OT: Northwestern furloughs 250 workers, suspends contributions to employee retirement funds
From CBS Chicago.
https://chicago.cbslocal.com/2020/05/12/northwestern-university-furloughs-250-workers-amid-budget-shortfall/
?
So did my employer. I'm thankful to still have a job right now.
Edit for some clarification. There's about 20k employees and approx 30% have been furloughed. I can still contribute to retirement but there's no company match and it'll be years before there's profit sharing again
Same. No company matches for one year, 20% base pay cut for everyone for 6 months (though the CEO was nice enough to take 40%), 10% of staff furloughed anywhere from 2-8 months.
My wife directs a state agency and 50 million was scraped from her budget yesterday, furloughs planned.
I think my wife might work for yours (state of CO employee) lol
I think your wife might be my sister....
No I'm Spartacus ?
Really curious about
- How much are they drawing down the endowment? This is a third rail of university governance, for good and bad reasons, so I wish people dug into the decision a bit more.
- Who exactly got furloughed? Graduate student researchers? Medical personnel? Facilities? IT? "Administrators?" It's a radically different story, I think, if academic people are getting furloughed.
I imagine there’s so fat on the bone for most big colleges, but core services (IT) can’t be skimped on, that’s what keeps the boat afloat securely.
Yeah, but I feel like (at many institutions) furloughing is as much a matter of political pull as anything else. Administrators -- the unquestioned fat-on-the-bone people -- seem to have a lot of pull. (Weirdly, the fattier they are, the more pull they seem to have. A functional registrar is a huge asset but that doesn't seem to have the juice that, like, a "student life coordinator" does.)
Until you realize the crucial psychological wellbeing function those student-facing administrators are serving for students right now...
Do you think so? I'm not talking about mental health professionals or people who are doing concrete things to help (financial aid office, career office, etc). I'm talking about -- to use an example from a current grad student buddy -- an "Office of University Life" that sends weekly emails talking about how proud they are of the students and setting up "Zoom Quarantine Friending." It feels hard to imagine that these orientation-type events (that everyone hates, come on) are providing anyone psychological wellbeing.
According to Northwestern’s recently released annual report, the value of the endowment dropped to $10.8 billion on August 31 from about $11 billion a year earlier.
jeez I hope they survive!
It's not that simple though. Endowments often have language in them about what the funds can be used for. So NW could be sitting billions... that they cannot use as a rainy day fund.
Heaven forbid we make an exception for a global crisis. Better to not pay people who work for you than be creative and do the right thing.
I agree with the sentiment, but legal strictures likely prevent it.
Exactly - you can't just "make an exception." And when you can, it's difficult to do so, and for good reason. You don't want people "making an exception" every time they think they can.
I mean, if ever there is a time for an exception, this is it. Feels hard to see how "global pandemic that is ruining everything" is not the time to use the rainy day fund, right? It's not ever going to be useful if it just always sits in the vault waiting for the "real" bad time.
And by law, they can typically only spend 4 or 5% of the corpus. Most of that goes to financial aid. A small college with 3000 students and a billion dollar endowment is probably able to use $45 million per year. Most of that is going to financial aid, and most schools are probably increasing what they will be budgeting for financial aid for the next few years.
I would be shocked if there us a law limiting the amount universities can take from their endowment; I actually think there is a law the other way that was recently passed -- they can't just sit on it.
Regardless, this isn't a small university -- NU has a $11 billion endowment and even 5% of that is $550 million.
And just once I'd like a big, rich university like NU to ask their rich donors, "Hi, Mr. Moneybags? I know you donated $10 million so we could have gold-plated lockers in the gymastics center and 100-inch TVs in our 100,000 sq foot weight room, but do you mind if we spend it on keeping our janitorial & food service staff instead?" At least tell your employees and students you tried.
Couldn’t they just tell each donor that they used another donor’s money? Like you said, even taking a small portion (5%) is a shit ton of money to work with.
Is that you, Bernie Madoff?
Wow, it's almost like you just stumbled onto why billionaire philanthropy is bullshit.
That's why I prefer mailing random people envelopes full of cash.
Was that you? Thanks!
It's not as if any state legislature passed a law about university endowments. It's a contract law concept. Donors specify what the funds can be used for. Paying employees wasn't the intent.
I understand what you are saying, but let’s play this out. They ask the donors to use the money this way and if they say no they tell folks they tried. Then everyone knows these big donors, who are usually well known and listed in many places, are publicly embarrassed. Are those donors going to be donors for long? Or you ask and they say no and you don’t tell anyone and posters on a blog complain you didn’t ask....
Endowments are in the crosshairs, whether universities like it or not. The days of "Hey, it's our $10 billion. We'll decide (along with our uber rich donors) what to do with it, and you'll have no say" is over.
This is the reason the "endowment tax" was passed.
https://www.insidehighered.com/news/2020/02/18/wealthiest-universities-are-paying-big-endowment-tax-bills-how-much-are-others-who
Now, we're in a situation where universities across the country are in some truly deep shit, budget wise. They are going to have to ask from the feds for literally tens of billions of dollars to stay afloat. If Michigan, Northwestern, Stanford, etc think they can say a) give us a good chunk of those billions and b) we're not touching our endowments, they have another thing coming.
So they and their donors may not like it, but they'll need to figure it out. I'm sure Stephen Ross (to pick one name) would be OK with some good publicity if it was announced $25 million of his gift was diverted to the "Health & Safety" fund, which will make sure support & cleaning staff are properly paid and there are no layoffs, and nurses at Michigan Medicine aren't cut back.
Endowments have very specific purposes- typically for supporting the direct academic missions of the institution (think scholarships, fellowships, professorships and other types of aid etc). You don't just go take $100M out of your endowment and support administration, operations, etc.
So should we cut $400 per student out of K-12 education funding (the state budget is screwed and cuts will be needed) and send UM and MSU the $600 million in state funding they are budgeted or tell them they are going to have to figure out a way to dip into their 12 billion and 3 billion endowments until we get through this emergency?
I’m eager to see when these companies reinstate retirement contributions. I would hedge a bet most won’t.
I work in High Ed (a private non for profit). Scary times all around, but our numbers are projecting to be higher for Fall. We don’t have folks living on campus nor sports, so maybe that will be to our benefit.
We'll see. I'd bet most will return retirement contributions unless they want to see a lot of good employees leave
Depends on whether they need to in order to be competitive. If other companies/organizations aren't offering a match there won't be much pressure.
This is correct. I’d bet matches come back as the economy recovers. It’s a relatively small expense and a benefit that most white collar employees value highly (as they should).
Not sure about it being a small expense. Salaries is usually like 50% of total expenses for most, so retirement alone is probably like 4-5% of total annual expenses- it is a meaningful amount especially since its one item.
Agreed, matches will return. Even though it is not a small expense, companies will need to have it to remain competitive when the economy comes back and hiring ramps back up. They are highly valued and an important part of the comp/benefits package.
My company suspended it's 401(k) match for the rest of the year, but I expect it to return in 2021 or sooner if conditions improve. Same thing happened 10 years ago.
U. Wisconsin-Madison also did 6-month furloughs for employees, roughly 5 days per person (faculty, staff). More if you make more, a little less if you make less.
It's not going to be a great year in higher ed for many places, but should be OK if the world starts to return to normal at some point....
Boo hoo. Bunch of "liberal elites" that want to keep us regular folks locked up and starving while they feast on foie gras during their "Zoom" meetings. #MAGA
/s
What was the purpose of this comment?
To incite rather than be insightful.
Just like most of the chaff around here lately.
Satire. Sorry if I missed.
Get that bullshit out of here
So 250 regular employees are laid off, the rest have their retirement contributions stopped, and the highest paid people at the school only take a 10% pay cut?
I honestly don't understand how some wealthy people sleep at night. The mattress made of money probably helps though.
Ass backwards if you ask me. They should cut tenured staff and admin executives and pay the regular staff through this. Those at the top should be able to absorb a financial impact better.
As a supposed leader in ethics, universities need to do better with this. Cut Pat Fitzgerald’s salary and, boom, you can pay the 250 you furloughed about $1100/mo/person. Not saying that should happen, just an example of the insanity of it all.
I realize that this is true of all “corporations” but universities have a duty to be more ethical IMO
I get that ideally universities should "be better" than corporations, but once a university starts operating un-businesslike, they will quickly fall behind the other universities that are and that's not what anyone at the university wants.
They’re at the top, so they make the decisions. You think they’re going to cut themselves or their executive buddies? In their minds, everyone director and above is essential to keep the business organized.
a certain amount of that is true. I mean, you can’t get rid of too much or certain people. You lose institutional knowledge. Anyway, all that to say there’s no way execs are going to axe themselves.
Not sure why you posted this. You realize how many people are without jobs right now?!
Presumably it was posted because it's a B1G school. If you don't like it, you don't have to read it.
Cool
My employer canceled the 401k match as well and furloughed a decent amount of people. I am grateful to still be working and my pay and my hours have not been cut.
UM has asked employees to take voluntary unpaid vacations. It has also gone out into the bond market and raised $1B to cover shortfalls during the coming academic year,