budget challenge

Colleges Introduce Salary Savings Plan to Address Budget Shortfalls

The COVID-19 crisis has created a huge impact in the education sector. With classes being canceled and admissions for the next year delayed, colleges are introducing temporary salary savings plans to counter their budget shortfalls in 2020-2021.

How KU Is Dealing with the Budget Shortfall

The University of Kansas recently announced that its Lawrence and Edwards campuses are facing a budget challenge with a financial deficit of $120 million for the fiscal year 2021. This prompted them to introduce a temporary salary savings plan for employees with an annual package of $50,000.

This savings plan will cover 13 pay cycles of the university and is valid only for 6 months, beginning on August 23 and ending on February 20.

Plan Layout

The salary savings plan will work differently for employees based on their salary packages. Employees with higher salaries or those funded by grants will face huge deductions. There will be no deductions for employees with a salary package of less than $50,000.

The minimum deduction is 1% for employees with a package of $50,000 to $59,999, and a maximum of 11% can be deducted. However, this salary savings plan does not apply to student employees (GTA, GA, GRA, and student hourly) as well as employees working on an H1-B visa.

Despite the salary deductions, health insurance premiums and leave accruals of all employees will remain unaffected.

Retirement Plans

There will be adjustments to the employer and employee contribution to mandatory retirement plans (KPERS, KP&F, and Kansas Board of Regents) because they are calculated as a percentage of gross salary.

Spending Down Savings and Carry Forward Balances

The university is also implementing changes in the usage of carry forward balances, savings from vacant positions, and salary savings, which will contribute almost $38 million towards the budget shortfall.


Some units may need to implement furloughs for employees who aren’t currently engaged in any projects.

The University of Kansas Lawrence and Edward campuses are working towards other measures to further counter revenue shortfalls.

Much like KU, several other universities are facing a budget challenge. If you are looking for a consulting firm with years of experience and expertise in legal, salary, and other human resource issues, contact the professionals at McKnight Associates, Inc. We are ready to offer assistance on human resources consulting for universities, colleges, and companies.