The salaries of 216 University of Hawaiʻi Executive-Managerial (EM) employees will be reduced, effective November 1, 2020, as the State of Hawaiʻi and UH continue to prepare for the significant budget shortfall caused by the COVID-19 pandemic. UH EMs account for 6% of the approximately $600 million in annual salaries paid to about 7,342 employees across the 10-campus UH System.
UH President David Lassner has directed that EMs will see their salaries reduced by 9.23% for that portion up to $200,000 annually, and any EMs whose salaries are more than $200,000 will see the portion above that amount further reduced by 11%. Lassner volunteered to reduce his total compensation by 20%.
“This is not related to your amazing efforts for the university and people of Hawaiʻi,” said Lassner in a September 29 message to the EMs announcing the pay reductions. “Payroll savings represent one of a handful of tools we have available for substantial cost reductions until we can achieve the structural savings needed to thrive in the new environment.”
The EM salary reductions will save the university $2.2 million in current Fiscal Year (FY) 2020–2021 and $3.4 million annually in FY 2021–2022 and beyond, if they remain in place.
“This should convey the serious level of importance regarding our current financial situation,” said UH Vice President for Budget and Finance/CFO Kalbert Young during the October 1, Board of Regents Budget and Finance Committee meeting. “This strongly demonstrates all management personnel’s sacrifice and contribution to help the university during this time of financial shortfalls.”
About 60% of the 10-campus system budget comes from state General Funds, and the state is projecting a $2.3-billion operating budget deficit to the current biennium budget. Economists and the State Council on Revenues have forecast that State revenues are not expected to return to pre-pandemic levels until after FY 2025–2026, at the earliest. Tuition revenue accounts for about 40% of UH’s operating budget and is projected to decline in fall 2020 from the previous year.
The EM salary reductions follow other cost-saving measures previously directed by the UH president and CFO, including a freeze on hiring, a suspension of all non-extramural-funded travel, and the implementation of cash preservation measures. Across the system, campuses are currently developing strategic cost savings initiatives while enhancing opportunities and revenue growth with a focus on meeting the stateʻs most urgent needs.