Furlough/Salary Reduction Information
Salary Reduction and Compensation
Separation from the University
UC’s Furlough Program
Beginning Sept. 1, most UC employees will begin taking part in a one-year furlough program aimed at helping UC close an $813 million budget deficit.
Common questions about how the furlough program will be implemented are answered below, in an indexed Q & A format.
The plan has been crafted to be as fair as possible and to ease the burden created by salary reductions. For example, the number of furlough days required of each employee is based on his or her salary band, with those who have a higher rate of pay absorbing a larger pay cut than those who have a lower rate of pay.
Pensions have been protected, and will continue to be calculated based on pre-furlough salaries. Vacation and sick leave accruals will also not be affected.
In addition, salary reductions have been spread out across the full year, so that employees can rely on consistent paychecks each month, regardless of how many furlough days they use in a particular month.
Finally, UC locations have been given flexibility in how furlough days are scheduled. Each location has developed its own plan, with the goal of minimizing disruptions to employees and to our mission.
We have tried to be as thorough as possible in anticipating questions and concerns about implementation of the furlough program. If you have a question that hasn’t been answered below, please talk to your local H.R. representative. Academic appointees should direct their concerns and questions to the Academic Personnel office.
FURLOUGH/SALARY REDUCTION PLAN
Introduction to the furlough plan
Why is a furlough plan necessary?
UC faces an unprecedented $813 million deficit in state support. The furlough plan is part of a system-wide strategy to address the shortfall. In an effort to lessen the 2 8/28/2009 hardship on employees, the plan is based on a sliding scale. Those who earn more have a larger number of furlough days and a correspondingly higher salary reduction. Salary reductions range from 4 -10 percent. Savings from the furlough plan will cover about one-quarter of UC’s budget gap. Student fee increases will close another quarter of the deficit. Debt restructuring, and cuts in spending on campuses and within the Office of the President will make up the remainder. This approach of shared sacrifice means that every member of the University takes part in solving UC’s budget problem.
Implementation
When does the furlough plan begin?
The plan is effective September 1, 2009. Employees who are subject to the plan will participate for 12 months, until August 31, 2010. For employees who are paid monthly, the salary reduction will be reflected in their September paycheck, which is issued around October 1, 2009. For employees who are paid bi-weekly, the reduction will begin with the first full pay period in September. Employees can begin using furlough days as early as September 1, with the approval of their supervisor, manager or department head.
What population is subject to the plan?
The plan includes all full- and part-time UC employees, including, but not limited to, non-represented staff, represented staff and academics, Academic Senate faculty, non-Senate faculty, non-Senate academics, and members of the Health Sciences Compensation Plan. Specific exemptions are indicated below. For union-represented employees, implementation of the plan will be subject to collective bargaining agreements and all applicable laws. Discussions with union representatives regarding the University’s proposal that they adopt the plan have already begun.
Exempted employees include:
· Employees of the Lawrence Berkeley National Laboratory;
· Academic and staff employees whose pay is funded entirely by research and extramural (government and private contracts and grants) funds; for those with salaries that are partially funded from extramural funds, the exclusion will apply to that portion of their salary. To the extent an individual has a partial component of their salary reduced, they will also receive the corresponding proportional share of furlough days/hours.
· Student employees, including postdoctoral, graduate and undergraduate employees, health sciences trainees and postdoctoral fellows, except where those employees are exclusively represented by unions;
· Employees working reduced hours under the START program if their voluntary reduction is already equal to or exceeds the percent reduction for their respective pay band;
· Foreign national employees working pursuant to H visas. (The H visa is job and site specific; once approved, the employee is eligible to work at the job for which that visa was approved and any changes in terms of and conditions of employment require additional submissions for federal agency approval.);
· Employees whose participation is precluded by law. (Employees with employment contracts that cannot be changed unilaterally by the University will be asked for a voluntary salary reduction appropriate for their pay band.)
Will employees hired after Sept. 1 be subject to the furlough plan?
Yes, unless the employee is among those specifically excluded, as outlined above, under Furlough Plan Participation.
How will employees be impacted by retroactive cost transfers involving extramural funds? Could an employee become subject to the Plan after-the-fact?
If a department makes a retroactive payroll adjustment, which results in the employee's salary expenses being transferred from an extramural fund to a non-extramural fund source, the employee would not become subject to the Plan with respect to any pay already received by the employee. Conversely, if an employee had been subject to the Plan and his or her salary expenses were subsequently transferred to an extramural fund source, pay already received by the employee would remain subject to the Plan. (9/15/09)
What happens when an employee changes campuses and their salary goes up to a higher tier under the program?
An employee's full-time salary rate, as of January 1, 2009 (or the hire date, if later), will be used to determine the salary band. Inter-campus transfers should have no change in their percent pay reduction due to promotion, merit pay or other increases in compensation. Local Payroll processers are familiar with the necessary forms to ensure continuity of information from one location to another. (9/15/09)
Are union-represented employees subject to the furlough plan?
For union-represented employees, implementation of the plan is subject to collective bargaining agreements and all applicable laws. Discussions with union representatives regarding the University’s proposal that they adopt the plan have already begun. The University is prepared to discuss alternative proposals from the unions, so long as they yield the same or similar cash savings as the furlough plan adopted by the Regents.
Will exclusively represented employees whose unions have not agreed to the furlough plan be required to take vacation or leave without pay during campus closure days?
Exclusively represented employees whose unions have not agreed to the furlough plan should check the collective bargaining agreement for their unit. Where a contract is in place, employees will choose to use vacation, other accrued time, or leave without pay during campus closure days. For represented employees whose contract has expired, there may need to be collective bargaining on the furlough plan and on closure. For these employees, what occurs during closure will depend on the outcome of negotiations.
How are staff in the Medical Centers impacted?
In an effort to protect patient safety, the UC Medical Centers were given the opportunity to develop an alternative plan, which would generate the same level of savings as the employee furlough plan. In lieu of employee furloughs, the Medical Centers have been allowed to meet the required savings, which is equivalent to the amount of savings the furloughs would have achieved, through the elimination of vacant positions, planned attrition, layoffs, management of overtime pay, program closures, voluntary separation program, reduction in the use of contract and temporary labor, elimination of pay increases – except those required by contract, and salary reductions for senior management. The alternative plan is designed to meet the goals of the Regent's action, while allowing our Medical Center to maintain the highest standard of patient care possible and continue the essential services upon which our communities rely.
Furlough Days
How will you determine my number of furlough days, and the corresponding salary reduction?
An employee's full-time salary rate on January 1, 2009 (or the hire date if later), will be used to determine the number of furlough days (and corresponding percentage pay reduction) for the term of the furlough plan. This follows the methodology used to determine salary bands for employee medical contributions.
How do the furlough days and salary reduction correspond to each another?
Employees will receive the allotted number of furlough days specified by their salary band in hourly increments each month. Their pay will be reduced by a corresponding percentage in even increments each month during the 12-month plan period. For example, an employee whose salary is within Salary Band 2 ($40,001 - $46,000) is allotted 13 furloughs days off, and receives a 5 percent salary reduction. That salary reduction is spread out evenly over each pay period for 12 consecutive months.
What is the full range of furlough days and the corresponding salary reduction?
Tier Furlough Salary Equivalent
Days* Salary Reduction
1 11 0 – 40,000 4%
2 13 40,001 – 46,000 5%
3 16 46,001 – 60,000 6%
4 18 60,001 – 90,000 7%
5 21 90,001 – 180,000 8%
6 24 180,001 – 240,000 9%
7 26 Over $240,000 10%
*Faculty furlough days will vary depending on academic or 12-month year.
Note: Senior Management Group members will receive a maximum of 10 furlough days, regardless of pay scale.
How will furlough days be scheduled?
Some or all furlough days may be formally scheduled by your campus, division or department. Employees should receive advance notice of these closure days. Any leftover furlough days may be taken at the discretion of an employee, with the approval of the employee’s supervisor. Employees may begin using furlough days as early as September 1, with the approval of their supervisor, manager, or department head. Supervisors have the authority to approve the use of furlough days in advance of accrual in order to manage employee schedules during the term of the program. Before approving the use of furlough time, supervisors should consider any upcoming prescheduled furlough/closure days. Employees are expected to use their discretionary furlough days during the pay period when they are accrued. However, if an employee has a compelling reason to accumulate discretionary furlough days for use at the end of the plan period, he/she may make a request to his/her supervisor.
How will furlough days be tracked?
At most locations, the payroll system will be used to track the accrual and use of furlough days. The appropriate number of furlough hours will be added into a furlough bank each month. For example, a full-time employee in Salary Band 4 will accrue approximately 12 hours of furlough time a month (1½ days) for a total of 18 days during the 12-month term of the plan. Furlough hours will be subtracted in the system when they are used. Campuses will also use local leave tracking systems to monitor the use of furlough days.
When can employees begin using furlough days?
Employees can begin using furlough days as early as September 1, with the approval of the supervisor/manager/department head. Supervisors have the authority to approve the use of furlough days in advance of accrual in order to manage employee schedules during the term of the program. Before approving the use of furlough time, supervisors should consider any upcoming pre-scheduled furlough/closure days (i.e., it would not be prudent for a supervisor to approve an employee using all furlough accruals prior to a scheduled holiday closure period).
Can furlough days be used before they are accrued?
If a location has scheduled closure days in excess of accrued furlough days, employees may use furlough days before they have actually accrued with a supervisor’s approval.
Must furloughs be taken as full days off or can they be taken in hourly increments?
Generally, furlough time should be recorded in one-day increments for exempt employees, ¼ hour increments for non-exempt employees. Campuses may establish local procedures for recording furlough time.
What happens to unused furlough time at the end of the program?
Employees are expected to use all of their furlough days during the plan term. Furlough time is not like vacation time that can be banked for later use. Furlough time that is not used as expected during the plan term will expire at the end of the program, slated for August 31, 2010.
What happens if I plan to take a furlough day but am called into work on an emergency and actually have to work that day?
That day becomes a work day, and the employee should schedule another furlough day as soon as possible thereafter as a replacement.
May an employee voluntarily come to work on his/her floating furlough day to take advantage of training or educational opportunities?
If an employee comes in for work-related training or education, it is considered a work day and not a furlough day. An employee who wants to take advantage of a training or educational opportunity on a day that he/she scheduled as a furlough day must schedule an alternative furlough day.
Are employees who are on a leave without pay (such as disability or family leave) affected by the furlough plan?
Employees who are on leave without pay at the time the furlough plan becomes effective on September 1, 2009 will be subject to it from the time they return to work until the end of the Plan on August 31, 2010.
Are these furloughs intended to be permanent?
No. The intent is for these actions to be temporary or short-term to help the University through the current budget crisis. The Plan will commence Sept. 1, 2009, and will run for 12 consecutive months thereafter, unless renewed by the Regents.
Is it possible that some employees may receive a pay-cut but not any furlough days?
An employee paid with a stipend may not receive any automatically accrued furlough days if the rest of his/her pay is excluded from the Plan, e.g., because the employee is paid from extramural funds and receives a stipend for the amount of his/her pay over the NIH cap. In such cases, the percentage of the stipend amount to the employee's full-time rate of pay that would otherwise be subject to the Plan should be used to manually calculate the number of furlough days owed the employee. This percentage would be multiplied by the employee's total number of furlough days associated with his/her salary band. (9/15/09)
How do I manage furlough time for variable time or per diem employees since they work “as needed?”
Many variable time employees receive vacation time and arranging furlough time for variable time or per diem employees should work similarly. When an employee is provided with their schedule for the coming pay period such as the next Bi-Weekly, they will request furlough time in lieu of work for some of the offered hours. Managers and supervisors must manage employees’ furlough time to ensure that it is all used by the end of the plan term. Once the furlough time has been taken it can be reported in the Payroll system and the employee will receive pay for the hours taken. (9/15/09)
Salary Reductions and Compensation
What types of pay will be affected by the salary reduction?
Compensation subject to the plan includes base pay, similar forms of regular pay and stipends, except as otherwise exempted, whether that income is derived from state funds, student fees, contracts, grants, cooperative agreements, auxiliary enterprises or other fund sources.
Are any forms of pay excluded from reductions under the furlough plan?
Yes. The following types of pay will not be reduced:
• Pay for summer session teaching
• Summer additional compensation
• Teacher-University Extension (UNX payments)
• By Agreement salaries (BYA)
• Overtime
• Shift differential
• Bonus pay *
• Incentive pay *
• Terminal vacation pay
• Severance pay
• Workers’ Compensation supplement
*Many categories of bonus and incentive pay have been cancelled or deferred by The Regents
Will the salary reduction be spread out equally over the year, or will pay be reduced in the month the furlough days actually occur?
The furlough plan is designed to spread the corresponding pay reduction evenly in each pay period throughout the year.
What if my salary increases or decreases during the year?
The number of furlough days will not be adjusted due to salary changes throughout the year; it will remain the same until August 31, 2010.
Will faculty merits and promotions be affected by a salary reduction plan?
There will be no change to faculty merit awards for July 2009 or to the 2009-10 academic review cycle with actions effective July, 2010. The Provost and Academic Senate Chair will convene a joint Academic Senate/Administration group in September 2009 to consider any possible temporary changes in future Academic Review Cycles beginning with the 2010-11 review cycle.
Will senior leaders who already have taken a 5 percent pay cut face further reductions?
Yes. The senior UC officials who volunteered to have their salary reduced by 5 percent will have their salaries reduced by a total of 10 percent.
How will vacation and sick leave accruals and other benefits be impacted by the furlough plan?
The plan will use pre-furlough salaries to calculate UCRP benefits and to maintain the pre-furlough accrual of UCRP service credit so that UCRP benefits are not negatively impacted. In addition, the accrual of vacation and sick leave will not be reduced and health and welfare benefits (medical, dental, vision, life and disability) will not be impacted by the furlough/salary reduction plan. Monthly costs of insurance premiums and calculations of life and disability benefits will continue to be based on your full-time, unreduced salary rate. These protections are consistent with those provided in the START program.
Will the reduction in salary have any impact on an employee’s disability or life insurance benefits?
Benefit payments for both short-term and supplemental disability plans will be based on an employee’s unreduced salary. Premiums also will continue to be based on an employee’s unreduced salary. Basic life insurance coverage will continue at the unreduced salary rate until January 1, 2010, at which time coverage will be based on the salary rate in effect at that time. Supplemental life insurance premiums and coverage will also continue at the unreduced salary rate. These provisions are consistent with the START program.
Will my monthly health insurance premiums be adjusted for the rest of 2009 if the salary reduction puts me in a lower medical plan salary band?
No.
Will I be allowed to change medical plans mid-year following implementation of the furlough plan?
No. There will be an opportunity to change medical plans for 2010 during Open Enrollment in November.
Will I be able to change my Dependent Care or Health FSA election due to the furlough/salary reduction?
It depends. Generally, employees may not change or cancel elections to the Health or DepCare Flexible Spending Accounts mid-year. However, if a qualifying “status change event” occurs, IRS rules indicate that changes to participation and/or to contribution amounts during the plan year may be made. The types of qualifying status change events under the Health FSA are different from those under the Dependent Care FSA. Additionally, the specifics of the status change event determine the type of changes allowed.
For example, for the Health FSA, the only type of employment-related events which would qualify to make changes are those that affect eligibility for the plan. The University’s specific furlough/salary reduction plan does not constitute a qualifying status change event since it does not impact eligibility for the plan.
For the Dependent Care FSA, there is also no qualifying status change event as a direct function of the furlough/reduction in pay since it does not impact eligibility for the plan. However, under a Dependent Care FSA, if you change work schedules (including changing from full-time to part-time status) and this results in changes to the hours of dependent care needed, a change to decrease the amount of the DepCare FSA is allowed. Similarly, if you change from one dependent care provider to another, you may change your election to increase or decrease the amount to match the new arrangement. Or, if you change to in-home dependent care, the election may also be changed (or cancelled if the new arrangement is for free care).
Also, remember that both the Health and DepCare FSA plans include a “grace period” – this means you can use 2009 contributions for expenses incurred during the grace period from January 1 – March 15, 2010. As always, there will be an opportunity to enroll for 2010 during Open Enrollment in November. (Revised 9/15/09)
Am I covered by workers’ compensation or any other relevant insurance if I’m injured on campus, in the course of work, on a furlough day?
If you work on a scheduled furlough day, you are no longer considered on furlough that day. The day would be considered a work day, subject to all relevant workers’ compensation and insurance coverage. The furlough day would need to be rescheduled. (9/15/09)
How will mandatory DC Plan contributions be impacted by the furlough plan?
Mandatory contributions to the DC Plan are based on a percentage of pay received by the employee; they will be reduced as pay is reduced under the furlough plan.
How will my voluntary contributions to the 403(b), 457(b) and DC Plan After Tax Plans be impacted by the furlough plan?
If your voluntary contributions are made as a percentage of pay, they will be reduced. Contributions that are made at a flat rate (for example, $100 per month) will not change. Employees can change their contribution elections at any time, subject to payroll and processing deadlines.
Will the senior management supplemental benefit program contributions be impacted by the furlough plan?
Yes. These employer contributions are a percentage of pay received by the employee, and therefore they will be reduced as pay is reduced under the furlough plan.
Will I be allowed to restructure the loan terms of my 403(b) Plan loan?
No.
Is the University considering reinstituting CAP accounts, like it did in 1992 and 1994?
No.
Will the employee contributions to the UC Retirement Plan, scheduled to begin in April 2010, be calculated on the employee’s regular salary or the reduced salary?
Both employer contributions and employee contributions to UCRP from April 15, 2010 through August 31, 2010 (or the end of the term of the plan) will be based on the employee’s reduced salary.
Will furloughs or salary reductions affect the health of the UC Retirement Plan?
The potential impact of the furlough plan on the funding status of the UC retirement plan was analyzed by the plan actuary. With UCRP contributions scheduled to resume April 15, the actuary estimates that $10 million less in UCRP employer and member contributions would be made from April 15, 2010 through August 31, 2010 as a result of furloughs. Given the size of UCRP, this does not diminish UCRP’s overall financial health. As previously announced, President Yudof has appointed a task force to look at a variety of issues regarding retirement benefits including long-term funding needs.
Will employees be permitted to choose START before/after the furlough plan begins?
The START program continues to be in effect through June 30, 2010. Employee participation is voluntary. In all cases, participation is dependent upon the approval of the department head.
Are there advantages to being in START rather than the furlough plan in terms of vacation and sick leave accrual and benefit protections?
No. The provisions for vacation and sick leave accrual and benefits, including UCRP, are the same under both programs.
What happens if my START program ends before the furlough period ends?
START participants whose START contract expires before the close of the furlough program will subsequently be placed on the furlough plan.
How will the furlough plan affect part-time employees?
Part-time employees will be allotted furlough days and have their salary reduced in proportion to their full-time equivalent salary. For example, an employee who has a 60% appointment and earns $60,000 per year ($100,000 full-time equivalent) is within Salary Band 5 that allots 21 furlough days and an 8% salary reduction, so the employee will receive 12.6 furlough days and a $4,800 salary reduction (8% of $60,000).
Will part-time employees currently at 50 percent time fall into a lower benefit eligibility level and lose their UCRP vesting?
No. Benefits eligibility will not be negatively impacted by the furlough plan consistent with how START participant’s benefits are protected.
Separation from the University
I plan to leave the University later this year through the Voluntary Separation Program. Am I still subject to the furlough plan and will my severance pay be affected by it?
Employees who will separate from UC under a VSP after the effective date of the plan are subject to it. Severance pay under the VSP is not affected by the furlough plan – it will be calculated based on the separating employee’s pre-furlough (unreduced) monthly salary.
If l leave the University before using all my furlough days, will those days expire?
By policy, unused furlough days will expire at the end of the term of the furlough plan or upon separation of employment, if earlier. Supervisors and managers should work with employees to schedule the furlough time prior to separation. Managers and supervisors have the authority under policy to require the use of furlough time.
Will severance pay be calculated on my pre-furlough salary or on the reduced salary?
If an employee is laid off or terminated during the furlough/salary reduction period, severance will be calculated on the employee’s pre-reduction salary.
If I leave UC while the furlough plan is in place, will it affect my payout of vacation pay?
No. Terminal vacation pay will be calculated based on your pre-furlough (unreduced) rate of pay.
I’ve read that the furlough plan yields much more than $184 million. Please clarify.
Yes, savings from the furlough plan will total more than $184 million. When all UC funds sources are taken into account (UC general funds, auxiliary enterprises, contracts and grants and medical center revenues) the furlough plan yields approximately $515 million. It is important to note that while the general fund savings of $184 million will be applied directly to the state budget cuts, salary savings generated from grants and contracts must be redeployed within the scope of each specific grant or contract. The additional dollars resulting from the salary reductions in other non-general fund sources will be used to help offset other cost increases and revenue shortfalls in those areas, such as rising costs of technology, utilities and health benefits as well as revenue shortfalls such as cuts in Medi-Cal payments to UC medical centers. To the greatest extent possible, campuses will seek to deploy savings generated from non-general fund sources strategically to address their specific needs and to address the balance of the $813 million state funding shortfall after savings from furloughs/salary reductions are taken into account, consistent with any restrictions on those fund sources.
Related Links
For Additional Furlough Information from UCOP Please Click Here. En Espanol
For Other Budget Information from UCOP Please Click Here.
Information from UC Office of the President (UCOP) as of 7/14/09
· Information about the UC furlough proposal – 7/14/09
· Información sobre la propuesta de ausencias dispensadas en la UC – 7/14/09
· Frequently Asked Questions – 7/14/09
· Preguntas frecuentes acerca de las Ausencias Dispensadas – 7/14/09
