University of Massachusetts Boston (UMass Boston) administrators are laying off staff as the university struggles to solve its massive budget deficit. In the first round of layoffs, UMass Boston is jettisoning 43 employees. The public research university is facing a serious budget deficit that could reach $30.0 million this year. The UMass Boston layoffs could have been avoided, as a new audit by firm KPMG LLP shows UMass Boston’s finances have suffered under terrible mismanagement.
UMass Boston to Make Job Cuts to Balance Budget
UMass Boston announced it will lay off 36 employees, and another seven workers will have their hours slashed. The staffing decisions are part of the university’s $30.0-million deficit reduction plan. The school has been charged with the task of ending its current fiscal year with a budget deficit no larger than $5.0 million.
“The staffing reduction decisions that have been made were driven by the financial and operational challenges that our campus faces,” said Marie H. Bowen, vice chancellor for human resources.
Of the 43 people being affected, 14 are part of the university’s classified staff and 29 are from the professional staff. Some have worked at UMass Boston for more than 30 years. The layoffs and hourly reductions are expected to save the university $1.8 million.
Administrators at the school have made a number of other cuts. In July, the University of Massachusetts Boston announced it closed a daycare center that served the children of faculty and students, as well as poor families in South Boston and Dorchester areas. The center will close on December 29. In the last fiscal year, it ran a deficit of $550,000 and has run deficits in previous years.
Also in July, the cash-strapped university offered buyouts to employees to plug its $30.0-million budget gap; 50 employees accepted the buyouts. The university offered $20,000 to employees who had worked full-time for at least 10 years, while all other eligible full-time employees received $5,000.
The buyouts will save the public university $4.0 million. At the time though, the school said the savings did not mean layoffs were off the table (which we now know is true).
Recently Conducted Audit Revealed Poor Budgeting Processes
Why the layoffs? It all comes down to an entirely avoidable financial crisis. UMass’ board of trustees recently released an audit conducted by KPMG that showed a chaotic budgeting process over the last two years. This includes huge swings in tuition revenue estimates and a fluid, non-committal interpretation of the size of the deficit.
The audit is highly critical of the schools record-keeping process, a lack of discipline, and a poor understanding of how the school’s major construction projects would affect the budget.
Martin T. Meehan, president of the UMass system, said the results of the audit were “very troubling.” This includes UMass Boston’s affinity to use its budget as a “guideline” rather than an “operational reality.”
Back in September 2016, UMass Boston administrators told trustees they would end the year with a surplus of $2.3 million. Fast-forward two months and these same officials revised that guidance downward, to a deficit of $30.0 million. In January 2017, the deficit was revised to just $20.0 million, and then in February, they said there would be no deficit.
Hence the need to conduct an audit of the school’s finances. But even that hit roadblocks. When auditors asked officials for documentations that might explain why budget projections fluctuated so much, they failed to provide any.
On top of that, administrators could not even accurately determine how much tuition the campus would bring in. The school as an operating budget of about $430.0 million. Knowing how much tuition it is generating helps with budget planning, but unfortunately, tuition estimates fluctuated wildly, from $205.0 million in September 2016 to $189.0 million in November 2016 to $200.0 million in February 2017.
These are just two examples in a long list of additional factors that helped contribute to the eye-watering deficit.
“The people losing their jobs had nothing to do with campus financial shortfalls,” said Tom Goodkind of the Professional Staff Union at UMass Boston. “These people worked hard through successive eras of mismanagement to advance our educational mission as the campus underwent, and continues to undergo, massive structural changes.”
In 2016, UMass Boston’s workforce totaled 2,095 people. So far, in 2017, the university has eliminated 130 positions. The schools fiscal year ends in June 2018, meaning that additional layoffs could hit UMass Boston in the coming months.
“Caught in a financial crisis, UMass Boston begins to cut jobs,” Boston Globe, November 15, 2017.
“Local university to lay off dozens, slash hours in effort to reduce $30M deficit,” WHDH-TV, November 15, 2017.
“50 UMass Boston workers take buyouts,” Boston Globe, July 11, 2017.
“Chaotic management led to UMass Boston deficit, audit says,” Boston Globe, November 9, 2017.