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Thread for folks who support the demands of GEO, RAs, and MDining workers, but who worry about the financial implications for the university if UM concedes to those demands.
tl;dr there is no evidence of a financial crisis at UM; quite the opposite. #UMMakesUsSick
tl;dr there is no evidence of a financial crisis at UM; quite the opposite. #UMMakesUsSick
(Disclaimer: I’m not an expert in university or hospital finance, this is based on following and talking to folks about things over the summer. I’ll provide as many sources as I can.)
The U worked hard early in the pandemic to convince people of dire financial ramifications. Most immediately, MI Medicine projected $230M in losses in FY20, with more in FY21.
Because the hospital rightly prepared for COVID, it canceled many other procedures, including elective procedures, which is where the hospital makes a lot of $
https://www.uofmhealth.org/news/archive/202005/michigan-medicine-announces-economic-recovery-plan
https://www.uofmhealth.org/news/archive/202005/michigan-medicine-announces-economic-recovery-plan
MMedicine didn’t explain where the estimates were coming from. But it used those projections to justify layoffs, furloughs, and benefit reductions (including eliminating the employer retirement match, a crucial benefit) through its “recovery plan”
https://www.uofmhealth.org/news/archive/202005/michigan-medicine-announces-economic-recovery-plan
https://www.uofmhealth.org/news/archive/202005/michigan-medicine-announces-economic-recovery-plan
The layoffs and furloughs (e.g., 38 emergency technicians laid off in June) increased workload on remaining staff, and also sometimes ended up shuffling staff around, out of positions they had long experience with and into others they had to learn anew. https://www.gofundme.com/f/forever-our-u-of-m-emergency-heroes
Unions asked UM to explain where these projected losses were coming from. HVALF created a petition in May that gathered well over 600 signatures in a short period of time. UM ignored it, and did the same for a similar call for transparency from GEO. https://actionnetwork.org/petitions/president-schlissel-open-the-books-to-u-m-employees
However, the June Regents revealed that actual losses were real ($139M) but much less than $230M, and that federal assistance had reduced those losses to $3M.
The same presentation goes on to show that administrators had cut worker pay and benefits so drastically that they anticipated a $44M PROFIT in FY21.
So the university’s own data showed that MI Medicine was not only OK financially, but actually making profit off of the backs of workers (and fired workers). That Regents video goes on to say they’re going to continue streamlining, i.e., cutting, in spite of this.
The hospital was an important part of the anticipated losses, but not all of it—in late April, Schlissel was already predicting losses of $400M to $1B. The range of these estimates was huge, and again there was no information about where the numbers were coming from.
But these projections were still used to justify cuts on the academic side. Schlissel froze salaries, hiring, and “non-essential” expenditures.
https://president.umich.edu/news-communications/letters-to-the-community/a-covid-19-update-from-president-mark-s-schlissel/
https://president.umich.edu/news-communications/letters-to-the-community/a-covid-19-update-from-president-mark-s-schlissel/
UM also laid off 19% of lecturers at Flint, and made cuts to a total of 44% of Flint lecturers. Flint is the campus with the highest proportion of Black students (12% of undergrads as opposed to 4% in A2 and 9% in Dearborn). https://themichigantimes.com/5012/campus/19-percent-of-um-flint-lecturers-will-not-return-in-the-fall/
UM used its austerity project to deepen institutional racism, showing how these two are often/always intertwined.
Defunding Flint was a slap in the face to YEARS of organizing by the One University Coalition, which is pushing for inter-campus equity. One U released its final report in May. https://docs.google.com/document/d/1Vbcua_jqxfbxdgY6u_kXRvZF4dny2XslBF0vKSfVAXQ
So UM moved into austerity mode with basically no transparency or community engagement. Various groups tried to tell the admin what they needed. In May, >1800 people signed an open letter to UM asking for many of the things that GEO is striking for now. https://docs.google.com/document/d/1GtgrYEmH7VpBbTSf81GByc0rBxR7P-QC_uAvdtCZcgI
(So the admin’s protestations that they were caught unaware by the strike are BS. They ignored/refused to engage us, in spite of us trying everything we could think of to get through to them over the summer. And now they feign surprise when we take the only action we have left.)
The open letter was sent to Schlissel, Collins, Regents, and all deans on May 8. In less than 15 minutes, Regent Weiser responded, “Where is the money supposed to come from for your monetary demands.” (See timestamps on the emails below.)
(Reminder: Weiser stood to profit from a campus reopening because his real estate company, McKinley Associates, owns tons of properties usually filled with students.) https://www.michigandaily.com/section/opinion/op-ed-university%E2%80%99s-summer-lies
(Reminder: Weiser has plenty of money and gives it to the university when he wants to.) https://medicine.umich.edu/dept/diabetes/30m-gift-establish-elizabeth-weiser-caswell-diabetes-institute-university-michigan
GEO responded UM's inadequate answer by asking them to show their work (as any GSI would!). UM did not do so.
https://www.geo3550.org/2020/05/14/where-will-the-money-come-from-open-the-books-and-the-community-can-help-answer/
https://www.geo3550.org/2020/05/14/where-will-the-money-come-from-open-the-books-and-the-community-can-help-answer/
In response to UM's stonewalling, the ACLC commissioned Howard Bunsis, EMU professor of accounting and nationally renowned expert on higher education finance, to review UM’s financial condition.
He used a variety of data sources, including UM’s audited financial reports. ACLC summarized in this report. https://docs.google.com/document/d/1mc3mkDaS-ZreAhjyyCXRcfi9ErUKQwPhoEsm7QuAkHo
Bunsis said UM was facing real losses. He estimated those at $229M to $690M, much less than Schlissel’s $600M to $1B.
Details here, though it can be a bit hard to follow without Bunsis's excellent presentation (a bit of this below): https://drive.google.com/file/d/1GuxfxLrnoE7CklRXhYQDNCTdUcu6ASd_/view?usp=sharing
Details here, though it can be a bit hard to follow without Bunsis's excellent presentation (a bit of this below): https://drive.google.com/file/d/1GuxfxLrnoE7CklRXhYQDNCTdUcu6ASd_/view?usp=sharing
One of Schlissel’s talking points then was that UM was already spending $368M from the endowment. But as Bunsis pointed out, they were literally required to do that. In fact, a modest increase in that spending could have wiped out the estimated losses.
UM likes to say that the endowment isn’t just a stack of cash they can use, and to some degree this is true. But Bunsis’s careful analysis showed that UM could spend $6.8 BILLION if it wanted to. Here’s a nice graph showing losses vs available funds:
This is one reason why UM’s approach is so unacceptable to me. Decades of marketization (& racist, classist & sexist notions of what a “real” college experience is) have made many schools highly tuition-dependent, & now face a financial collapse if students don’t return to campus
UM IS NOT ONE OF THOSE SCHOOLS. As Bunsis says, it has $6.8 BILLION it could use to ride out this crisis without laying off any workers, cutting any benefits, or forcing workers into hazardous working conditions. But instead it has done all of those things
UM will argue that much less of the endowment is available than Bunsis found. Here’s why that’s wrong (thanks to ACLC and lecturers who put these videos together!):
I don’t think that these numbers include a $1B line of credit UM took out earlier this year, or the $ it could draw from its massive donor and alum network. Reminder that UM recently raised $5B— as UM said, “shattering records for public universities.” https://news.umich.edu/u-michigan-raises-5b-shattering-records-for-public-universities/
And note that even UM’s own ridiculously low estimate of its unrestricted reserves ($1.3B) could have taken care of the losses it was projecting.
btw I don’t think any of this matters for the campus reopening—if it was dangerous to bring people back to campus (which I think it was), but the U would go bankrupt otherwise, then the U should go bankrupt. Lives > institutions
That those are the choices some schools face is a massive failure of higher ed and public health policy. But to reiterate, UM had other options. It could have done the right thing AND survived financially—in fact, it probably still would have had billions.
This shows that UM can afford all the demands that GEO, RAs, and MDining workers are making—as well as those that other workers would if they could.
I think it also shows that UM could (and absolutely should) keep ALL of its employees on its payroll when UM goes online.
I think it also shows that UM could (and absolutely should) keep ALL of its employees on its payroll when UM goes online.
Re:endowment, UM’s Regents also refuse to divest from companies that contribute to unspeakable human rights abuses against Palestinians by the apartheid state of Israel. & Regents refuse to fully divest from the fossil fuel industry. https://www.michigandaily.com/section/student-government/csg-president-endorses-umdivest
It would be better if the money we use to support our community were not blood money.
