USC layoffs are coming, sources warn

USC still hasn’t publicly announced the imminent sweeping budget cuts that Morning, Trojan reported Saturday. But behind closed doors, one fact is already clear: Sizable layoffs are inevitable, according to multiple sources involved in high-level discussions.

“There is no other way around it,” said one financial official who asked to remain anonymous because he was not authorized to speak to the press.

Officials at academic units said they were scrambling over the weekend to balance their books. Many must submit budget proposals to the provost’s office this week — some as soon as Monday.

Schools must cut an average of 5% of their budgets while administrative units must cut 10%, internal documents show. Even under normal circumstances, those would be intimidating numbers.

But because USC’s ongoing financial crisis has already eroded many non-personnel expenses, there’s not much left to cut, officials say.

“You must be wasting a lot of money in materials and supplies, travel, and other expenditures to be able to find 5% of your overall budget in those categories,” said one person with knowledge of university finances.

Staff are expected to bear the brunt of the layoffs, though non-tenured faculty are also at risk “if they don’t find enough staff to lay off,” one official said. Complicating matters is that the reduction percentages are deceptively low, the official added.

Under USC’s financial structure, all schools — Dornsife, Viterbi, Keck, et al. — must divert a large share of their revenue to the university’s central administration to cover common overhead costs.

Research-intensive schools might spend 35% of their revenue on these taxes, while a teaching-focused school might spend as much as 55%, according to the Academic Senate. The remaining money is generally what they can spend on school-specific expenses, like faculty salaries and supplies.

The catch is that a 5% budget reduction is calculated using the school’s total revenue — not what it actually has left to spend after university taxes, one official said.

If a school earns $1 million from tuition and other sources, a 5% reduction means it must cleave $50,000 in spending. But if half its revenue still goes toward university taxes, the school effectively has 10% less cash to work with.

USC has seen several layoffs over the last year, though sources privy to budgeting discussions said they expect the imminent round to be more dramatic. One said that, under federal law, USC will likely have to file a WARN Act notice, which requires large employers to notify employees 60 days ahead of a mass layoff.

University policy dictates the following terms regarding severance and insurance:

• Employees who’ve worked four or fewer full (cumulative) years at USC receive four weeks of severance. They’ll get four weeks of health insurance premiums.

• Employees who’ve worked five or more (cumulative) full years receive one week of severance for each full year worked. The same math applies to health insurance premiums.

View the full policy here.

Got a tip? (SBOs: I’m looking at you.) Contact me confidentially.