Lowering annual leave balance will reduce projected budget deficit

Cut Backs to Maintain Budget

The University is asking all staff members to reduce their annual leave balance by 20 percent by September 30, the end of the fiscal year, a step that will reduce by two-thirds a projected deficit in the operating budget.

President Hurwitz informed the campus community in a May 25 email that unless steps are taken, Gallaudet will end the fiscal year with approximately $1.5 million in arrears. A follow-up message the next day by Vice President for Administration and Finance Paul Kelly suggested steps that individuals can take to help the University control or reduce costs, such as lowering energy consumption.

Because employee salaries and benefits account for 70 percent of Gallaudet’s budget, the University is considering a number of initiatives to find cost savings in these areas. For example, Kelly said that the University is experimenting with a pilot program where staff can volunteer to work 10 or 11 months at a proportionally reduced salary. Having staff who have accumulated a large amount of annual leave use as much leave as possible between now and the end of the fiscal year is another important step toward balancing the budget, he said.

On the Green recently interviewed Kelly for a detailed explanation of how reducing annual leave hours can help the University save money. First, he clarified that the issue of accumulated annual leave applies only to staff, because faculty work under a different compensation system. Staff who have worked at Gallaudet for up to three years can carry over up to 240 hours into the next calendar year; those with three to 15 years of service can carry over 360 hours, and those with more than 15 years can carry over up to 480 hours.

Although the odds that the University would have to compensate all staff for their leave balances at one time are essentially nonexistent, the fact is that Gallaudet is required under generally accepted accounting standards to set aside funds equal to the total amount of hours that staff has accumulated. Last year, said Kelly, that figure was $6 million. Reducing the leave balance by 20 percent would save the University approximately $1 million–a significant step toward erasing the operating deficit.

The rationale typically cited for socking away annual leave is that some staff members view building up annual leave as a bank account of sorts that they can cash out when they leave the University, while others say their job responsibilities don’t allow them to take a lot of time away from work. Kelly said the first reason may be a sound one, but he encourages staff to exercise the practice at a lesser rate. Regarding the latter reason, he said the University strongly urges supervisors to make the necessary arrangements so that staff can use their annual leave.

Staff have clearly taken the memo to heart: Kelly said that Human Resources Services records at the end of June show a reduction in the total number of annual leave hours, compared to June 2009. “People are using their leave to help Gallaudet, and I appreciate that,” he said. “For anyone interested in helping the University, this is a painless way to help avoid a deficit, compared to alternatives such as furloughs, more layoffs, or further cuts in non-payroll expenses.” He added that in the future, the University may consider reducing the number of hours that staff can carry over from one year to the next.

Taking annual leave has clear personal benefits, as well. Research shows that time away from the job for relaxation or pursuing other interests leads to better job performance and improved mental health, said Dr. Lauri Rush, associate dean of Student Support Services. “Productivity increases as employees return to their jobs refreshed and more cognitively alert,” she said. “Vacations also lead to better physical health and emotional well-being. Employees who use annual leave for vacations report a decrease in stress, depression, and anxiety. Research also indicates that vacations lead to decreases in burn out and better decision-making skills. On a personal level, studies show that vacations even can improve family relationships and marriages.” Her advice is, “Use your annual leave, benefit from some rest and relaxation, and help Gallaudet balance its budget.”