Furloughs Sept 09

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					Furloughs - A Review
September 2009 Walt Alexanderson Director Human Resources Augusta State University

Why are we having furloughs?
• Up until the state budget crisis, Augusta State University was funded by about 70 % state appropriations and 30 % tuition • 84 % of the cost of running ASU is salary and benefits • The legislature approves money for the University System of Georgia • The money is divided among the schools according to a formula based on number of students and credit hours

Why are we having furloughs?
• There is an under lying assumption that the state revenues will provide enough money to fund the amount the legislature has approved for the University System of Georgia

Why are we having furloughs?
• In FY 2009 (July 1, 2008 to June 30, 2009) ASU’s state appropriations were reduced 13 % $3,000,000 (three million dollars) • This was covered by:
– Not spending new money allocated from the state due to increased enrollment – Energy savings – Delaying the filling of staff positions 3 months – Delaying repair of the Forest Hills dam

Why are we having furloughs?
• The FY 2010 (July 1, 2009 to June 30, 2010) budget was the reduced FY 2009 budget plus an increase for increased enrollment • Immediately for FY 2010 all schools were required to submit plans for further reductions of 4%, 6 % and 8 % • The 4 % reduction was required to contain six days of furlough • Funding has now been reduced 5 %

Why are we having furloughs?
FY 2008 vs. 2007

ZERO
FY 2009 vs. 2008

Minus 10.5 %

Why are we having furloughs?

First 2 Months FY 2010 YTD -13 %

Why are we having furloughs?
• July 2009 Revenue down 9.6 % from July 2008 • August 2009 Revenue down 16.4 % from August 2008

• YTD Revenue down 13.1 % from a year ago

USG Considerations
• USG employees got a 2.5 % average raise in January 2009 – other state employees ZERO • Other state employees started doing unpaid furloughs in FY 2009 and continue to be furloughed • Georgia legislators look at USG – look at everyone else and go – “Why are they different?” • Chancellor says we are different but we are not better

USG Considerations
• Chancellor will have to go before the legislature in January and request funding for FY 2011 • If the members of the Georgia legislature are upset because everyone but the USG took a furlough hit the reality is the Chancellor will have a major uphill fight for money • The result could be a budget reduction for USG

USG Considerations
• Bottom line – If the USG expects to maintain support from the legislature – USG better be able to demonstrate the sharing of the pain

Furlough Policy USG
• Every employee earning over $23,660 will take six (6) unpaid furlough days between August 2009 and May 2010 • Three days will be in calendar year 2009 • Three days will be in calendar year 2010 • Classes will not be canceled • Furlough money must be deducted in the period furlough is taken

Furlough Policy USG
• Benefited employees working full time 12 months work 260 days – a furlough day is calculated as (Salary / 260) = dollars deducted • Benefited employees working on a 10 month contract work 195 days – a furlough day is calculated as (Salary/195) = dollars deducted • 195 days is 9months / 12 months times 260 days

Furlough Policy USG
• Because 12 month employees lose 6 days out of 260 days the percentage is 2.31 % • Because 10 month employees lose 6 days out of 195 the percentage is 3.08 % • However, summer is not affected. 10 month employees teaching 3 summer classes end up at 2.31 %

Augusta State Implementation
• While the loss of income hurts everyone, the bi weekly paid employees are going to struggle with the furloughs • Remember, the Board of Regents said the deduction must occur in the period of furlough • A one day furlough reduces a bi weekly check 10 %

Augusta State Implementation
• We developed several plans from one hour every Friday to half days and full days • The best approach was to take three full days in 2009 announcing them in advance so our employees could save money ahead • - day after Labor Day • - day before Thanksgiving • - day before Christmas Eve

Augusta State Implementation
• For 2010 we have only announced one furlough day – Friday of Master’s Week • While Master’s Week looks good on paper if all three days were that week our bi weekly employees would lose 30 % of a paycheck and our monthly 15 % of a paycheck • We continue to look at options for 2010

Effects of a Furlough Day
• Gross pay is reduced one day of dollars • Federal tax, Ga. tax, Social Security, and Medicare are reduced • Medical and dental cost stays the same • Life and disability stay the same • Flex spending and health savings stay the same • 403 (b) – 457 – college savings stay the same

Effects of a Furlough Day
TRS:
– Employee contribution stays the same – Employer contribution stays the same – Retirement calculations using the furlough time period are based on normal salary – not reduced amounts ORP: - Employee contribution stays the same unless employee asks for a reduction - Employer contribution stays the same

Effects of a Furlough Day
What about future raises?
Raises are based on salary before furlough

 What about volunteer furlough?
I asked the question and BOR said no

Effects of a Furlough Day
• Individual furlough days have no effect on the tenure and promotion process • Budget constraints, not furloughs, could affect future raises

More Information
http://www.usg.edu/hr/news/furlough_information

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Questions


				
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