Facing an unprecedented budget crisis, Chicago State University has laid off nearly 400 employees since the beginning of the year — an astounding 40 percent of staff at a school that serves mostly minority and low-income students from the city.
The mass layoffs, unusual in higher education, came with a cost: $2.2 million, the bulk of it in severance pay mandated by a long-standing school policy that requires up to a year’s notice of being terminated or a payout for the time. It’s a policy common at Illinois public universities but generous compared with what is provided by most schools in other states.
Chicago State spent nearly $1.6 million on severance for about 50 administrators who were provided lump-sum payments in June equal to the salaries they would have received if they had not been terminated. The university spent another $650,000 to pay out unused vacation time for about 130 administrators and civil service employees. It was a significant sum considering the university had only $7.3 million in cash at the end of April, according to records obtained by the Tribune.
The university, however, provided no severance to the 10 faculty members laid off last month, saying a provision in the faculty contract that would have required a year’s notice did not apply because the school has declared financial exigency.
While the payments are a short-term expense that will reduce payroll costs by $2 million a month, it’s another sign of the South Side university’s precarious financial situation. The university, which depends on state funding for about 30 percent of its operational budget, was hit hard by the budget stalemate that left higher education without a dime for most of last year — and then provided only partial funding.
For the upcoming year, Chicago State has again received limited funding — about $13 million — that is expected to last through December. And with a projected enrollment decline of about 20 percent, tuition revenue will be down.
To make ends meet, the 150-year-old public university, which last year served about 4,500 students, has cut its budget for the coming year by about 30 percent, to $70 million, according to university President Thomas Calhoun Jr.
He said recently that the university “has done much to shore itself up financially,” including through the layoffs. “We are confident that we are in good shape,” he said.
In late February, as the need to trim payroll became clear, Chicago State sent notices of potential layoffs to all of its 950 employees. Two months later, hundreds of employees were either laid off with the possibility of being recalled, or terminated.
For some, that wasn’t enough notice under the university policy.
Administrators are to be notified of a potential termination anywhere from three months to one year in advance, depending on how long they have worked at the university. After six years, employees are entitled to a year’s notice.
The payments ranged from about $4,000 for an associate director who had worked at Chicago State for less than a year, to $94,000 for an associate vice president who had been employed for six years, according to records obtained under the Freedom of Information Act. Employees received anywhere from a few hundred dollars to $20,000 for accrued vacation time.
“I was aware of the cost (of the layoffs),” said Renee Mitchell, Chicago State’s associate vice president for human resources. “But I am also aware of the savings in the long run, too.” The employees who received severance, for example, are not getting benefits. She said there are risks associated with allowing employees to work when they know they will be let go, she said.
State Sen. Bill Cunningham, D-Chicago, said the severance pay is “probably a little rich to afford right now given the financial challenges higher education is facing in Illinois.”
“Those things are nice and probably really help with recruiting … but the question becomes, can you afford them anymore?” asked Cunningham, vice chair of the Senate Higher Education Committee.
Indeed, Western Illinois University changed its policy two years ago. Instead of a year’s notice, administrators now are entitled to a maximum of six months. The change was made to be more in line with corporate practices and universities outside of Illinois, a spokeswoman said.
Western laid off about 130 employees this year, including 17 faculty members and four administrators who received a total severance of $84,582. With the additional state money approved in July, about 78 of the civil service employees who were laid off are being recalled by the start of the fall semester, a spokeswoman said.
Other public universities in Illinois have notice rights similar to those at Chicago State, including the University of Illinois, Illinois State University, Southern Illinois University and Eastern Illinois University. EIU laid off 298 employees in the past year, but all employees who had notice rights worked through the remainder of their time. The university paid out $496,627 in accrued vacation and sick time, according to the university.
Layoffs in higher education are rare, and the employment policies were not written with that purpose in mind, experts said.
“These things were intended to provide protection against favoritism or a difference of opinion with the board or a new president,” said Jill Leka, an Illinois attorney and general counsel for the National Public Employer Labor Relations Association. “The rationale (behind the policy) makes perfect sense, but maybe it doesn’t work in light of the economic circumstances going on right now.”
Outside of Illinois, college and university employees generally are given less notice of a layoff — and less severance.
“These people got a good deal, relatively speaking, in a horrible situation,” said Raymond D. Cotton, a Washington, D.C., attorney who specializes in higher education. “Universities are very humane in the way that they deal with their employees. They will try to give people a soft landing if they can afford it.”
But Chicago State faculty said they are not being treated fairly.
While administrators received severance, the faculty members did not. According to their union contract, tenured faculty are allowed to work for at least one academic year after being given a layoff notice except in cases of “extreme and immediate financial exigency.”
In February, the university declared financial exigency because of the state budget stalemate.
Tenured music professor William Jason Raynovich, who taught at Chicago State for 16 years, was among those laid off.
“Chicago State University is on the South Side of Chicago and I believe we should be much more thoughtful about social justice and about fairness across the board, about treating everyone fairly and with respect,” Raynovich said. “The idea that administrators are not taking the hit equally with all of us is upsetting.”
History professor Steven Rowe, who taught at Chicago State for nine years, said he never imagined he could lose his job — and without time to search for a new opportunity.
“You feel like when you get tenure you are reasonably well-protected against things like layoffs,” he said. Providing notice to administrators but not faculty “is this top-down way of thinking about the university that has dominated the administration for a while.”
“I definitely don’t think it’s fair,” he said.
Chicago Tribune’s Jennifer Smith Richards contributed.
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