APRIL 30, 2009 ISSUE
Perdue Orders Furloughs For All State Employees
ASU Chancellor Peacock Issues Letter of Announcement and Explanation
Gov. Beverly Perdue signed an executive order on Tuesday, April 28, calling for unpaid furloughs for all state employees. The order is in response to a worsening state budget shortfall that analysts now say could climb to $3 billion. Perdue’s move is expected to save the state $65 million this fiscal year.
“North Carolina continues to experience the effects of a national economic crisis, which forces me to make difficult decisions in order to maintain a balanced budget through June,” Perdue said in a statement released Tuesday, April 28. “I will do what I must in order to ensure that North Carolina can pay our bills and provide the essential services required by our citizens.”
Perdue’s order calls for all teachers and state employees to receive a pay cut of 0.5 percent, on an annualized basis, for the remainder of the fiscal year, which ends on June 30. The money will be deducted from paychecks in May and June. As an example, an employee who makes a $30,000 annual salary will have 0.5 percent of $30,000, or $150, deducted from their paycheck over the next two months—a $75 deduction in May and a $75 deduction in June.
In return, full-time employees will receive 10 hours of flexible time off that they must use between June 1 and December 31. The 10 hours of flexible time does not represent an additional cut in pay, according to ASU Vice Chancellor of Business Affairs Greg Lovins. Part-time employees will receive time off on a prorated basis.
“Therefore, when an employee takes their time off, their pay will not be deducted any further beyond the 0.5 percent taken this fiscal year,” Perdue said in the statement.
The Situation At ASU
ASU Chancellor Kenneth E. Peacock released a letter on Wednesday, April 29, announcing the mandated furloughs.
Peacock explained that the furlough mandate applies to all state employees, including faculty, regardless of funding source. Employee benefits funded by the state, such as health insurance and retirement benefits, will not be reduced.
“The governor has pledged to work with the General Assembly to pass legislation that would hold these benefits harmless,” Peacock said in the letter.
According to Peacock, the Office of State Personnel is expected to distribute formal policy and guidelines regarding the administration and use of the 10 hours of furlough time to state human resources directors by Monday, May 25.
“As of today, we do not know if the restrictions will remain in effect after June 30. If they do remain, any expenditure not related to payroll, utilities or direct classroom expenses will continue to be disallowed,” said Peacock in the letter. “The information we have at this point is that we will be permitted to offer contracts on July 1 to faculty already in the queue to teach classes in the fall. I know that has been of great concern within Academic Affairs, so this is very good news. Faculty contracts and course offerings for Summer School will continue as planned.”
Peacock explained that there has been confusion on campus as to why some expenditures continue to be allowed despite the restrictions on state funds. He said the reason is that different areas and activities of the campus are funded from different sources of revenue.
“We can continue with some types of construction, for example, because funds for housing, steam repair, athletics and some other types of construction come from housing receipts or other auxiliary funding, not from state-appropriated dollars,” explained Peacock in the letter.
ASU is not allowed by law to move funds from one area to another to cover disallowed expenses, and not allowed to carry funds forward to a new fiscal year.
“While it might seem logical to stop some construction and use those funds to fill open faculty lines, the state does not allow us that flexibility,” said Peacock in the letter.
Peacock said in conclusion, “The administration will continue to carefully manage the resources of the university and will monitor spending from non-state funds to ensure they are being spent wisely. The situation we are facing is unprecedented in recent times, so we will be extremely cautious and conservative in regard to any spending on campus. Because of this abundance of caution, several student, faculty and staff functions have been cancelled. While we regret each cancellation, we believe it is in the best interests of the university at this time.”
In the letter, Peacock said he would provide timely updates on the university’s budget situation in the coming weeks and months.
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