March 19, 2021
Dear AFT Faculty Members,
Many of you have asked why the projected budget deficit went from $16-$20 million, at the end of Fall 2020, to $20-$26 million at the start of the Spring 2021 semester; how we arrived at the range of faculty layoffs needed to address the deficit and ultimately landed on 100 positions; and, finally, how that number dropped from 100 to 33 through an agreement between the University and the AFT. This communication will attempt to address these questions, while also clarifying several things of which you should be aware, going forward.
“Why did the projected deficit go from $16-$20 million at the end of Fall 2020 to $20-$26 million at the start of Spring 2021?”
The University’s preliminary budget for the next academic year is typically developed late in the prior Fall semester, after census occurs. We wait until Fall census because, based on Fall enrollments, we can model out Spring enrollment based on prior years data and then project forward into the next academic year. Following the Fall census, the Vice President of Enrollment Management and I meet to discuss enrollment goals for the next academic year. Last October, I asked Vice President Reg Ross for an aggressive enrollment goal, in order to get us back to 10,000 students, which is a 5% enrollment increase. I want you to know that WP has never achieved a 5% enrollment increase. However, with WPOnline exceeding enrollment expectations, coupled with the fact that we are expanding WPOnline with select undergraduate programs, 5% -- while certainly a stretch goal – is achievable, if everyone pitches in.
Faculty play an important role in this plan. We need your help to make a dent in the 2000 students we attrit, year to year, and the lost tuition revenue they represent. Also, in the preliminary budget developed in Fall 2020, we assumed residence halls would achieve a 70-80% occupancy rate for the 2021-2022 academic year, a significant drop in resident students and revenue from the typical 80-85% occupancy rates we saw prior to the pandemic. Finally, on the revenue front, the agreements between WP and the collective bargaining units, which provided salary savings through furloughs and the COLA suspension, expire at the end of the current fiscal year. When we added those expenses and COLA increases back in to the budget projections, it has produced an expected deficit of $16-$20 million for the 2021-2022 academic year.
It was at this point when we knew that we would have to notify AFT of layoffs in January 2022, given the two-semester noticing requirement in the CBA and given the fact that the statewide furlough agreement precluded any layoffs until January 2022. To comply with the contractual obligations, we had to provide notice knowing that we could always withdraw that notice if a solution could be devised.
“Why did the projected deficit increase from $16-20 million to $20-$26 million between Fall 2020 and Spring 2021?”
At the end of the Fall 2020 semester, we believed that residence hall occupancy would hold steady at 50%. Instead, the Spring 2021 census showed that the rate had dropped to 38%. This, understandably, made us leery of building a budget that relied on an occupancy rate of 70-80%, which was built into the preliminary budget at the end of the Fall 2020 semester. We reworked the budget to provide a range of scenarios with residence hall occupancy rates anywhere from 50%-70%, which then grew the deficit from the original $16-$20 million projected at the end of the Fall 2020 semester, to the current $20-$26 million projection.
“How did WP arrive at the range of faculty layoffs needed?”
We initially provided a range of 60-100 layoffs, with the understanding that if more faculty with seniority – and, thus, higher salaries – took advantage of the Voluntary Separation Program (VSP), it would reduce the number of layoffs required to the lower end of the range. As you know, not many faculty took advantage of the VSP, which is why the expected number of layoffs moved to the high-end of the range – 100.
By necessity, we notified the AFT in January, based on the preliminary budget, built in Fall 2020, with its projected $16-$20 million deficit, and stated that the 60-100 range for layoffs was based off that projection. Required adjustments to the preliminary budget occurred in Spring 2021 and drove the projected deficit up to $20-$26 million. However, I did not feel that it was fair at that point to further increase the number of layoffs, so we kept the range at 60-100 but were forced to adopt the higher end of the range that was based on the $16-$20 million deficit, as of Fall 2020.
I think it is important for you to understand why auxiliary revenue from things like residence life, the bookstore, and meal plans have become increasingly important to the operating budget. As enrollment dropped, the University increasingly relied on auxiliary revenues to offset declining tuition and fee revenue in the operating budget. Typically, auxiliary revenue is used to increase the reserves and is used to support capital improvements or one-time strategic investments. Hence, the drop in residence hall occupancy had a significant impact on both our operating budget and the reserves.
“How did we arrive at the number of 100 faculty layoffs?”
Despite the increased deficit projection, we stayed with the initial range that was projected based on the deficit at the end of December ($16-$20 million), given that was what we had told the AFT to anticipate. We decided that approximately half of the deficit, or $10 million, would be filled through faculty layoffs. The AFT contract provides that layoffs for financial reasons must be based on seniority – that is, last in, first out – unless the University demonstrates programmatic need or is eliminating academic programs. The average salary of assistant and associate professors, the group most likely to be impacted, is $100,000. Doing the math, $10 million (50% of the deficit) divided by $100,000 (average salary) equals 100 positions, which is how we arrived at the projected number of faculty layoffs that would be necessary. If more faculty with higher salaries had opted for the VSP or retirement, we could have reduced the number to the lower end of the 60-100 range.
“How, then, did we go from 100 to 33 layoffs?”
AFT Local President Sue Tardi and I then began to look at all the economic factors, many of which were locally negotiated, to determine if we could make some headway in reducing the number of layoffs. We used as our guide the budgeted dollar amounts divided by the average assistant or associate professor salary of $100,000. The following details the approved Memorandum of Agreement (MOA) between the AFT and the University, which helped to reduce the number of layoffs.
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We started with 100 layoffs, and 17 faculty either took the VSP or were slated to retire, which got us to 83.
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AFT agreed to withdraw a grievance regarding career development money, which resulted in 1 less layoff. This dollar amount of savings was $60,000 less than the $100,000 bar, but it was nonetheless agreeable to both parties, which brought us to 82 layoffs.
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The agreed-upon suspension of ART will save the University about $2 million, annually; so, $2 million divided by $100,000 equals 20 positions; we were now at 62 layoffs.
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The agreed-upon suspension of sabbatical leaves will save the University $500,000, annually; divided by $100,000, that equals 5 positions, which brings us to 57 layoffs.
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The agreed-upon suspension of faculty promotions and range adjustments will save the University about $300,000, annually, which provided for 3 positions and got us to 54 layoffs.
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The agreed-upon suspension of faculty advisement saves the University approximately $300,000, which provided for 3 positions and got us to 51 layoffs.
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The agreed-upon suspension of Non-Contractual Release Time (NCRT) saves the University approximately $1.6 million, annually, which provided for 16 positions and got us down to 35 layoffs.
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Finally, the agreed-upon suspension of faculty travel will save the University about $200,000, annually, which provided for 2 positions and got us to the current number of 33 expected faculty layoffs.
The complete MOU is posted on my website and can be viewed here.
Here are some key things to keep in mind:
Should more faculty members decide to retire or adopt the transition to retirement program, we can reduce the 33 layoffs further, still.
ART is suspended for the next academic year. Even for those of you who were given multi-year awards last year, ART will not be awarded this year. If you have a grant where ART was a provision of the grant, please work with your Dean and the Provost. However, remember that you can discuss the possibility of teaching a class in the Winter Term or in Summer 1 as part of your contractual teaching load, if there is need. This would allow for a lighter teaching load in the Fall or Spring semester, which could provide some additional time for research. The Provost and I are sensitive to the impact of the suspension of ART on research agendas and will be thoughtful in the review of tenure and promotion applications.
The AFT and the University agreed that the above provisions have been suspended and not permanently eliminated. What does this mean? It means that as preliminary budgets are built, I will meet with the AFT President to review and discuss our financial status. We will also meet again, post census, in case the budget changes, to determine a path forward. The University President and the AFT President will annually have to engage in this process of review and discussion. Should we continue to have budget challenges, the University will need to provide faculty with potential layoff notices. These notices may be avoided if the AFT and the University can reach agreement regarding provisions in the attached Memorandum of Agreement that may need to continue to be suspended to avoid additional layoffs. While it is important to remain optimistic, it is equally important to recognize that we have a long, steady climb out of these financial problems.
Many have you have also asked about federal relief money and what it will mean for this agreement. Please understand that federal relief money is one-time money and does not address our structural imbalance, which is the result of long-term trends, including enrollment declines and a lack of appropriate increases to our state appropriation. The Board of Trustees, and I maintain that increases in retention, enrollment, or base state appropriations are necessary to avoid future layoffs. We recognize the importance of many of the sacrifices you are making regarding the MOA, but we cannot rely on using one-time funds to resolve our structural budgetary problems. Returning some NCRT using one-time funds to support critical administrative work, which is not part of faculty salary, for one year only is a discussion we will have with the AFT when the time comes.
Please know that, as part of the MOA, faculty scheduled for post-tenure review may no longer defer pending retirement. Details will be forthcoming.
Additionally, we have extended the transition to retirement program until 2023 to allow us to further reduce the number of possible layoffs. Every faculty member opting for the one-year transition to retirement program will save one colleague’s job. For every two faculty members who opt for the two-year option, retiring in 2023, one colleague’s job will be saved. Please contact Veronica Ruiz in Human Resources if you feel this might be an option for you.
I want to thank AFT Local President Sue Tardi and her leadership team, Professor Linda Gazzillo Diaz, Professor Maureen Martin, and Professor Sean Wilson, statewide AFT leadership, Vice President for Human Resources Allison Boucher-Jarvis, Provost and Senior Vice President for Academic Affairs Joshua Powers, Senior Vice President for Administration and Finance Steve Bolyai, and Vice President for Strategic Initiatives and Government Relations Guillermo de Veyga for their hard work on reaching this agreement. Additionally, thanks to General Counsel Melissa Reardon Henry for her guidance through this process. We are particularly grateful to local AFT membership for their strong support of this agreement. I know that you all sacrificed because you care about your colleagues, your students, and your University.
It is devastating that we may lose 33 valued faculty members. I have said, and I maintain, that layoffs remain a last resort, and if things change, either through better-than-anticipated enrollment, retention, auxiliary revenues, or state appropriations, or through additional retirements/separations, I will withdraw layoff notices accordingly.
Thank you for your patience through this challenging process and for your continued dedication to William Paterson.
