The Rochester region's largest employer has announced a series of cost-cutting moves in response to the financial impact of the COVID-19.

The University of Rochester announced Wednesday it would implement furloughs for some staff, eliminate merit raises, and delay a planned wage compression program for employees affected by the increase in minimum wage.

Details of the various measures were outlined in a letter to employees from university President Sarah Mangelsdorf, Provost Robert Clark and CFO Holly Crawford that was distributed Wednesday morning.

The letter outlined a variety of ways in which the university's finances had been significantly impacted by the pandemic, including refunded room-and-board fees to students sent home and the uncertainty about when in-person instruction might continue.

It also described the expenses incurred as URMC made preparations for its pandemic response while seeing its other healthcare operations slow significantly.

"We have experienced significant lost revenue from suspending non-essential medical procedures in order to build capacity in our hospitals for an anticipated surge in COVID-19 patients," the letter explained. "The financial implications of this situation have been significant, and we don’t yet know how long these will last."

The private university employs roughly 29,000 people in the Rochester area, with about 90% of those workers associated with the University of Rochester Medical Center.

Cost-cutting steps

The letter outlined seven steps that the university was taking to address its financial challenges.

Some employees will be asked to take short-term furloughs in the coming months. This includes furloughs that occur as campus operations are ramped down for the summer, as well as incremental furloughs in other areas.

The university also said there will be no merit-based pay increases for faculty or staff for fiscal year 2021. A hiring freeze has been implemented for all open positions, and overtime for workers outside of clinical areas will not be allowed.

A wage compression plan, which would have increased the pay of workers making slightly more than minimum wage, has been put on hold.

Some senior leaders will take pay cuts of up to 18%, according to the letter.

Many capital projects are being put on hold, and the university said it will work aggressively to pursue funds available from government stimulus programs, including the CARES act.

Endowment remains untouched

The letter explains that the university will not be tapping into its sizable endowment fund to help address these financial challenges.

That endowment is worth in excess of $2.2 billion, according to a February report from the National Association of College and University Business Officers.

"The majority of [the] university’s endowment is directed to specific purposes such as professorships and scholarships. We simply can’t use those funds to support operations," the letter said. "We must also take a long-range view of our endowment; it is as much ours now as it will be for future generations of University of Rochester faculty, students, and staff."

The letter described these cost-cutting measures as "a preliminary measure to help sustain university operations." It cautioned that additional measures may be necessary in the future, depending on the duration of the pandemic and the impacts of the economic downturn.

Sean Lahman is a watchdog reporter for the Democrat & Chronicle, part of the USA Today Network. Contact him at slahman@gannett.com and follow him on Twitter @seanlahman.