Faculty Senate discusses lost pension funds, propose audit of University finances

An+image+of+the+gray+Rebecca+Crown+Center+building.+There+is+a+lawn+with+white+flowers+in+front+of+the+building.

Daily file photo by Catherine Buchaniec

Rebecca Crown Center. Faculty representatives discussed University retirement contributions and proposed an audit to increase financial transparency.

Joshua Perry, Reporter

Faculty representatives raised questions about the University’s fiscal practices and financial future at Wednesday’s Faculty Senate meeting.

Board of Trustees Chair J. Landis Martin highlighted the University’s efforts to mitigate the impact of the pandemic on NU finances. Expecting a budget deficit, the University enacted staff furloughs and pay cuts. However, this resulted in an unexpected budgetary surplus of $83.4 million for fiscal year 2020.

“We’ve been fortunate that we were able to adapt to the new realities,” Martin said. “Our early predictions predicted that we’d be in a much more dire strait today than we turned out to be.” 

Contributions for faculty retirement funds were temporarily suspended to compensate for 2020’s budget shortfall — a practice some Senate members characterized as  a bad precedent for NU’s budgetary practices.

When asked whether the University would return lost faculty pension funds, Martin said the financial uncertainty of the near future meant the funds were still a necessary asset. A budget surplus doesn’t mean NU is in the clear, he added.

“We have our big hurdle to climb in the future — to remain and to keep the budget on balance,” Martin said. “So the money helped us, and it’s going to continue to help us in the future, and we’re not thinking about refunding it.”

Several faculty members said they understood cuts as an alternative to budget eliminations elsewhere, such as increasing staff layoffs. But others said neither option was ideal, and perhaps more information about NU’s finances could help illuminate the situation for both faculty and staff stakeholders.

Weinberg Prof. Karen Alter raised the prospect of bringing in a third party to perform a financial audit to verify the Board of Trustees’ position on retirement contributions and clarify the underpinnings of Northwestern’s financial decisions.

“It just gives you that set of information,” she said. “It doesn’t then say that the money has to go into restitution for faculty, it can’t go into this—it tells you how much money you have, how much money existed or was available.

Alter said faculty at Johns Hopkins University were able to attain pension restitution due to insight about the university’s finances uncovered by an independent audit.

Communication Prof. Kyle Henry said both staff laid off during the pandemic and faculty affected by cuts would benefit from understanding the University’s financial situation. The Board of Trustees could be more transparent about finances through an audit, he said.

“Trust but verify,” he said. “It would be that verification part I think that something like this could afford us.”

The Senate settled on designating consideration to the Budget and Planning Committee. Faculty Senate President Therese McGuire said the executive committee and the full senate would revisit the potential financial audit once more details were available.

The discussion of University finances also led into questions about the Board of Trustees’ reluctance to tap into NU’s endowment. Several members of the Senate agreed that NU’s substantial endowment could potentially help address persistent issues or the needs of faculty and staff affected by the pandemic.

McCormick Prof. Luis Amaral said the University prioritizes growing the endowment to help boost its standing in national rankings, as opposed to investing in other important issues that matter to the NU community. A wider variety of interests need to help guide Northwestern’s financial decisions, he said.

“It’s our University,” Amaral said. “It’s actually very concerning to me that the Board of Trustees behaves as if it is their university, and we are just living in it.”

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Twitter: @joshdperry

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