May 2021 Financial Update for Faculty & Staff
As we approach the end of the academic and fiscal years, I write to share an update on the state of college finances and some financial actions that we will undertake for the benefit of faculty and staff. Before turning to specifics, I want to thank you for your flexibility, generosity, and very hard work throughout this challenging year. Your creativity and persistence have enabled us to operate a full campus, in person, under pandemic conditions, allowing our students to continue with their education while keeping our community safe. We should all be proud of what we have accomplished together, and I am truly grateful for your efforts.
A year ago, when there was great uncertainty about the months ahead, I announced a series of financial actions designed to position the college to weather potential disruptions associated with the pandemic. These included:
- A hiring freeze on faculty and staff positions
- Suspension of discretionary expenditures not critical to the operation of the college
- Voluntary salary reductions for the president and all other members of the Senior Staff
- A freeze on staff salaries at FY20 levels through FY21
- A request that faculty accept revised contracts, on a voluntary basis, keeping their salaries at FY20 levels through FY21
- A suspension of college retirement contributions: 9% for all eligible employees and matching funds up to 3% for qualified employee contribution
These decisions were based on principles centered on sustaining our educational mission, maintaining continuity of employment for faculty and staff, taking account of impact and equity, especially with regard to our most vulnerable employees, and preserving organizational capacity for a return to operations following the pandemic. The College Finances Team, convened as an advisory body during the pandemic, developed further principles, prioritizing the well-being of the college’s employees in financial decision-making. This emphasis continues to guide the financial actions taken by the college.
In November 2020, we provided a mid-year financial update and announced that, based on where we stood at the time, we would restore the 9% amount that the college would have contributed to the Money Purchase Pension Plan from July through December 2020, had the program not been suspended. At the time, we noted that given ongoing financial uncertainty as we headed into the winter semester, we were not in a position to reinstate the employer retirement contribution for the second half of the fiscal year.
As the year has unfolded, our ability to operate at full enrollment, combined with savings from the hiring and salary freezes and reduced expenses due to the elimination of travel and in-person events, will generate positive financial results for the current fiscal year. This is true notwithstanding the fact that we will have spent more than $6 million by June 30 on pandemic-related expenses, chief among them the comprehensive testing program for students and employees.
I am very pleased to announce that these results also put us in a position to restore in full for each employee an amount equal to the college retirement contributions that had been suspended. Last week, the Board of Trustees reviewed and unanimously approved the following actions:
- Contribution to Employee Retirement Funds – In mid-June, Bates will make a one-time employer contribution to the 403(b) retirement accounts of all active benefit-eligible employees, who have been employed by the college for at least one year as of June 1, 2021, consistent with the requirements of the college retirement plan. This payment mirrors the action made in mid-December for the first six months of this fiscal year. It represents the 9% amount that the college would have contributed to the Money Purchase Pension Plan from January through June 2021, had we not suspended the program for the current year. The payment will also include an additional amount to represent the 3% match, covering the entire fiscal year, that the college had also previously suspended. In total, the payment amount will be 18% of each employee’s January through May eligible compensation. For employees who have contributed to their 403(b) account but have not been employed by the college for at least a year as of June 1, 2021, the college will make a one-time payment equal to the amount that would have been matched had the program been in effect.
- Retirement Program Reinstated for Fiscal Year 2021–2022 – For the coming fiscal year, beginning July 1, 2021, the retirement contribution plan previously in effect will be reinstated. More specifically, the college will again provide a 9% contribution on eligible earnings for employees with at least a year of employment at the college. For any employee who met the one-year requirement for the pension plan during the period from July 1, 2020, to June 30, 2021, this reinstatement will take effect on July 1, 2021. Additionally, the college will reinstate the 403(b) program that provides a match of up to 3% for employees who contribute up to 6% of their compensation.
- Restoration of Voluntary Salary Reductions – Following the principles described above, the voluntary salary reductions for the president and Senior Staff will be restored at fiscal year 2020 levels, consistent with the salary freeze experienced by all college staff.
Looking ahead to the fiscal year 2022 budget, compensation pool increases have been set at 2.5% for the faculty and salaried staff compensation pools, and approximately 4% for the hourly staff. The higher hourly staff pool allows Bates to increase its introductory wage to $13.75 per hour, and to ensure that all hourly employees with a year or more at Bates will earn above $14.00 per hour. Faculty salaries are effective August 1, 2021, through July 31, 2022, with updated letters specifying individual compensation distributed this week. Staff salary increases will be effective July 1, 2021, and updated compensation letters will be in Garnet Gateway in June.
If you have questions regarding any of the matters described above, please contact your department head or Ken Emerson at firstname.lastname@example.org.
Our success this year is a result of the extraordinary efforts of faculty and staff across the college, sustained over many months, together with strong adherence to public health guidelines by all. As we enter the summer months, I hope that you will find time for relaxation, restoration, and togetherness with friends and family. The fall will bring a new year—one that I sincerely hope looks and feels more like pre-pandemic times on this beautiful campus.
Many thanks again to all,