Pay cuts for top officials might not be enough as UM faces crisis, considers layoffs

The University of Miami stands to lose “hundreds of millions of dollars over the coming year” due to the financial havoc wreaked by the novel coronavirus, according to an email sent this week by President Julio Frenk to the Canes community.

“COVID-19 has taken many thousands of lives, hundreds right here in our community,” he said. “Compounding that loss, we are facing a significant economic disruption.”

To help offset the projected losses of closing campus this spring and summer and possibly the fall, Frenk said his administration will expand budget cuts announced earlier this month and implement new measures, including pay reductions for top officials, and the suspension of merit-based salary raises and of UM contributions to employee retirement plans.

Additionally, Frenk warned that the private university is considering layoffs and furloughs: “A reduction in workforce may become unavoidable,” he said.

Megan M. Ondrizek, a university spokeswoman, said she could not provide details regarding Frenk’s message.

An emailed statement from Jacqueline R. Menendez, vice president of university communications, read in part: “Just like all universities and health systems across the country, we are not immune to the economic realities of this pandemic. We have been monitoring the situation carefully and recognize that this unprecedented situation requires sacrifice.”

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Frenk didn’t specify in his Tuesday email how many high-ranking workers would see their compensation drop by 15% beginning Friday, May 1, or how long the pay cuts would last. But he said the list includes himself, the provost, chief operating officer, senior vice presidents, vice presidents, deans and similar positions in the university’s healthcare system, UHealth.

According to The Chronicle of Higher Education, UM paid Frenk, a public health expert, about $1.5 million in 2017.

Human Resources will also reach out to everyone whose compensation falls in the top 1% and ask them to voluntarily give up 10% of it, he said.

Starting June 1 and through fiscal year 2021, UM will stop its contributions, both core and matching, to employee 403(b) retirement plans. The university also paused merit-based raises through fiscal year 2021.

University of Miami President Julio Frenk, in orange tie, confers with, from left, Drs. Dipen Parekh, Tanira Ferreira, David Lang, UHealth Emergency Manager Vincent Torres, back right, and UM Miller School of Medicine Dean Henri Ford, right, on the medical campus as they discuss demand surge during the coronavirus pandemic.
University of Miami President Julio Frenk, in orange tie, confers with, from left, Drs. Dipen Parekh, Tanira Ferreira, David Lang, UHealth Emergency Manager Vincent Torres, back right, and UM Miller School of Medicine Dean Henri Ford, right, on the medical campus as they discuss demand surge during the coronavirus pandemic.

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Frenk’s email arrived this week as the second phase of the “financial mitigation efforts” UM will enact. It’s unclear how many phases the plan includes.

In an email sent April 7, Jeffrey L. Duerk, executive vice president for academic affairs and provost, and Jacqueline Travisano, executive vice president for business and finance and chief operating officer, announced the first phase, which included a hiring freeze through at least December 2020 on all positions on the Coral Gables and Marine campuses. They also said the university would reduce or eliminate nonessential, non-salary expenses.

This week, Frenk extended the hiring freeze to the Medical campus as well and said it applied to all positions except those “deemed mission-critical” by the university’s healthcare system, UHealth. He said budget centers would further cut costs on travel, entertainment, outside services, consulting, conferences and meetings.

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The university is also delaying planned construction projects until 2022, tapping into unrestricted donor funds and expanding its freshman class from about 2,200 to 2,350, according to the April 7 email.

The coronavirus outbreak altered the financial picture for all higher education institutions, forcing administrators to shutter campuses and transition to virtual classes, cancel fundraising events and now risk seeing their enrollment numbers drop.

UM is issuing prorated refunds for Spring 2020 fees and services “that cannot be provided in an online or virtual format” like housing, dining, parking, student center, wellness center, health and counseling, student activities, and athletics fees. But it has received backlash for not returning money for the swap from in-person instruction to remote learning.

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Hundreds of students have signed petitions online demanding hefty tuition discounts. And at least one of the students, Adelaide Dixon, is suing UM to get compensated for the change.

In mid-April, the university received roughly $8 million from the Coronavirus Aid, Relief, and Economic Security — CARES — Act, approved by Congress on March 27. UM has to award at least half of that directly to students but has yet to clarify who can qualify to receive a grant or what the application method will be like.

UM took one of the biggest financial hits amid the pandemic when the state mandated that UHealth and hospitals postpone the vast majority of highly profitable elective surgeries. This week, Gov. Ron DeSantis announced those could resume.

“The next few months will provide greater clarity, as we quantify our fall enrollment and further assess the financial impact of COVID-19 on the UHealth system,“ Frenk said.

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