The University System of Maryland announced Wednesday that it expects to make budget cuts that could include layoffs in response to unforeseen costs and losses brought by the COVID-19 pandemic.
Other cost-cutting may include temporary salary reductions, furloughs, hiring freezes, eliminating vacant positions and postponing construction projects.
USM predicts that the pandemic will cause at least a $500 million decrease for the Fiscal Year 2021, relative to the original budget. The system already lost $230 million in the previous fiscal year, when its schools refunded students’ room, board and fees when campuses closed in mid-March.
Public colleges and universities are especially vulnerable right now, with three major revenues sources at risk, according to Brookings Institution: hospital revenues, tuition and state funding. Out-of-state and international students provide the highest tuition revenue, and a study by the Institute of International Education found that 50% of schools said their international student application numbers were lower than previous years. And there is a $130 million cut to USM’s state appropriations, according to a university press release.
Whatever action the system takes will affect Maryland’s fiscal health, Chancellor Jay A. Perman said. USM is one of Maryland’s largest employers, providing $3.5 billion in wages and $285 million in state and local taxes, Perman said.
Perman said he will personally take a 10% temporary salary reduction and warned that other employees will likely have to endure budget cuts as well. Union rights will be respected during this process, according to the statement.
“A major challenge for our universities is balancing their budgets without harming their mission and without unduly hurting their employees,” Perman said in a written statement.
“This is extraordinarily difficult, given that COVID has already taken a heavy toll on families’ finances. Protecting faculty and staff to the extent we can is a guiding principle for us, and executive leadership Systemwide has committed to bearing a greater share of any pay cuts we have to make.”
Each of the system’s 12 institutions will announce specific budget plans in the upcoming days.
“Our goal remains to respond to the budget shortfall in a manner that preserves the System’s educational goals for the students we serve, while minimizing any hardship on our employees,” Board of Regents Chair Linda Gooden said in a written statement.
Sally Davies, vice president for higher education at AFSCME Council 3, which represents USM employees, issued a statement Wednesday afternoon in response to the budgetary warnings.
If no campus can act without USM approval or input, employees should be allowed to bargain statewide, rather than campus-by-campus, she said. A bill to shift USM employees to a statewide collective bargaining system stalled in the General Assembly this year.
Davies also urged the system to avoid personnel cuts.
“The University System and its affiliates are major public corporations with Billions of dollars in reserves and holdings,” Davies wrote in an email. “During this time of unprecedented health and economic crisis those reserves should be used to greatly mitigate the effects on the frontline staff who have continued to run the universities throughout the pandemic.”
Davies also said there was “some irony” in Perman’s statement about sharing in the pain.
“In ‘good’ economic times, over the previous 7 years at least, our members didn’t share in the rewards of those high times,” she said. “…Hopefully, the USM will sit down and negotiate with AFSCME a resolution that is fair and equitable.”
Danielle E. Gaines contributed to this report.