Finance Ministry to Hebrew U: Cut wages, lay off staff to qualify for bailout

Hebrew University — and other institutions of higher education nationwide — face stark budgetary prospects.

October 16, 2017 19:43
3 minute read.

Hebrew University campus . (photo credit: Wikimedia Commons)

The Finance Ministry is demanding that Jerusalem’s Hebrew University lay off staffers and cut professors’ wages to qualify for a multi-million shekel bailout to reduce its budget deficit and grapple with crippling pension costs.

The state is negotiating with Hebrew University, along with the Council of Higher Education’s Planning and Budgeting Committee, over immediately transferring NIS 80 million to help close the flagship university’s NIS 160m. deficit this year, according to a government official involved with the talks who spoke on condition of anonymity.

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The Finance Ministry will cover half of the 2017 budget deficit in return for Hebrew University firing dozens of administrators, cutting academics’ salaries by a percentage point, and selling off its real estate holdings, according to the government official.

Over the next 10 years, the ministry may also provide some NIS 700m. to the university to cover its pension obligations, reported The Marker, adding that an agreement could be signed shortly.

Neither spokesmen for Hebrew University nor the Finance Ministry would confirm the final amount or if negotiations were in the final stage.

“We don’t want to see the Hebrew University coming to us in two to three years saying, ‘Oh, we solved the pensions, but now we have another thing,’” the official told The Jerusalem Post.

“We said that we’re willing to discuss all the finances of the university... that if we’re dealing with this crisis, we’re going to solve everything.”

Hebrew University – and other institutions of higher education nationwide – face stark budgetary prospects, since their traditional pension plans guaranteed monthly stipends without requiring that workers pay into the system.

Academic pensions today are now based on professors receiving upon retirement however much they contributed to the system – a model adopted in 2000.

“The old way of having a pension is that you would know what you would get, from the day you retired until the day you died, regardless of the amount of money you put in.

And that has bankrupted cities and states,” said Prof. Daniel Ben-David, who is affiliated with Tel Aviv University and the Shoresh Institute. “And with people living longer, a lot of the old packages are unviable.”

Hebrew University spent NIS 635m.

on pensions in 2015 – 22% of Hebrew University’s expenditures that year, according to financial reports reviewed by The Marker.

Each year, Hebrew University transfers hundreds of millions of shekels to cover ballooning pension costs, albeit an amount that is not sufficient. The university carries the largest pension burden among Israeli universities.

It remains to be seen whether the Finance Ministry can demand that the university’s lecturers take a pay cut, given that Israeli professors participate in a collective bargaining agreement which applies equally to all schools. “All professors, every one of the same rank and the same seniority, makes the same amount of money and it’s not university-specific,” said Ben-David.

The university is in debt to the tune of NIS 1.3b., the government official said. Its total 2016 expenditures were around NIS 2.8b., according to the university’s 2017 President’s Report.

For the 2016 to 2017 school year, the university was unable to start on time due to a budget deficit and a strike that lasted two weeks. It ended after the Finance Ministry stepped in and allocated more funding. Since that time, negotiations have been ongoing between the government and university administrators.

As Israel’s most prestigious university – which was recognized by the 2018 QS World University Rankings and the Shanghai rankings – the school requires high psychometric testing scores to be admitted on a departmental basis.

In recent years, Hebrew University has slipped in international rankings, falling out of the top Shanghai 100 this year.

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