Behind the budget curtain

University executives take a pay cut as PSU and student budgets brace themselves

While COVID-19 has cut Portland State to what can be offered over a computer screen, what is left must still be paid for. The university was already plagued by budgetary challenges, such as the decline in enrollment, but the pandemic threatens to turn those challenges into crises. 


Among a steady flow of coronavirus updates and announcements, on April 27, PSU released its first announcement directly addressing and attempting to amend budget shortfalls: pay reductions for those in executive positions. 


“The COVID-19 pandemic made a tough budget situation even worse,” stated Interim President Stephen Percy in the announcement. “We continue to take critical steps to increase enrollment, grow revenue and reduce costs. Nevertheless, PSU’s revenue losses and the likely reductions in state funding present extremely difficult challenges.”


Percy will take a 15% decrease in pay. For other executives, such as vice provosts and college deans, it will be a 10% reduction for those whose annual salaries are initially over $200,000, and 7.5% for others, according to Chris Broderick, associate vice president for university communications. The reductions will begin on May 1 and are slated to stay in effect until October; The cuts may last for longer, however, if Percy later chooses to extend them. 


The decision—like many of those made during and concerning the pandemic—was preemptive, anticipating a significant loss of revenue from the Oregon government, but with limited information on how much that loss would be. 


“The next state revenue forecast is May 20 from Salem, and it will reflect a big loss in income taxes and other tax revenues,” Broderick stated. “That, combined with the millions that the state is having to spend on unemployment benefits for the growing number of people thrown out of work, means there will be cuts in state funding for higher ed—the only question is, how big will those cuts be, and how will that impact PSU’s budget?”


Facing the impending loss of income, the federal government has released some relief for colleges and universities through the “Coronavirus Aid, Relief, and Economic Security” or CARES Act. Approximately $126.7 million will be sent directly to Oregon universities, according to the Oregon Higher Education Coordinating Commission, of which PSU will receive the largest amount out of any single institution: $16,640,405. 


The relief comes with certain restrictions to how it can be used; half of the funds must be allocated to students, and what the University itself does use can’t be for “enrollment, recruitment, capital, or athletics activity.”


On May 1, PSU released the application for students to take advantage of the designated funds. Upwards of $3,000 will be awarded on a rolling basis to students who qualify, with priority going to students who have completed the Free Application for Federal Student Aid and have financial need. Others, however—international students, DACA recipients, those in an entirely online program before the school closure or who weren’t enrolled in spring term early enough—will not be eligible for the funds. 


PSU also has a general emergency fund for students, regardless of demographic, with rewards capped at $2000 and restricted to expenses other than tuition and student fees. 


Despite the relief PSU has received and allocated, however, it likely will not equal the expected revenue for the university, which already wasn’t equivalent to the university’s expenses—for the past two fiscal years, it was lower


The reduction of pay for executives was one decision among a multitude to address a potential budget crisis before it comes. 


On March 5, PSU launched a hiring freeze to make up for the anticipated loss in revenue even before campus moved to remote learning. The freeze was expanded on March 26, covering all vacant positions, with few exceptions for positions essential for campus health, beneficial to remote learning or those that can generate new revenue, among others. 


While some employees agreed to take a reduction in pay, other employees will receive none, as PSU also announced temporary workforce reductions on May 1 as a result of the COVID-19 pandemic. 106 employees will be affected, according to the announcement, and while they are not losing their positions, they are losing their pay. The change in status will allow them to keep employer healthcare benefits, and qualify them for unemployment benefits. 


“It is our sincere hope that these reductions are short-lived and the employees are able to return to their regular work no later than September 27,” Percy stated in the announcement. “We are developing scenarios for the safe reopening of our campus. I thank each of these employees for their dedicated service.”

Outside of PSU, Multnomah county currently has the highest numbers in Oregon in terms of confirmed cases and deaths: 739 and 46, respectively, according to The New York Times.