As institutions grapple with COVID-related expenses—and anticipate future budget shortfalls—some have begun furloughing staff to temporarily reduce salary costs. While furloughs are an attractive alternative to layoffs, most institutions haven’t considered furloughing staff since the Great Recession—and today’s circumstances are quite different than they were a decade ago. As a result, leaders are adapting their historic furlough approach to the COVID-19 context.
EAB has analyzed institutional furlough plans from the Great Recession through today and predicted how furloughs will evolve as the coronavirus crisis continues.
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Looking Back at Post-Great Recession Furloughs
In the aftermath of the Great Recession, many public institutions furloughed employees in response to state budget cuts. In fact, several states—like North Carolina, Georgia, and Virginia—mandated furloughs for all state employees, including faculty and staff at public higher education institutions. Even when state governments did not mandate furloughs for all employees, many institutions still opted to furlough their entire administrative workforce, with few exceptions (e.g., 100% grant-funded positions, H1B visa holders). Most often, leaders enacted tiered furlough plans that mandated a specific number of furlough days for every employee based on their salary. Typically, these plans required staff to take fewer than 15 furlough days intermittently over the course of a fiscal year.
Select Tiered Furlough Plans from the Great Recession (2009-2011)
These across-the-board furloughs often generated millions in savings, although they alone did not sufficiently address budget deficits. Institutions also needed to pursue hiring freezes, senior administrator pay cuts, and even layoffs to compensate for shortfalls.
Select Across-the-Board Furlough Savings from the Great Recession
Arizona State University’s furloughs (10-15 days) yielded $24 million in savings in FY09, which was 40% of their required budget reduction
The University of California System’s furloughs (11-26 days) yielded $184 million in savings in FY09-FY10, which was 25% of their budget shortfall
Utah State University’s furloughs (5 days) yielded $3.36 million in savings in FY09, which was 60% of their required budget reduction
Monitoring COVID-19 Furloughs
Public and private institutions of all sizes have announced staff furloughs in the wake of COVID-19. At least 60 institutions have already initiated furloughs (see examples in the graphic below, and use the links to access more information about their plans). Meanwhile 41% of business and finance leaders anticipate needing to furlough staff in the coming months as a result of COVID-related financial pressures.
Most institutions have furloughed staff whose roles cannot be performed remotely during campus closures, often in dining, facilities, and student-facing services. Some institutions—like Western New England University and University of Wisconsin-Green Bay—have placed staff on furlough for several consecutive weeks this spring. Others—like The New School and Eastern Kentucky University—have furloughed staff for the next several months, with end dates in the summer. A third group of institutions—including Seton Hall University and Marquette University—have furloughed staff indefinitely, promising to reinstate them once normal campus operations resume.
While no leader wants to furlough staff, some currently feel more comfortable doing so because of the federal CARES Act’s expanded unemployment benefits. In fact, some institutions—like Ithaca College—have explicitly stated that they expect affected employees to recoup their lost wages in full through state and federal benefits. However, the weekly federal supplement afforded by the CARES Act is set to expire on July 31, 2020. So several institutions—including the University of Montana and University of Tulsa—have intentionally scheduled furloughs to end on this date, so employees won’t experience a sudden income reduction.
Some institutions are also beginning to require all employees—not just staff whose work was directly affected by campus closures—to take some furlough days. For example, Boise State University is requiring all staff and 12-month faculty to take furlough days between May 3 and July 31, 2020. Other institutions are thinking even further ahead. Both the University of Arizona and Idaho State University have announced furloughs for the upcoming fiscal year. In each case, the institution has mandated a specific number of furlough days that each employee must take during FY2021. Both plans require lower-salaried employees to take fewer days than higher-salaried employees, reducing the financial burden on employees for whom salary reductions will have an outsized negative effect. While Boise State University plans to schedule some furlough days consecutively, staff at the University of Arizona will take furlough days intermittently throughout the year.
Beyond individual institutions, a few university systems—like the University of Wisconsin System and University System of Georgia—have announced furlough plans for FY2021 that will affect most or all employees at every system campus.
Predicting Future COVID-Related Furloughs
It’s almost certain that more institutions—both public and private—will announce furloughs in the coming months and even into the fall. In the short term, we expect some institutions will need to continue placing select staff (i.e., those whose roles cannot be fully performed remotely) on extended furloughs—particularly while federal unemployment supplements are still available. Looking ahead, leaders’ furlough plans will depend on 1) to what extent campuses reopen and 2) how reopening decisions affect fall enrollments and auxiliary revenues. Since final fall plans are still in question, leaders may announce new furloughs during the summer to minimize salary costs in anticipation of fall tuition or auxiliary revenue shortfalls. And depending on the magnitude of their FY2021 budget shortfalls—along with potential mandates from public higher education systems or state governments—some institutions may plan for more widespread furloughs across the upcoming academic year.