UD faces layoffs as deficit looms up to $288M
NEWARK — Facing up to a $288 million deficit this year despite previous efforts to stop the financial bleeding, the University of Delaware is turning to layoffs, furloughs and other deep cuts in coming days.
It’s unclear how many of the 3,570 full-time staff members will be affected by layoffs, but all staff members will face unpaid leave and temporary reductions in retirement contributions. The exact scope of the cost-cutting measures will be accessed after Oct. 5, the deadline when staff can choose to opt into the university’s voluntary retirement program and schedule reductions.
UD’s 1,330 faculty members are exempt from these cuts. The university continues to have discussions with the unions representing employees, including the UD chapter of the American Association of University Professors.
“We simply have no other recourse than to take painful but necessary personnel-related measures,” UD President Dennis Assanis wrote in a letter to UD faculty and staff. “These steps will achieve temporary and permanent savings, while creating some choices for our employees and spreading the impact over multiple measures.”
The cuts come after drastic cuts in discretionary spending, a hiring and salary freeze, salary cuts for senior administration as well as laying off 1,100 part-time employees last spring. That covered about $86 million of the projected shortfall, and the Board of Trustees drew down the endowment portfolio to cover the remaining $82 million.
Earlier this year, it was projected that UD was facing a $168 million deficit. That factored in a tuition freeze, a drop of first-year students, more expenses related to sanitation and online course conversion.
But Assanis said the evolving reality of students staying off campus created a ripple effect that amounted to another $60 million. Enrollment dropped 10% for first-year students and 5% drop in sophomores returning compared to last year. Residence halls are at less than 20% capacity.
The projected deficit for the year is now within the range $228 million to $288 million.
“The hard reality is that the financial difficulties facing UD are not a one-year event, and the road to recovery will extend over the next several years,” Assanis said, adding that the university is already looking at a reduced ability to recruit new students and rising need to increase financial aid next year.
Ahead of layoffs, UD is offering a voluntary retirement program that includes health care for the retiree’s life and retention of education benefits provided. On top of that, the university will offer five months of salary as severance. This program is eligible to those who meet age criteria and have worked at UD for 20 years, which includes 369 staff members. It’s unclear whether the same offer will be made in the future.
On top of these measures, UD will be asking academic departments to cut spending by 15% and non-academic areas to cut by 25% to 35%. All large building projects have been postponed for at least a year.
In addition, the Board of Trustees has drawn down its endowment an additional $100 million.
“This is a situation we truly tried to avoid, with the salary cuts, the endowment, the salary freeze,” university spokesperson Andrea Boyle Tippett said. “But the reality of the situation is that in our $1 billion operating budget, 60% of that is people. We have little choice.”
By Katie Tabeling