salary reduction plan, employees’ salaries were reduced by the amount required to meet the total amount of the shortfall. Employees participating in the plan then received an additional amount of paid administrative leave that must be taken by the end of the fiscal year. This approach provided more flexibility in scheduling because the leave provided to offset the salary reductions was not restricted to a specific payroll period and could be scheduled at any time through the fiscal year. Once again, the plan was tiered to have the least impact on lower-paid employees. In addition to the employees excluded in the first plan, the second plan excluded staff and faculty with a high percentage of salary funding coming from external sources.

Now in our third round of salary reductions, the university has refined the temporary salary reduction plan. For the 2011 fiscal year, the implementation of such leave has been seamless. Leaders, staff and faculty, and union representatives have worked cooperatively and with open communication. And, of course, the plan allows the university to meet its goal in achieving the needed budget reduction.

The use of a temporary salary reduction plan has helped the university minimize the disruption experienced with the initial furlough plan. The flexibility to schedule time has been beneficial as it helps to ensure coverage, especially in vital areas such as in our many clinics.

Given the current economy, we have not yet seen large numbers of employees leaving for better opportunities with higher salaries. Turnover was 14 percent in fiscal 2009 and 13 percent in fiscal 2010.

Throughout all three rounds of salary reductions, our employees have done their best to carry their share of the burden. Of course, employees are optimistic that it will not be necessary to continue with salary reductions into a fourth fiscal year. And like all of our employees impacted by the plan, I have done my best to adjust my household budget to accommodate my reduced salary and have used the temporary salary reduction time off instead of using my annual leave time.

University leaders fully expect that salaries will be restored when possible. We are also optimistic that future state budgets will include provisions for costof- living and merit increases so that we can continue to stay competitive in the marketplace, attract new employees and retain our workforce.

The author is associate vice president of human resource services at the University of Maryland, Baltimore.

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