USM braces for $500 million COVID-19 budget cut, potential layoffs

Students walk across McKeldin Mall. (Gabby Baniqued/The Diamondback)

The University System of Maryland is bracing for a $500 million coronavirus-related budget cut this school year and warning faculty and staff that layoffs could be on the horizon.

In a press release Wednesday, the system acknowledged that “nearly every source” of its revenue — including government funding and tuition — will fall in the coming year. That includes over a hundred million dollars in funding cuts from the state, according to the release.

“A major challenge for our universities is balancing their budgets without harming their mission and without unduly hurting their employees,” system Chancellor Jay Perman said. “This is extraordinarily difficult, given that COVID has already taken a heavy toll on families’ finances.”

In June, the Board of Regents voted to authorize system presidents to use temporary salary reductions and employee furloughs as a means of closing their school’s budget deficits. Different institutions within the system could also see layoffs, as well as a reduction in operating expenses and the use of reserves, according to the release.

[USM Chancellor Jay Perman stands behind in-person classes, but with an exit route]

In recent months, the system began bracing for COVID-19’s financial impact by implementing a hiring freeze, eliminating vacant positions and deferring construction projects.

Perman said he would be taking a 10 percent temporary salary reduction to help bear the burden.

“Even so, I acknowledge that the size of our deficit means that, to some degree, employees will likely have to share in the pain of budget cuts,” he said.

The American Federation of State, County and Municipal Employees Council 3, which represents system employees, criticized the statement, saying in a press release that system officials should have negotiated the budget cuts with the union before sending out a public statement. 

“The University System and its affiliates are major public corporations with Billions of dollars in reserves and holdings,” the statement read. During this time of unprecedented health and economic crisis those reserves should be used to greatly mitigate the effects on the frontline staff who have continued to run the universities throughout the pandemic.”

The union also alluded to the university’s repeated refusal to bargain with its members on healthy and safety protocols amid the pandemic.

The system’s statement did not indicate whether tuition and fees at its schools will be affected by the budget cut. In June, the Board of Regents voted to freeze tuition and fees at the rate of the 2019-2020 school year.

[USM won’t increase tuition, room and board rates for next school year]

In the coming days, each system institution will communicate its budget decisions to faculty and staff, according to the statement. On Thursday, University of Maryland President Darryll Pines and administration and finance Vice President Carlo Collela will hold a virtual town hall to discuss the impact of the coronavirus on the university’s budget.

In April, former university President Wallace Loh said the university will lose about $80 million due to the pandemic. A month earlier, Loh joined other Big Ten presidents in lobbying the federal government for a higher education bailout.

He and other university presidents had been dissatisfied with the $14 billion set aside for  higher education in the CARES Act, an emergency relief bill passed by Congress in March to alleviate economic fallout from the COVID-19 pandemic.

This university was allotted $21 million from the bill. At least half of that sum must be set aside as financial aid for students, according to the bill.

To ease those losses, Loh instituted a hiring freeze last semester and instructed the vice presidents of all university divisions to plan to reduce expenditure rates and delay any nonessential spending.

In the past, the former university president attributed tuition increases for both in- and out-of-state students to decreases in state funding.

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