UK furloughed 1,700. Now it should follow UofL with pay cuts for top level brass, coaches.
The coronavirus fallout news is trickling down from the University of Kentucky, and as expected, it’s bad.
Officials reported a $70 million deficit on Tuesday; by Thursday, it was 1,700 employees furloughed, the vast majority of them from UK HealthCare, which has been all but shut down to a major moneymaker, elective surgeries. It’s possible some of those furloughs will end early as hospitals will begin phasing elective surgeries back in next week. Others in transportation and dining may lose their jobs altogether.
In addition, all employees will lose 5 percent of the match on their retirement accounts. But most of those furloughed and laid off are from the lowest staff ranks, the people who have the most to lose and the least amount of safety net to upon which to rely. It was ever thus, right? The little guys get the ax; the top guys wring their hands and move on to the next crisis.
That’s why UK officials should follow the lead of peers like the University of Louisville, along with the more exalted like Harvard, and cut pay to top administrators across the board. When UK Athletics announces its cuts, as it’s expected to soon, it should do exactly the same thing.
No, it won’t ease the budget crunch, but it makes a huge symbolic statement about the importance of shared sacrifice and puts weight behind the often meaningless phrase that we’re all in this together. Six of President Eli Capilouto’s direct reports make more than $400,000 a year; he himself is one of the highest paid presidents in the country with a total compensation package last year of $1.5 million last year. On June 30, he is scheduled to pick up another $178,000 in deferred compensation.
At UofL, which has a $40 million shortfall, President Neeli Bendapudi implemented a total freeze on retirement matches, plus a 10 percent cut for university employees earning $300,000 or more, 5 percent those earning between $200,000 and $299,999 and a 2 percent cut for those making between $100,000 and $199,999. In addition, all the head coaches are taking a 10 percent cut.
At Harvard, the top three administrators are taking 25 percent cuts; Stanford 20 percent and so on. The theme to all these announcements? Shared sacrifice.
I could go on and on why our basketball and football coaches should do the same thing, but I think we can all agree that people who make millions to coach college games can give up a little when those games are all canceled for the foreseeable future.
UK spokesman Jay Blanton said budget officials conducted a lot of analysis on ways to meet the shortfall.
“As we talked to people throughout the institution, it was clear that if we needed to take additional steps, adjusting benefits first, in the way we did, would be a preferred option,” he said. “If you cut pay, it’s essentially a double hit to people. You are impacting pay and benefits. We took the step of reducing benefits first. We hope this series of steps we are taking gets us where we need to be, even as we know additional steps might be necessary in what remains a very fluid and tough environment.”
A tough environment
It’s true that higher ed is probably facing a lot of calamity; it’s hard to think of another sector of society so upended by the virus in a series of domino effects. But even before coronavirus, higher education was headed for a reckoning: A national baby bust affecting lower high school populations, a huge decline in state support that was only starting to inch back up, increasing competition for students whose tuition shoulder much more of the overall budget.
Schools like UK have spent millions of their own or private partners’ money building over-the-top dorms, dining facilities and student centers. Those facilities were built to attract more and more students whose tuition is more and more required to fund the whole operation.
John Thelin, a UK professor and the author of “A History of Higher Education,” said he recently added a chapter to his book about higher ed since 2010 where he wrote that all of higher ed “is dangerously overextended financially. I see it really as overextended and deceptively fragile.”
Coronvirus has added steroids to the existing problems. “There will be very severe changes,” Thelin said. “They’re going to be deep changes but not instantaneous. If there were a quick melodrama, people could handle that, I think it will be more dreary and more enduring than that. The resilient and wise institutions are going to respond using it as a opportunity to make modifications.”
UK only recently got on board with any on-line instruction, but it looks as if it was just in time. UK has not made any announcements about what will happen next semester, but others have, and it’s hard to believe plenty of parents won’t be nervous about sending their children to live communally just as the second wave of virus is predicted to hit. Even if they go back in normal mode, it’s easy to see that more students will choose college closer to home. Pandemics have that effect. In UK’s case, that could affect 38 percent of student enrollment from out of state who pay nearly double the in-state cost.
At any rate, whatever emerges needs to be less expensive for consumers, a leaner model that worries less about what students want to eat and more about what goes in their heads. Maybe this reset would include fewer administrators judged and compensated like Wall Street CEOS.
Capilouto has been an effective leader since 2011, growing UK and its facilities to where they are the largest economic engine in our region and far too big to fail. What he should also recognize is that his employees and those paying tuition want to see that he understands the pain and shares in it. If you make $400,000 or $800,000 or $8 million like Coach Cal, a six-month pay cut isn’t going to hurt you. The good will it would buy? Priceless.
This story was originally published April 24, 2020 at 10:17 AM.
