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UofL, UK both announce cost-cutting measures including furloughs and pay cuts

Universities have announced more cost-cutting measures as the coronavirus pandemic cripples local and national economies.

LOUISVILLE, Ky. — The University of Louisville and UK both announced new cost-cutting measures Tuesday, ranging from furloughs to pausing retirement contributions. U of L had already announced plans for pay cuts earlier this month.

In a letter to employees, University of Louisville President Neeli Bendapudi laid out the new actions the university will be taking.

  • University retirement contributions for all employees will be stopped from May 1 through July 31.
  • Some staff members will be subject to a temporary furlough at the discretion of their unit’s vice president, dean or vice provost. These furloughs could be for two weeks, one month or for an indefinite amount of time depending in large part on the duration of the COVID-19 situation.
  • All faculty and some staff members who earn between $58,000 to $99,999 will see a 1% pay reduction for the months of May and June.

“Currently, we face a $39 million shortfall for Fiscal Year 2020, in addition to a $15 million projected loss by our Athletic Department through Fiscal Year 2021, and we have implemented strategies to address much of that deficit,” Bendapudi wrote.

She said that by temporarily stopping retirement contributions for three months, the university will save $9 million and that temporary pay reductions and furloughs will save $3 million.

“We hope to return to regular funding of the retirement match program on August 1,” Bendapudi said.

In a video message also sent to employees, University of Louisville Chief Financial Officer Dan Durbin said, “These actions were not taken lightly. These actions were thought through carefully, deliberately.”

Durbin also outlined the ways U of L is seeing revenue impacts, including a major loss of revenue without elective procedures at the University hospital system, a loss in tuition dollars, and unexpected covid-related costs. The university also estimates it’ll lose money from cancelling in-person classes and programs this summer.

Even with financial relief coming from the federal government and other cost-saving measures, the university said it still wouldn’t have been enough to fill the gap.

“Those losses are significant,” Durbin said. “It’s a risk we could not accept happening. It would decimate the university’s financial position.”

“The actions that we are taking today are based on projections that the university will not return to normal operations until at least June 30. If the impacts of the COVID-19 pandemic continue for a longer period of time, or if we face an enrollment decline that results in a cut to our state funding, our financial position and budget may be altered further,” Bendapudi said.

In Lexington, the University of Kentucky also announced cost-cutting measures Tuesday.

“The coronavirus has significantly impacted budgets. Not just private business, but all public entities. Every single one of them to a significant degree,” Gov. Andy Beshear said at his media briefing Tuesday.

The University of Kentucky said it's facing a $70 million budget shortfall for next year, requiring its cuts. University President Eli Capilouto said the lack in revenue stems from projected declines in revenues from enrollment and short-term investments.

"Many of these decisions will cause pain. They will require shared sacrifice," Capilouto said in the campus message. "But they are necessary, if we are to meet our financial obligations, honor our principles of education, research, service and health care and lay a foundation for the future."

In the message, Capilouto outlined what cuts the university is making:

  • Continuing a hiring freeze for the foreseeable future.
  • Enacting low-activity/no-pay policies in units where work has ceased or been reduced significantly
  • Implementing in some units layoffs or reductions in force.
  • Reducing for one year the university's retirement contributions to individual employees from 10% of the employee's salary or wages to 5%.
  • Not providing merit increases July 1 for the coming year. For the last seven years, UK has enacted merit increases for employees. As a result, UK is not going to increase employee health premiums or parking rates in 2021.
  • Delaying expansion of a planned family leave policy.
  • Delaying plans to make mandatory participation in UK's retirement program for new employees hired after July 1, 2020, who are under the age of 30.

►Contact reporter Tyler Emery at temery@WHAS11.com. Follow her on Twitter (@TylerWHAS11) and Facebook.  

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