Penn State Athletics will reduce salaries for employees throughout the department, a spokesperson confirmed to StateCollege.com on Monday night.
The Centre Daily Times was first to publish the story on Monday evening.
A source told StateCollege.com earlier on Monday that cuts will operate on a sliding scale from 5% at the lower end up to 10% for some of the highest earning members of the department, with cuts not impacting those below a certain earning threshold. Penn State didn't not confirm those percentages but didn't not dispute them when presented for comment. At least one source indicated that for head coaches such as James Franklin, due to contract language, pay cuts may be voluntary.
Two sources who wished to speak on the condition of anonymity said that Penn State hosted a Zoom video call last Wednesday with Vice President for Intercollegiate Athletics Sandy Barbour, who announced the cuts and plans moving forward. According to one source Barbour indicated that she too would cut her salary.
Barbour signed a new contract extension in 2019 that pays her roughly $1.3 million annually.
In a statement provided on Monday night, the athletic department confirmed the pay cuts, but declined to provide specific details.
“Penn State Intercollegiate Athletics has analyzed its budget and revenue shortfalls for the 2020-21 academic year due to the COVID-19 pandemic,” the statement read. “As a result of our analysis and based on our current financial circumstances, we made the difficult decision to make reductions in salaries across the department for this fiscal year. The savings generated by these reductions, as well as decreases in our operation budgets, will assist in minimizing our currently anticipated revenue shortfall for this year."
For many employees the prospect of pay cuts was not an unexpected decision. One source provided StateCollege.com with a portion of a document, issued in June to certain athletic department employees. Among other things the language dictated that the university had the ability to cut pay or furlough employees at its discretion.
"This appointment can be terminated earlier by either party upon notice, in accordance with university policies," the document reads. "This appointment is also subject to university furlough guidelines, and any decision to implement a furlough shall be determined by the university at its sole direction. The university shall also have the right to institute pay reduction(s) during the term of this appointment, which can be implement without notice and shall be determined by the university at its sole discretion."
It's unclear how this language deviates from Penn State's standard contractual legalese.
Additionally it is unknown at this time how many, if any, coaches have opted to take voluntary cuts. One head coach reached on Monday afternoon declined to comment on the situation. Earlier this summer Barbour had indicated Penn State was considering pay cuts as part of an ongoing effort to tackle the financial implications of the COVID-19 pandemic on the athletic department, but that those cuts would come only once it was determined that they were needed and what those figures would look like.
"I had this conversation with [staff members] in mid- to late- April that, with so much uncertainty about our financial position, frankly I didn't want to ask for too much and I also didn't want to ask for too little," Barbour said at the time. "Because I didn't want to say, 'Let's do 5 percent,' and then come back in July and say, 'Guess what? I need 10?' That's why I hesitated to nail anything down. To be fair to our employees, I think the time is coming."
Penn State, like every athletic department in America, stands to lose a signification portion of its operational revenues this fall amid the ongoing COVID-19 pandemic and the subsequent fallout. The football program reported just over $100 million in revenues in its most recent fiscal report, nearly $37 million of that coming from ticket sales.
Like so many athletic programs across the country, college football revenues from TV deals, conference affiliations and ticket sales are the funds that keep those same departments operational.
Penn State's $7.1 billion total university budget for 2020-21, approved earlier this month, had an overall deficit of $125.7 million to be covered by university reserves. Within that budget, athletics showed a $5 million projected decrease in revenues from 2019-20, though the university did not explain the scenario that was used to arrive at that anticipated figure.
Targeted cost-savings totaling $104 million are built into the budget, including about $30 million from across-the-board 3% reductions for all units throughout the university, which was announced in April.