University Senate - August 31, 2020 Meeting Minutes

Call to Order and Announcements

The University Senate was called to order at 3:30 p.m., via WebEx, on Monday, August 31, 2020. Attendance was not taken.

Announcements and Remarks by the Chair of Senate Executive Committee, Dana Cox.
1. The WebEx meeting protocols and norms were explained to new senators and guests.
2. Senate is a key leadership body for the University. Today’s conversation is going to center on the furlough policy and furloughs in Intercollegiate Athletics. This cannot be delayed indefinitely. There are unintended consequences if the issues are stalled and other important issues are not addressed. The Provost urged senators to listen and to come to a point of voting.
3. PEC has been meeting regularly with the President regarding making a decision on returning to campus.

Approval of University Senate Minutes

A motion was received, seconded, and carried to approve the August 17, 2020, minutes of University Senate.

Consent Calendar

The following items were received on the consent calendar:
1. MUDEC – Annual Report
2. Liberal Education Council Meeting Minutes – August 11, 2020
3. Curriculum

New Business

ICA Furlough Presentation – Stacey Lowery Bretz, Chair, Fiscal Priorities and Budget Planning Committee
1. For the determination of a furlough for ICA, the furlough policy requires Fiscal Priorities to be consulted. This process was started on August 14, 2020. Fiscal Priorities’ role is to determine whether a significant operating budget exists and to report the determination to University Senate.
2. Why is the furlough focused only on ICA? ICA is an auxiliary, and auxiliaries are self-supporting and expected to be individually, not collectively, self-sufficient. Additionally, they are expected to generate sufficient revenue and not be a draw against the general operating budget. The focus of the discussion is on ICA, not on whether the University as a whole faces a significant operating budget deficit. The furlough would impact ICA staff on the Oxford campus. There will be no discussions about faculty furloughs or staff furloughs (outside of ICA.) Per the furlough policy, a ‘significant operating budget deficit’ is defined as ‘documented substantial decline in the financial resources of the institution that is brought about by a reduction in state funding, loss of revenue from endowments or investments, decline in institutional enrollment, or by other action or events that compel a reduction in the operating budget.’ There is no predefined percentage or threshold, because these would vary widely by division and unit. Miami is a public university that is required to balance its budget, and we must respond in situations when expenses exceed revenue.
3. What are the possible responses when a significant operating budget exists? The responses are finite and include: increase revenue; decrease expense; spend unrestricted net assets; furlough; layoff; or position elimination. Projected revenues and expenses: the MAC has postponed fall sports and championships with the intent to resume in spring 2021. There has been no decision regarding winter sports. The revenue stream are ticket sales, game guarantees, NCAA contracts, and the general fee transfer. There has been a significant net revenue loss due to general fee transfers. All students were granted a $750 credit. Students not coming on campus this semester were given an additional $250 credit. Out of state students were granted a credit of $1,250. ICA’s known losses of the general fee is approximately $3.5M. The current projected revenue loss for ICA is $5.3M, at a minimum, which is 22.3% of the revenue stream for ICA. Scholarships, health and safety, and gameday operations and support expense have to remain intact; therefore, salaries and benefits, which total $10.7M (45% of expenditures), is the primary area with flexibility. The projected operating deficit is based on several key assumptions, including, fully returning to campus by September 21, 2020, fully returning to campus for spring 2021, and having a spring 2021 football season with some ticket revenue.
4. Instead of a furlough, can we redistribute the General Fee to increase the allocation to ICA? ICA is partially funded, in accordance with House Bill 166, through the General Fee as are all other student life activities. ICA cannot be funded through the instructional fee. Auxiliaries are responsible for setting aside funds for unexpected budget variances and capital renewal and replacement funds. ICA has been unable to fund these needs. Total known losses for auxiliaries are currently $49.6M. If Miami remains remote for fall 2020, ICA will incur additional loses of $2M, with total projected losses for all auxiliaries of $80M. If we were to redistribute the General Fee to increase the allocation to ICA, other auxiliaries will lose part of their revenue stream. It is impractical to redistribute the general fee to ICA.
5. Can we eliminate one or more sports? The MAC requires 14 sports. Miami currently has 19 (8 men’s and 11 women’s). Cutting a sport would not yield immediate savings due to the need to honor existing scholarships and game contracts.
6. Instead of a furlough, could we draw upon unrestricted net assets? Senate is advisory, and Fiscal Priorities wants to make sure that the implications of this are understood. In the RCM model, all funds, except for Ohio Pension Liability and Health Care Reserve, go to Academic Affairs. Using designated funds on an operating deficit (e.g. ICA) would require the Board of Trustees to issue a directive. Miami’s $322M in unrestricted net assets have already been promised for future expenditures and are not to be considered ‘reserves for a rainy day.’ Some of the designated funds do not reflect when they are going to be spent (e.g. construction projects.) Of the $322M unrestricted net assets, $260M is in Academic Affairs and is reserved for carryforward funds, designated funds, and quasi-endowments and scholarships. Carryforward funds include start-up funds for research and faculty professional development money. Designated funds include new faculty positions funded through Boldly Creative, Business Course surcharge/Engineering Major fees (includes full salary and benefits of some FSB and CEC faculty), course program fees retained by academic departments, and F&A recovery (indirects) for academic divisions and departments from external funding. Quasi-endowments fund professorships and student scholarships. So, if we draw upon unrestricted net assets, where would the money come from? If unrestricted funds are used to cover ICA expenses, it is likely that most of the money will come from Academic Affairs. We need to think this through very carefully and realize that this may set a precedent. Would this lead other auxiliaries or divisions to think they could be granted a transfer of designated funds? Academic Affairs is currently deficit spending and will likely need to use carry-forward money to cover expenses.
7. Will a 20-day furlough eliminate the ICA deficit? No, it is estimated that a 20-day furlough will yield approximately $500,000. The furlough is not a long-term solution. ICA has a long-term underlying structural budget problem that needs to be fixed. Work needs to be done to align expenses with revenue; repay the funds that they are unable to generate in support of their operating budget; and, create a fund for their facilities renewals and short-term operating deficits as all other auxiliaries do.
8. The details of a furlough plan are not designed by Fiscal Priorities. We have to abide by NCAA guidance and ensure the health and safety of our student athletes. A 10% voluntary pay reduction was taken by coaches with salaries over $200,000. All sports would be included in a furlough. If postponed fall sports resume in the spring, it is imperative that furlough days be taken in the fall for the health and safety of the athletes. The furlough plan will be intentionally structured to minimize the impact on the employee’s total compensation. For example, it may be structured to allow the employee enough consecutive furlough days so they can apply for unemployment. Employees are given at least 30 days notice.
9. The projection for the University’s budget is more challenging and based on several variables, including whether students can return on September 21 and whether international travel is limited during winter term.
10. It is the determination of the Fiscal Priorities and Budget Planning Committee that a significant operating budget deficit exists for fiscal year 2021 and that a furlough of ICA staff is justified. The Committee’s vote was unanimous. Additionally, Fiscal Priorities urges Senate to remove the limits in the furlough policy to allow for maximum flexibility when designing the furlough plan. If budget deficits cannot be managed through furloughs, layoffs would be the next option. Continued debate on the furlough policy hurts our colleagues in ICA.
11. The timeline for the process began on August 14 with the initial consultation. The furlough policy requires no less than 14 days for the consultation. September 1 will be the notification of the furlough to start in 30 days. September 25 is the Board of Trustees meeting. The furlough will begin on October 1.
12. Senators are being asked to select from one of two statements (or abstain):
  - University Senate has received the determination of Fiscal Priorities regarding the ICA budget deficit and furlough. University Senate affirms the determination of Fiscal Priorities that a significant operating budget deficit exists in ICA and that a furlough of ICA staff to partially address this deficit is justified.
  - University Senate has received the determination of Fiscal Priorities regarding the ICA budget deficit and furlough. University Senate does not affirm the determination of Fiscal Priorities that a significant operating budget deficit exists in ICA and that a furlough of ICA staff to partially address this deficit is justified.
13. Senators had the following discussions and questions:
  1. Senator Moser wanted to clarify that the statements are for ICA and not for the furlough policy. They are to affirm/not affirm the ICA furlough.
  2. Senator Wagner made a motion in that support for this furlough should not set a precedent and Senate should be provided budget information for the entire institution, not just ICA. Additionally, ICA has continually operated with a deficit. Why haven’t we had to do furloughs in ICA in the past? Why were two sources of revenue, direct and indirect institutional support, left off of the list? It was 7.9M last year. Professor Bretz responded that the analysis for FY 21 is that the deficit of 5.3M is untenable, and there are not many options. Senate needs to either affirm or not affirm the determination of Fiscal Priorities. There is no point in looking backwards.
  3. The Parliamentarian was called upon to assist with a procedural question because there was already a motion on the floor when another motion was made. Since there was a motion on the floor from a standing committee of Senate, that takes precedence.
  4. Senator Poetter wanted clarification regarding the vote about the statement and the further discussion about the furlough policy. Professor Bretz confirmed that the statements are to confirm that Fiscal Priorities report has been received and that it is either being affirmed or not affirmed that furloughs are justified for ICA. This works with the 20-day furlough policy as it now stands. This has nothing to do with the furlough policy. Remember that Senate is advisory.
  5. Senator Morris wanted more information regarding the additional revenue stream information that was mentioned by Senator Wagner. Professor Bretz responded that there has not been sufficient time to look at the link Senator Wagner just provided and compare it to the numbers in the presentation. Provost Osborne asked if there is any other revenue there that has not been discovered by Fiscal Priorities. This was declined.
  6. Senator Alessio wants to thank the committee members for the detailed information. A motion was made and seconded to call the question.
  7. The vote to call the question passed with 2 Nay and 1 Abstention.
14. The vote on the statements was taken with Statement 1 (to affirm) passing: 52 Yes; 5 No.
Unclassified Staff Layoff Policy – Robin Parker, General Counsel (Attachment A-II)

The proposed layoff policy was introduced as a part of the overall planning.
A layoff severs the employment relationship. This proposed policy is slightly different in that it allows the employee to keep benefits and accrue seniority. Most layoff policies don’t continue benefits. It is very similar to the furlough policy, although the employee could get another job or collect unemployment. Furloughs are designed more to be of a reduction in the amount of employment laid out over a fiscal year.
Parker reminded Senate that if the furlough caps are not lifted, we may need to lay off. It was noted that a furlough is essentially a salary savings as opposed to a salary elimination. During a furlough, an employee would continue to contribute to retirement.
The goal today is to be transparent and show the reduction in force policy; no action needs to be taken at this time.
The process for ICA furloughs has been started. The notice will go out on September 1, 2020 that there will be a 20-day furlough with a possible additional 20 days if the furlough cap is lifted. The goal is to give notice to ICA staff as soon as possible so that the furlough could start October 1. This would allow more time to spread out the income loss and decrease the financial burden.
A 20-day ICA furlough would equate to approximately $500,000 savings, and an additional 20-days would give a total projected savings of $1M.

Old Business

Furlough Policy – Robin Parker, General Counsel
1. There are several choices for Senate. They could lift the caps for 2020-21, or they could lift caps as well as give guiding principles. Or, Senate could choose not to act.
2. Senator Navakas introduced a motion on behalf of several constituents and senators that would lift the cap through July 31, 2021. The proposed resolution requests that ‘current university revenue and expense and cashflow reports and projections as well as a summary of avoidable and non-avoidable costs will be shared with Senate. The information provided ahead of Senate’s decision on ICA furloughs should not be taken as a precedent.’ The resolution also included some guiding principles brought forth by UPAC and CPAC. Additional points are included below.
3. Senator Hamilton added that in addition to lifting the 20-day cap, it had also been asked of Senate to lift the restriction of the 5 consecutive days (40 hours). Was this purposely not added or an oversight? This was added as a friendly amendment.
4. Ms. Parker asked for clarification on the final paragraph. Is it a concurrent request? It was confirmed that it is needed moving forward.
5. Senator Moser asked about the cash inflow/outflow for Fall 2020. Can we get a report similar to the one we received for ICA for the entire University. Ms. Parker responded that Dr. Creamer, Sr. V.P. of Finance and Business Services, will be making a budget presentation at the September 25, 2020, Board of Trustees meeting to the extent that the information is known. We are not sure as to how many students we have for the fall. Currently, we are facing a very large projected deficit even if students come back – 40-50M. If students do not come back, the number will be double. A furlough is one tool in the toolbox.
6. The proposed resolution gives flexibility for a year.
7. How much would a 20-day furlough for everyone save? It is not known specifically.
8. It was noted that if a student chooses online instruction, there would be a general fee refund.
9. Senator Kenworthy affirms his support for the proposed resolution.
10. Senator Coleman asked if voluntary furloughs have been considered?( A: Yes) When someone is furloughed, how is workload to be handled? Ms. Parker responded that there are some employees who may not have as much work to do, but for those who do, some have opted to take a pay cut and continue working.
11. Senator Newman asked for clarification on dollar amount of payroll. How much money would a 1-day/week furlough for all employees yield? If the total payroll expenditure is $400M, 20% would be $80M. It was reiterated that the discussion is only focused on ICA furloughs. Provost Osborne indicated that personnel expense was around $273M. A one day a week furlough is not possible to discuss under the current policy. Ms. Parker affirmed that the furlough being discussed is only for ICA staff.
12. Senator Haynes wanted to clarify furlough vs. pay reduction. In a pay reduction, the employee would keep working the same number of hours
13. Multiple people requested a budget session to assist in further discussions. Executive Committee received the suggestion.
14. The question was called. It was approved: 45 Yes; 3 Nay
15. SR 21-01 was approved – 51 Yes; 2 Nay

SR 21-01

Sense of the Senate: Furlough Policy Recommendations

August 31, 2020

Whereas, Senate recognizes the unprecedented circumstances and financial repercussions of the COVID-19 pandemic. As a result, Senate supports revising the furlough policy in the following way: the 20-day limit and the consecutive 5 days/40 hours limit will be replaced with an unlimited cap until July 31, 2021.

Whereas, so that Senate can make an informed recommendation on furlough proposals, current university revenue and expense and cashflow reports and projections as well as a summary of avoidable and non-avoidable costs will be shared with Senate. The information provided ahead of Senate’s decision on ICA furloughs should not be taken as a precedent.

Whereas, Senate supports the principles and considerations in the statements on furloughs from UPAC and CPAC, and asks the Board of Trustees and administrators who are designing furlough policies to consider, in addition, the following principles:
Whenever possible, people should be working. Other avenues to dealing with a budget shortfall should be considered before furloughs and layoffs and position eliminations.

Furloughs are preferable to lay-offs and position eliminations.
Furloughs should be thoughtfully implemented with careful consideration of both employee welfare and Miami's mission
Furloughing people up to the allowed limit will be deeply painful to employees and should be avoided whenever possible
Avoid furloughs for people who make under $40K a year, whenever possible.
Consult with employees who will be impacted regarding whether they would prefer furloughs to be structured in a way that allows them to receive unemployment benefits (ie, taking furlough days in week-long increments) or if they would prefer to have the furlough days spread out across as much time as possible
Furloughs should be progressively graduated so that lower-paid workers are the least impacted
Furlough days should be commensurate to pay reductions and reduction in work
Employees should be provided with as much notice as possible before a furlough begins

Furthermore, Senate asks Fiscal Priorities Committee to prepare for a future, more permanent revision to the furlough policy by identifying a limit for furloughs that would both address a reasonably projectable budget deficit and would also take into account the amount of reduction in annual income an employee who makes at or above Butler County median per-capita income can tolerate. There is no reason to establish a limit for furloughs that is above what a projectable budget deficit might require.

Adjournment

The Regular Session of University Senate was adjourned at 5:07 p.m.