Drexel will cut senior leaders’ salaries, reduce retirement benefits and consider layoffs in light of its $63 million operating loss

Drexel University, during a meeting with its employees on Thursday, outlined plans to cut and freeze some salaries, reduce benefits and implement a workforce reduction in November.

The university did not say how many people could lose their jobs, but said it depends on the success of a voluntary retirement incentive program and how many vacancies could be eliminated.

“Final decisions regarding workforce reductions will not be made lightly,” the university said in a message to campus after the meeting, which drew more than 2,600 employees in person and online. “Rather, they will be based on careful analysis and consideration made at the unit level.”

” READ MORE: Drexel is cutting staff and benefits as it faces a $63 million operating loss and 15% fewer first-year students

Drexel announced last week that it would cut staff and benefits as it faces a $63 million operating loss and 15% fewer first-year students. Interim President Denis P. O’Brien said in an interview at the time that Drexel faces some of the same serious challenges as other colleges, including “unfavorable demographics, rising costs, public skepticism (about higher education) and government scrutiny.”

The university said it aimed to raise $150 million annually through revenue cuts and increases to recover a positive operating margin by 2027 – it has already identified $80 million in cuts and $25 million in increased revenue.

The private West Philadelphia university said it has a “structural imbalance” of about 10% in its $1.5 billion budget.

To help reduce this, senior university leaders will get a pay cut for 2025 – the school did not say how many leaders would be affected or how big the cut would be. Meanwhile, employees earning more than $100,000 will have their salaries frozen. Full-time, non-union employees who earn less than that will receive a 4% pay raise on Jan. 1, the school said.

The university also plans to suspend employer contributions to retirement plans for 2025 and increase medical insurance copays. Prescription drug costs will also increase by about 5%, although the university said this was not related to the cost-cutting plan but to the overall increase in costs.

” READ MORE: Drexel University is consolidating schools and calling for the resignation of several presidents

Drexel previously withdrew from the SEPTA Key Advantage program, which gave faculty and staff deep discounts on all-access transportation passes. The university said it could not afford a 46% increase in cost for the roughly 600 employees who use the program.

But the university said it will extend the Thanksgiving and Christmas holidays to give employees a few extra days off.

In their campus message, university officials described the factors that led to the deficit, including: a $40 million drop in net revenues from tuition, room and board over the past decade; an investment of US$150 million in financial aid; $10 million for student guidance and counseling; and $25 million for cybersecurity, public safety and other areas.

Drexel also last month asked several deans to resign as part of the consolidation of two colleges and one of its schools into a new entity. It is part of a wider academic restructuring, which also includes plans to move from a quarter system to a semester system in the coming years.