By CALEB HAMPTON | Davis Enterprise

Chancellors and Napolitano will take 10-percent pay cut

On Monday, University of California President Janet Napolitano announced a systemwide freeze on salaries for nonunionized staff and nonstudent academic employees. Additionally, Napolitano and all 10 campus chancellors will take a 10 percent pay cut in the coming fiscal year.

Napolitano earns a base pay of $570,000. The chancellors’ average base pay is roughly $500,000.

The pay cuts and salary freezes are part of cost-saving efforts undertaken by the university in response to financial hardships caused by the coronavirus pandemic.

In a letter addressed to the campus community, Napolitano said UC suffered $1.2 billion in unanticipated losses from mid-March through the end of April. “Like many other organizations, UC is facing significant financial impacts as a result of the pandemic,” Napolitano said. “This significant loss of revenue is having an enormous negative impact on our budgets.”

Last week, California Gov. Gavin Newsom announced a revised state budget for 2020-21, which included a 10-percent reduction in funding for UC worth $372 million. Newsom’s initial budget — made in January, before the pandemic — had proposed a 5-percent increase in funding for UC.

The university’s 2019-20 budget is roughly 40 billion, according to the UC Board of Regents. Many of the university’s revenue streams, which come from a variety of sources, are restricted to specific purposes.

According to Napolitano’s letter, UC is developing budget scenarios for different locations in anticipation of further cuts. “Each UC location faces unique circumstances which will require different budgetary strategies and actions, so cuts will not necessarily be uniform across the system,” she said. The university is also looking at eliminating non-essential travel and renegotiating service agreements to reduce expenses.

UC Davis had begun planning budgetary adjustments before the extent of the coronavirus disruption was evident. In early March, UC Davis Provost Ralph J. Hexter published a new budget framework and announced the need to reduce the campus’s reliance on state funds and tuition by $80-100 million over the next five years.

In an April 16 letter, Hexter asked administrators to look for cost saving opportunities as the campus continues to monitor the pandemic’s financial impact. “Over the coming months we will track and model the impact of COVID-19 across the range of our operations, including enrollment, patient care costs and revenue, extramural research activity, and operating costs for providing remote instruction,” Hexter stated.

On Monday, Napolitano added that the UC Office of the President is in communication with union leaders “to be sure they understand the current reality of our financial circumstances.”

“We are a strong organization and will work over time to address our losses and recover,” she said. “The present realities and ongoing uncertainties, however, require us to take actions in order to adjust to current circumstances.”

Anticipating potential pay cuts and layoffs, UC workers’ unions have pushed back against expected austerity measures. On Tuesday, AFSCME Local 3299, UC’s largest employee union, gave a virtual presentation on UC’s finances, presenting a different picture of the university’s preparedness to weather pandemic-related losses.

“Based on its cash reserves, working capital and endowment pools, strong credit, and through potential administrative savings, UC does not need to be bound to a strategy of austerity,” said AFSCME Local 3299 research director Claudia Preparata. The union’s findings were based on an analysis of 12 years’ worth of data from UC’s financial reports.

UC has roughly $31 billion in endowment assets and working capital pools, which, according to the union, could help it navigate the pandemic with minimal cuts and layoffs. Preparata pointed out that as California’s third largest employer, UC’s decisions will play an outsize role in the state’s response as a whole. “UC is in good financial standing to lead the state’s economic recovery,” she said.

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[Source]: Davis Enterprise