States and state universities across the country weigh pay cuts and furloughs as pandemic wrecks havoc on budgets – Yankee Institute

**Meghan Portfolio contributed to this article**

States and state universities from Hawaii and California to Maine are proposing employee pay cuts, pay freezes and furloughs in response to the COVID-19 pandemic, which has wrecked havoc on state budgets.

Hawaii Gov. David Ige has proposed a temporary 20 percent reduction in pay for state employees, while New York Gov. Andrew Cuomo froze a 2 percent pay increase for state employees and Pennsylvania Gov. Tom Wolfe laid off 2,500 part-time and seasonal employees and furloughed 9,000 state workers in response to the crisis.

California Gov. Gavin Newsom’s proposal to cut state employee pay by 10 percent was rejected by the legislature on hopes of a federal bailout, otherwise the state will dip into its reserves and defer payments.

In Michigan, more than half the state workforce will be furloughed through the summer and North Carolina furloughed almost all its Department of Transportation employees to save an estimated $300 million.

Colorado reduced a set aside for state employee pay and both Rhode Island Gov. Gina Raimondo and New Jersey Gov. Phil Murphy are allowing voluntary furloughs to avoid layoffs.

More prevalent, however, are employee furloughs at state universities, which have taken massive hits after being forced to move from in-person classes to online learning and sent resident students back home, forcing partial tuition refunds.

The University of Delaware cut the salaries of top officials and froze annual pay increases for staff; the University of Alaska furloughed senior administrators, including the university president; Kansas State University furloughed 350 employees and top Athletics Department staff will take 10 percent pay cuts, along with a 10 percent reduction in operating costs for the university.

All states are essentially facing the same budgetary difficulties as a result of the pandemic, the shutdown of businesses and the market downturn.

Connecticut, bolstered by its reserve fund of $2.5 billion, has so far avoided having to make any cut backs on state employee wages or furloughs, but how long the state can hold out is anyone’s guess.

State employees are set to receive the second half of an estimated $353 million pay increase in July, part of a contractual agreement negotiated in 2017 between Gov. Dannel Malloy and the State Employee Bargaining Agent Coaltion.

The raises are a combination of a 3.5 percent general wage increase and a step increase of roughly 2 percent.

Connecticut is facing a roughly $619 million shortfall this year due to the COVID-19 pandemic and shutdown of businesses. That figure is down $300 million thanks to federal government support for state expenses for battling the virus. 

The 2021 fiscal year is projected to worse, however, running $2.3 billion in the red, according to the April consensus revenue estimates. Lawmakers will also be tasked with crafting a budget to address a projected $4.3 billion biennial deficit when they return to session, although numbers may change dependent on federal stimulus money.

Like many other states, Connecticut’s premier public university is also facing severe shortfalls due to the pandemic.

Addressing this will include significant spending cuts and reprioritizing funds. Limiting hiring has already been implemented. Costs associated with our workforce are a significant part of our budget and will have to be part of the discussion.

Stephanie Reitz, Spokesperson for University of Connecticut

UConn is preparing for a loss of up to $134 million after resident students were sent home to avoid the virus halfway through the spring semester.

That number could grow by as much as $70 million next year as the university expects to see a decline in the number of international students attending in the fall, either through government-imposed travel restrictions or just continued fallout from the pandemic.

“We are actively planning to contend with serious financial challenges in the coming year due to the pandemic and will make a presentation to our Board of Trustees later this month,” UConn Spokesperson Stephanie Reitz wrote in an email. “Addressing this will include significant spending cuts and reprioritizing funds.”

“Limiting hiring has already been implemented,” Reitz wrote. “Costs associated with our workforce are a significant part of our budget and will have to be part of the discussion.”

UConn’s total salary costs for faculty and staff were $426 million, according to their last presentation to the Board of Trustees. Salaries and fringe benefits made up 57 percent of the university’s operating budget. 

The report said high fringe benefit costs of $338 million per year were “impacting UConn’s and UConn Health’s competitiveness.” The high fringe benefit costs are due to Connecticut’s unfunded pension and retiree health liabilities.

“The deficits would be non-existent without the State’s unfunded [State Employee Retirement System] liabilities,” the presentation says.

The state paid $608 million in support to its flagship university in 2020, including $198.1 million for salaries, which covered 47 percent of UConn’s total salary costs, $168.1 million for fringe benefits and $212 million for debt service.

UConn Health is also facing a loss due to a decline in the number of surgeries and other medical procedures. Hospitals across the state are seeing losses as they vacated units to prepare for a surge of coronavirus patients.

One of the key drivers of UConn Health’s deficit in 2020 was the 5.5 percent pay increase negotiated as part of the 2017 SEBAC Agreement, according to UConn’s report. 

A second 5.5 percent pay increase is set for July 1 of this year and some lawmakers have been urging Gov. Lamont to suspend the pay increases to deal with the fiscal fallout of the pandemic. 

Lamont has said he is currently in talks with union leaders. UConn will present its budget and recommendations to the Board of Trustees on June 24.

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