COVID-19 has been an inflection point for institutions of higher learning in the U.S. Midway through the 2020 semester, campuses shut down, refunded students’ room and board, and made unbudgeted investments in transitioning to a virtual environment.
For the 2021 academic year, most institutions are expecting declines in room and board payments, student enrollment, endowment returns, and alumni and donor giving. Public institutions are expecting lower state appropriation funding than they received in 2020. Alongside these projected revenue shortfalls, investments in social decisions need to continue to provide both distance and on campus education in the fall of 2021.
One of the ways institutions are responding to these financial challenges is to rethink their staffing models and reduce faculty and staff costs. Some are implementing hiring and travel freezes, deferred retirement contributions, salary reductions, furloughs, and freezing of annual merit increases. Some have gone further to eliminate staff positions and terminate faculty contract renewals, or change them to one-year contracts.
In this paper, Milliman’s Radhika Philip explains that workforce transitions need to be conducted with sensitivity and doing so can ultimately strengthen the institution’s reputation with its diverse stakeholders.
The passage of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, as well as general liquidity and business continuity concerns resulting from the financial effects of COVID-19, have created circumstances calling for reductions in executive compensation. However, employers and employees must carefully consider how any reductions are implemented to remain compliant with Internal Revenue Code Section 409A.
In this article, Milliman’s Dominick Pizzano and White & Case’s Henrik Patel and Kenneth Barr review executive compensation issues that should be examined during these turbulent times.
The COVID-19 pandemic has precipitated short-term and long-term economic responses that will continue to unfold. In the meantime, employers have many questions regarding Internal Revenue Service (IRS) minimum required contributions (MRCs) for their defined benefit plans.
In this article, Milliman actuary Esther Peterson summarizes the components that feed into the MRC calculation and considers how potential consequences may trickle down into the MRC calculation for future plan years.
In this Milliman webinar, consultants Lauren Busey, Heidi tenBroek, and Larry Daniels discuss results from the recent Milliman Northwest Healthcare COVID-19 Pulse Survey. The survey summarizes key actions local healthcare employers are taking to address employee benefits and compensation issues as a result of the current pandemic.
For more perspective on the survey, read Lauren’s article “Managing benefits and compensation for healthcare workers in the time of COVID-19.”
The emergence of the COVID-19 pandemic has had a massive impact on the U.S. economy and workforce. Millions have been furloughed or laid off, while others have struggled to do their essential jobs or work from home amid limited child care, stay-at-home orders, and social distancing guidelines. Even as the nation slowly gets back to work, the pandemic will undoubtedly have long-lasting effects on the economy, and by extension on employee benefits.
The 14th annual Northwest Benefits Survey—which includes data collected from February to April 2020 from 138 organizations located in Alaska, Idaho, Oregon, and Washington—captured the situation immediately before COVID-19 began affecting the United States. Despite the uncertainty of the moment, the observations from the 2020 Northwest Benefits Survey help clarify some strong trends that will likely have relevance in the future. From the expanded use of telehealth to the increasing importance of wellness benefits, employers may feel a need to reexamine their benefits in order to better support their employees and determine the way forward for their organizations during this global health crisis.
To learn more, read the article “Five key observations from the 2020 Northwest Benefits Survey” by Milliman’s David Evans.
At present, the severity and duration of the COVID-19 pandemic are unknown, and the same is true of the impact on the economies of the United States and other countries. However, the effect on pension plans will certainly be negative.
Congress did respond quickly by passing the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which provides a record-shattering $2 trillion in stimulus, including some immediate relief for plan sponsors. Despite the ongoing uncertainty, there are some helpful guidelines for corporate pension plan sponsors based on past experience as well as the market data already in the books through the first quarter of 2020.
In this article, Milliman’s Zorast Wadia addresses the likely impact on pension expense and funded status. Additionally, he discusses the impact of the CARES Act on required cash contributions in calendar year 2020. Zorast also points out some red flags to look for over the next few years and details strategic steps that plan sponsors can begin taking now to help mitigate some of the risks in these unprecedented circumstances.