COVID-19: Progressive Pay Reduction Plan

Update: April 5, 2021

While the University of Oregon continues to face financial challenges due to the COVID-19 pandemic, the university WILL NOT implement progressive pay reductions for faculty or officers of administration as a cost savings measure. More information is available on Around the O.

“We are extremely pleased to let our faculty and staff know that — thanks to their hard work and dedication — we have been able to blunt our most immediate financial challenges and we won’t be reducing salaries due to COVID-19 impacts. I am so grateful to every employee for their dedication to our students, research and service. Thank you for helping us weather the challenges of the last year and for our incredible resilience.”
President Michael H. Schill

Background Information for Context and Reference

The COVID-19 pandemic has caused disruption on so many levels – locally, nationally, and globally. No individual, community, business, or institution has escaped untouched. Through it all, we have collectively accomplished so much to enable our students to continue with progress toward their degrees and for the educational work of the institution to proceed. 

Like all institutions of higher education across the nation, the University of Oregon faces unprecedented financial issues and enrollment uncertainties that will continue to present tough decisions. As we navigate financial uncertainty, our focus will be to keep as whole as possible our university community while continuing to deliver excellent education and life-changing research. We are committed to creatively addressing our financial realities with flexibility and compassion while positioning the university for success in the decades to come.

We are committed to being transparent and collaborative as we continue to work through financials issues that come our way.  

We are very supportive of the important COVID-19 safety measures and regulations implemented at the state, local, and university levels, and hope and believe our students and staff are safe. However, the adjustments we have made starting in the spring term led to a sharp decline in the number of students on campus making financial uncertainty a reality.

Steps have already been taken.

In response to the real and potential budgetary impacts from COVID-19, the university took several actions to mitigate financial loss. The actions we have already taken include: hiring and pay freezes, travel freezes, implementation of the Extended Benefits Program and voluntary and mandatory Work Share programs, department reorganizations, salary cuts and FTE and personnel reductions. While our actions thus far provide important and necessary savings, we must prepare for the prospect of future financial loss. The UO Education & General (E&G) fund will be significantly impacted if there are losses in the university’s two biggest sources of revenue: state appropriations and tuition.

A Progressive Pay Reduction plan would reduce expenses and protect jobs.

We continue to engage our employee groups and unions in contingency planning for responding to the COVID-19 crisis. Planning allows the university to consider reductions to operating expenses and protect as many jobs as possible should that become necessary. It is very possible that we will face an enrollment decline in the fall and/or a cut in state funding, and we will need flexibility to preserve the institution’s long-term viability.

The progressive pay reduction (PPR) plan is a contingency plan for progressive pay reductions on employee salaries.

The university recognizes that activating a PPR would have real financial impact for those who experience reduced pay, which is not taken lightly. At the same time having a plan for salary reductions in place as an option provides an interim solution as we seek greater financial security and stability as we carry forward towards our long-term mission as a university.

We are proud of the work the entire university community is doing to avoid the need for these reductions as we plan for the support, retention, and recruitment of our students.

Past Financial Triggers for Activating PPR (November 2020 through Summer 2021)

The University of Oregon WILL NOT temporarily reduce the salaries of faculty members and officers of administration as allowed by the progressive pay reduction plan triggers described below.

The PPR plan would have been triggered by one of two things (or both): enrollment and state appropriations.

First Trigger – November 15, 2020

The university will review its academic year (AY) 2020-2021 tuition revenue compared to the prior year. The difference will be calculated based on the numbers of in-state and out-of-state undergraduate students in the accounts receivables system as of that date as compared to the numbers of in-state and out-of-state undergraduate students for faIl term AY 19-20, which was 10,517 in-state undergraduate students and 8,473 out­ of-state students (includes international students) for a total of 18,990 total undergraduate students. Those numbers will be compared using the AY 20-21 tuition rates for resident and non-resident students. Any loss in state funding, as reported by the HECC or other state government agency, that occurs between the formalization of this agreement and November 15, 2020 will be combined with any decrease in tuition revenue as calculated above. If reductions in tuition revenue and state funding losses exceed $15 million, the PPR plan described below may be triggered.

Update: Nov. 16 – Despite significant budget challenges created by the COVID-19 pandemic, the University of Oregon will not be temporarily reducing salaries of faculty members and officers of administration this winter under the first trigger defined by the progressive pay reduction plan. More information is available on AroundtheO.

Second Trigger – Summer 2021

If the pay reduction plan is not activated in November 2020, then the plan can be activated in summer 2021 (or directly after the legislature completes the Spring 2021 legislative session and determines the Public University Support Fund (PUSF) funding level). If the PPR plan is not triggered until after the Spring 2021 legislative session, the following things will be combined to determine the total E&G fund loss:

  • Tuition losses calculated in November of 2020
  • State cuts calculated in November of 2020
  • Additional state cuts announced by the end of the Spring 2021 legislative session. The impact of these state cuts will be calculated by comparing the funding that the university is projected to receive for the E&G fund in FY22 to currently projected state appropriation of $84.5 million (FY20 E&G state funding of $79.3 million plus expected $3.2 million increase in FY21 plus expected $2.0 million increase in FY22).
  • Note that this figure will be adjusted for actual FY20 HECC anti-up calculation (completed in Fall 2020 for FY20).