Drexel will trim senior leaders’ salaries, slash retirement benefits, and consider layoffs in the face of its $63 million operating loss

Drexel University during a meeting with its employees Thursday outlined plans to cut and freeze some salaries, slash benefits, and implement a reduction in the workforce 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 vacant positions can be eliminated.

“Final decisions on workforce reductions will not be made lightly,” the university said in a message to the campus following the meeting, which drew more than 2,600 employees in-person and online. “To the contrary, they will be based on careful analysis and considerations 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 last week announced that it would be cutting 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 that time that Drexel is facing some of the same serious challenges as other colleges, including “unfavorable demographics, rising costs, public skepticism [about higher education] and governmental scrutiny.”

The university said it was aiming to come up with $150 million annually through cuts and revenue increases to re-gain a positive operating margin by 2027 — it already has identified $80 million in cuts and $25 million in increased revenue.

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

To help pare that down, senior university leaders will get a salary reduction for 2025 — the school did not say how many leaders would be impacted 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 get a 4% salary increase Jan. 1, the school said.

The university also plans to suspend employer contributions to retirement plans for 2025 and increase medical insurance co-pays. Prescription drug costs also will increase by about 5%, though the university said that was not related to the expense reduction plan, but overall rise in costs.

» READ MORE: Drexel University is consolidating schools and asking several deans to step down

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

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

In their campus message, university officials outlined factors leading to the deficit including: a $40 million drop in net tuition revenue, room, and board over the last decade; a $150 million investment in financial aid; $10 million for student advising and counseling; and $25 million for cybersecurity, public safety, and other areas.

Drexel also last month asked several deans to step down as part of a consolidation of two colleges and one of its schools into a new entity. It’s part of a larger academic restructuring, which also includes plans to move from a quarter system to a semester system over the next few years.