Chapman faculty and staff temporarily lose retirement contributions

President Daniele Struppa spoke to an audience at the State of the University event Feb. 21, where he detailed the university’s accomplishments and plans for the upcoming year. Panther Archives

When the Chapman University administration realized the COVID-19 pandemic had saddled them with a $57 million deficit in May, they assumed their budget would have seen the worst of it. 

It did not. 

The rapid spread of the coronavirus, the 18 Chapman task forces and the initiatives the university crafted for a return to hybrid instruction put it in a tight spot. According to President Daniele Struppa in an Aug. 17 town hall meeting, Chapman is anticipating a financial setback of $110 million.

While donations, some housing options and tuition rates for first-year students have actually increased, the revenue the university receives can’t keep up with its expenditures. In addition to freezing most new hires, senior staff and degree-granting deans have opted for salary cuts in attempts to mitigate the financial setback – with Struppa reducing his own $720,000 base salary by 20%. Impositions on faculty and staff were kept to a minimum, but even still, Struppa announced in an email to employees July 31 that Chapman is temporarily suspending contributions to 401(a) retirement plans and is considering layoffs for those who can’t perform their work remotely. However, since then, the administration has rescinded that possible scenario.

“I have made it very clear that we are not considering layoffs any longer,” Struppa wrote in an email to The Panther. “We have been able to put together a package that allows us to address the deficit without having to fire people.”

When deciding how to surface from the tsunami of consequences left by the pandemic, while also trying not to harm the professors that fuel the university, Vice President and Chief Human Resources Officer Brian Powell told The Panther the solution was to look long-term, By temporarily drawing monetary assets away from employees’ retirement contributions, they’re able to keep the benefits of the real and immediate funds that salary, for example, offer. 

“There was a strong, strong desire to have no impact on employees. However, some of the tradeoffs we had to examine could be devastating for the student experience and for the long-term academic reputation and health of our institution,” Powell said. “If we did not want to create massive pay cuts or massive layoffs, what choices do we have?”

Faculty Senate President Alison McKenzie told The Panther there have been mixed reactions among the faculty, but most are understanding of the hardships the university is facing. McKenzie said communication between the administration and the Faculty Senate Executive Board in the months leading up to the temporary pension cuts was clear, and discussions were held at least two different times before the official announcement.

”They’re not obligated to do that and we’re grateful for the opportunity … to have communications and negotiate in good faith the best interest of everybody, knowing that no matter what you do, somebody's going to be unhappy regardless of what the cuts are,” McKenzie said. “They’re having to look at multiple factors and I appreciate that. I obviously care about the long-term success of the university, but my first allegiance is to the faculty and protecting them.”

While Powell said the administration is working tirelessly to assuage the financial impact of the COVID-19 pandemic, he emphasized the university’s ability to continue paying faculty who couldn’t work from March 16 until August.

“I’m rather well-networked in higher education and human resources. No one (other than Chapman) was able to do that,” he said. “That is so unprecedented and that shows the degree of care that (Struppa) took to ensure that we do everything possible to avoid any kind of hardship to our dedicated employees.”

In a virtual meeting held Aug. 25, faculty were able to directly ask senior staff the questions weighing on their mind. Some agenda items and inquiries focused around the unfreezing of hirings and raises, the restoration of the retirement contributions and concerns with diversity initiatives and employment security for non-tenured track and adjunct faculty members.

“Right now, faculty can still be let go without notice and without being told why. So there’s not a lot of job security and so, when you’re in the time of COVID-19 and budget cuts, they’re going to be pretty vulnerable,” McKenzie said. “A big part of our discussion this year will be what is the best solution to protect those important faculty.”

Prior to Aug. 1, the 401(a) retirement plan would allot employees an automatic 3% discretionary contribution based on base salary as well as a discretionary matching contribution from Chapman, of up to an additional 6% of base salary for each dollar or percentage an employee contributes to their 403(b) retirement plan. 

The temporary suspension allows for equity among faculty, staff and administrators – since the contribution rates are proportional to salary. Powell said the university is committed to reinstating the contributions as soon as it financially recovers.

“It’s fair to say that many people have been understanding, but not 100% of people were pleased,” he said. “But that kind of commitment resonates well with individuals who understand that we as a community have to band together in very uncertain times … so that we can give our students the best experience.”