President Schapiro announces anticipated budget deficit, 250 staff furloughs

Rebecca+Crown+Center.+Northwestern+announced+a+potential+budget+deficit+and+more+financial+changes+in+a+Monday+email.

Daily file photo Daniel Tian

Rebecca Crown Center. Northwestern announced a potential budget deficit and more financial changes in a Monday email.

In an email Monday morning, President Morton Schapiro announced updates to the University’s financial situation, detailing an anticipated budget deficit, 250 staff furloughs, administrator pay reductions, increased draws from endowment and suspension of contribution to retirement plans.

The email comes almost one month after the University announced hiring and pay freezes, among other measures, to address funding hampered by dramatic declines in financial markets and the cancellation of on-campus programs and sporting events. In total, the University expects a shortfall of roughly $90 million for the 2020 fiscal year, Schapiro wrote, and will likely experience a significant shortfall in the 2021 fiscal year.

Schapiro, Interim Provost Kathleen Hagerty and Senior Vice President for Business and Finance Craig Johnson will take at least a 20 percent pay reduction, the email said. Deans will take a 10 percent pay reduction, with other University leaders and members of the President’s Senior Staff electing to take similar pay reductions.

In addition, 250 staff members who “are unable to substantially perform their duties remotely who support areas with significantly reduced workloads in the wake of the pandemic” will be furloughed. The email said temporary work has been reduced until further notice, while furloughed employees will be prioritized for temporary placement when possible.

Affected employees will be notified of this change starting Monday, with furloughs beginning over the next few weeks, potentially lasting into the summer, the email said. Staff will continue to receive benefits and access to professional development opportunities. They also will receive 100 percent health care insurance premiums and basic life insurance premiums continuation.

The email also said furloughed employees could be eligible to “apply for state unemployment, which, when supplemented by the federal stimulus package, in some cases can replace most or all of the lost wages.”

Many Northwestern staff members, including dining and service workers, have said they still haven’t received compensation from Compass or Northwestern — despite a March 30 email that said the University would partner with Compass to provide pay and benefits through June 30. They were also told they could be eligible for unemployment and federal stimulus money, though many could not apply at all due to their immigration status. 

The last time Northwestern faced staffing decisions this large in scale was in July 2018, where one percent of staff were laid off during the budget deficit. Then, academic units faced five percent non-salary budget cuts and student organization funding was decreased significantly. 

Northwestern recently joined the ranks of schools like Harvard University and Princeton University after it rejected $8.5 million in federal funds allocated by the CARES Act. The reasoning behind this decision has not been made clear. 

The “vast majority” of the endowment, Schapiro said in the email, is restricted or illiquid. Due to its recent drop in value, Schapiro said the University will temporarily increase the rate at which it draws from the endowment. Northwestern will temporarily increase the payout rate regardless of plans to return in the fall, the email said.

The University hopes to resume on-campus activity in the fall by phases, Schapiro said, and is looking into many scenarios for adjusting its operations. The Northwestern University Staff Advisory Council will host a webcast discussion with Schapiro, Hagerty and Johnson next week to engage the broader community on how to take the next steps.

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