Facing $96M Shortfall, President Brown Announces Layoffs, Furloughs
Facing $96M Shortfall, President Brown Announces Layoffs, Furloughs
Decision comes after operational cuts reduced expenses by $164 million
After cuts to operational expenses reduced a $264 million revenue shortfall by more than half, BU President Robert A. Brown announced Monday, a remaining budget hole of nearly $100 million has forced him to “reduce budgets in our academic and administrative units.”
Brown said in a letter to faculty and staff that he anticipated that 250 employees, at the most, will be laid off or furloughed (furloughed employees would maintain their benefits). The decision comes, he said, after approximately 200 vacant positions had been either eliminated or deferred in a further cost-saving measure. All of the budget cuts are a direct result of the financial impact the global COVID-19 pandemic has had on the University’s revenues and expenses.
There is the possibility that in the coming weeks some employees who are furloughed could be moved into other jobs that are focused on the University’s efforts to create a safe and healthy campus environment for the fall return of students, or other opportunities that surface across BU. Employees will be told individually sometime in July, but the exact timing remains unclear.
“As challenging as these decisions are,” said Brown, “our top priority is to treat every employee with dignity and respect consistent with the values of Boston University.”
I feel it is best to share the realities of our financial situation and to err on the side of transparency with you.
In his letter, Brown outlined various operational steps the University took before turning, as a last resort, to employee layoffs and furloughs—steps that he said decreased expenses by $168 million. He said reserve funds and budget contingencies were all used to reduce the shortfall. Salaries of faculty and staff were frozen, and the salaries of BU’s most senior executives were reduced by 10 to 20 percent. Also, BU’s contributions to employee retirement funds were frozen. Even with those reductions, however, Brown said the fiscal year 2021 budget still had a $96 million gap that had to be closed.
“At this moment, I feel it is best to share the realities of our financial situation and to err on the side of transparency with you.”
The president acknowledged in his letter that the fallout from COVID-19 could mean further budget cuts might still be necessary.
“I must reiterate the considerable uncertainty that still exists relative to what our enrollments will be in the fall, and thus, what actual revenue and expenses will be, compared to our revised budget,” he wrote.
Brown said there are some positive signs to point to for the coming fall semester: deposits from students for almost all of BU’s undergraduate and graduate programs are strong, but it’s unclear whether students will choose to attend—or will be able to attend depending on their personal circumstances. “This is especially true for our international students, for whom obtaining visas is not yet possible,” he wrote.
The Learn from Anywhere (LfA) learning model that BU is implementing, which will allow students the flexibility to learn from home or return to campus, will be critical to accommodating both the needs of students who come back to campus and require Housing and Dining and other services, and those students who choose to study remotely.
Brown wrote that the initial $264 million revenue shortfall BU faced this spring equaled about 16 percent of University expenditures—not including expenses connected to research or financial aid or debt service, none of which can be reduced.
“We have a budget, although not quite in balance, that is a good starting point for beginning the fiscal year on July 1,” Brown wrote. “We are all working and living with extraordinarily difficult circumstances as we attempt to define a new normal with COVID-19 in our midst.”
$100 million/250 employees = $400,000 per employee? Who knew that we are paid so much!
Seriously speaking, there are quite a few departments that are overstaffed and have nothing to do. BU needs to hire an efficiency expert who could evaluate management qualifications and business know-how.
As a fellow staff person and so-called “double Terrier,” I wholeheartedly agree.
BU has a $2.3- $2.5 billion endowment. They can surely use a small fraction of this to save jobs and avoid layoffs. Also, many employees (Including myself) have donated annually to the Giving Day fund. BU wasn’t shy to receive money from their employees- is this how BU will treat and repay them now with layoffs?
Agree 100000% – as a potentially incoming student, seeing this news was extremely disappointing and makes me question how much BU truly values the important members of its academic community. Reduce highly paid administrators’ salaries!
God forbid Brown halts the building of his stack of books between Silber and Granby Street for a year or two.
Some Billion Dollar pet projects are sacred. Even though the University will shrink as a result of reduced enrollment and employees, even as the existing infrastructure crumbles, we must build enormous new facilities.
No one should be laid off or furloughed until President Brown and other highly-paid leaders take pay cuts down to zero. That’s leadership.
I could not agree more.
I have to agree with this statement. I feel this should be the case across all organizations and companies that are impacted by COVID-19, leadership and upper management should be the first to take salary cuts before lay-offs.
Boston University has an endowment of $2.31 billion. Knowing how much they pay their staff members, they would likely need no more than $1.5 million to keep all 250 people employed. BU would need approximately the same amount of money as the President’s annual income to keep these 250 staff members, with responsibilities and lives, from losing their jobs.
BU has a significant spending/management problem that should have been fixed long before COVID-19. Here are some ideas:
Reduce the number of administrators by half.
Stop the insane building spree. We do not need posh buildings to do world class research.
Eliminate useless/marginal departments/colleges whose only function is to take money out of middle class families.
Reduce tuition by expanding the student base in strategic areas (STEM) recruiting more domestic students.
Downsize non-academic activities (sports).
Use the endowment to support BU employees.
Without fixing the structural problems created by years of bad management not amount of layoffs/cuts will be enough.
Why is the construction of the new building not halted for the time being ? If employees are going to get laid off who’s going to occupy and maintain the building.
Then there will be 200 or so unemployed construction workers.
Let’s face it Boston University community, BU is not the world class elite university we all thought or were led to believe. Layoffs, furloughs, and suspension to retirement benefits , are horrendous tools in attracting and retaining world class elite talent. I may potentially expect these type of moves after several years of hardships and difficult times not a few months. There are plenty of smaller and larger universities then BU who are sticking by there employees, not abandoning them. I hope these decisions by BU do not affect the world class reputation and rankings I once thought BU deserved and that we all worked hard for. BU strives to be the best they should start acting like it and weather the storm like so many other colleges and universities seem to be doing.
Does BU not plan for rainy days? Years or surplus and BU can’t make it one year of hard times without cutting retirement benefits and laying off staff?
Fiscal Year 2018
The Fiscal Year 2018 year-end financial operating results were much better than expected and represented a very strong outcome compared to prior fiscal years. The University’s Fiscal Year 2018 ended with funds of $188.2 million available for reinvestment. This balance compares to end-of-year balances of $180.3 million in Fiscal Year 2017 and $157.5 million in Fiscal Year 2016.
As a BU alum this is why I will never donate a cent of my hard earned money to the university. They should have implemented basic cost cutting strategies years ago that would have kept the administrations bloated salaries in check and building spree under control. They need a consulting firm to do an audit and suggest where they can trim the fat instead of just having mass layoffs. How in the heck are they almost $100 million in the red after 1 single semester?
Making a big mistake
I can’t believe this is happening. It isn’t right. As a monthly paid member of staff, I’d be willing to take a pay cut before seeing peers be furloughed or fired. Not to mention that there’s no information being shared about who is even being fired.
Who are the idiots that decided to announce the furloughs and the layoffs a few weeks in advance? You care about your faculty and staff? Rightfully, a press release could have gone out after, not a few weeks before. No thought into how this would affect all employees. This was a HORRIBLE MOVE BY THE UNIVERSITY.
Why can’t BU borrow money and service the debt on a long-term basis? They can build repayments into future years budgets. It’s what most businesses are doing.
Was wondering if other options were explored before lay-offs were implemented. Maybe an early retirement package for the 60+ employees
How much did all those testing robots cost? Are you trading robots for grad student stipends? Staff that are being fired or furloughed?
Agreed with many of the comments and I’d like to add that as an “essential worker” who has been in the frontlines through this pandemic I think that cutting our retirement plan contributions and freezing salaries is not the best way to say “thank you for being there when all of us are working from home“, enough said.
Early retirement might help.
Where is the petition to cut president Browns/high paid execs salary ?? Reduced 10-20% boohoo — pay your employees.
“the salaries of BU’s most senior executives were reduced by 10 to 20 percent”
How much is that in dollars?
The highest unemployment rates this country has seen in DECADES and you’re firing people? From the looks of the other information coming out plus what people are sharing here you announced that you’re firing staff while simultaneously promoting faculty. Seriously? You should realize that it takes more than only faculty to keep you running successfully. It’s the staff that kept me on track to graduate. It’s the staff that checked in with me when I couldn’t see the end of the tunnel. Faculty don’t have the skill, care, or interest in connecting with students as individuals. Staff do.