Faculty and staff take salary cut of 0.5% this fiscal year

All Carolina faculty and staff will feel the sting of the state’s financial crisis, both before the end of the current fiscal year and after the beginning of the new fiscal year, which now is projected to have a budget shortfall approaching $5 billion.

On April 28, Gov. Beverly Perdue issued an executive order for a flexible furlough plan that will reduce all teachers’ and state employees’ annual salaries by 0.5 percent before the fiscal year ends on June 30. In return, each permanent full-time employee will receive 10 hours of flexible leave that can be taken between June 1 and Dec. 31.

The 0.5 percent decrease in annual salary applies to all University employees, regardless of how their salaries are funded, said Brian Usichon, senior director of benefits services, and Betsi Snipes, director of payroll services in a campuswide e-mail last week.

The aim of the policy is to apply the decrease fairly across the board to all state employees, they said.

The impact on a faculty or staff member who earns $42,000, for example, is a $210 reduction in gross earnings.

Although the University has not received final implementation instructions, University officials expect the reduction to be spread over several pay periods.

For permanent SPA employees, the reduction will probably be divided into equal increments and spread over three pay periods: May 22, June 5 and June 19. For permanent EPA employees, equal reductions likely will be taken for each of the May 31 and June 30 pay periods.

Both employees who earn leave and those who do not are subject to the flexible furlough program.

Permanent full-time employees will receive 10 hours of flexible leave to be taken between June 1 and Dec. 31. The flexible leave will be prorated for permanent part-time employees. Temporary employees who are paid on an hourly basis will have to reduce their hours proportionately to their average weekly hours.

“We understand that employees have many questions about how this program will be implemented,” Usischon said. “We are working with UNC General Administration, the Office of State Personnel and the Office of State Management and Budget to get answers as quickly as possible. As we learn more, we will definitely keep employees informed.”

Current information is posted on the Carolina Budget Information Web site, universityrelations.unc.edu/budget, including a link to information on the Office of Human Resources Web site, hr.unc.edu/Data/benefits/flex-furlough. People also may submit questions to furlough-questions@unc.edu.

Next fiscal year
The scope of state budget cuts for next fiscal year, including any possible impact on salaries, likely will not be known soon.

To prepare for inevitable cuts of at least 5 percent next fiscal year, Chancellor Holden Thorp in March directed senior administrators to cut University programs, operations and staffing equal to 5 percent in conjunction with the July 1 start of the new fiscal year. He made the decision because he felt it would save more employees’ jobs in the long run, Thorp told the Employee Forum at its May 6 meeting. (See the related story here.)

Thorp told the forum he supported Perdue’s efforts to deal with the unprecedented budget crisis. “I think the governor is as open and active a governor as we’ve had in a long time, and I appreciate the way that she is being clear with us about the challenges she is facing,” he said.

The latest news from Raleigh is not promising. Last week, budget projections from the legislature’s Fiscal Research Division estimated the state’s budget deficit for the 2009–10 fiscal year at $4.8 billion, not the $3.3 billion originally forecast.

An unprecedented 40 percent drop in April tax collections accounts for the significant discrepancy. Consequently, when the House submits its proposed budget, it will have to take into account an additional $1.5 billion in cuts beyond those already proposed in the Governor’s and Senate’s budgets.

The Fiscal Research Division also predicted a modest rebound for 2010 but forecast that state revenues would not return to last year’s $20-billion level until 2013 at the earliest.