June 23, 2020
Dear Members of the University Community,
I want to begin this letter by thanking all of you who have reached out to me with your questions and concerns regarding our ongoing budgetary response to the COVID-19 pandemic. I have had the opportunity to discuss our plans with individuals and various stakeholder groups across campus, including all of our deans, the Executive Committee of the Administrative Council, the Academic Senate, the Committee on Faculty Economic Welfare, and the Employee Benefits Advisory Council. I appreciate your thoughtful and constructive ideas and recommendations.
With passage of the June 1 deposit deadline for new students, the University has a clearer picture of our first-year and returning classes, and of the impact COVID-19 will have on the budget the trustees approved in March. Our best judgment is that we will experience a net shortfall of $25-$35 million. Some of this is lost revenue from enrollment and auxiliary services. Some is the added cost of COVID-related testing, equipment, and protective measures designed to ensure a safe environment for living, learning, and working.
We need to make some immediate and difficult budgetary adjustments to ensure the continued financial strength of this University. Before I get to that, I would like to recognize that last spring we committed to investing in faculty and staff salary increases over the next three years. The first installment of those raises was scheduled for this fiscal year. Unfortunately, the pandemic has frustrated our plans. I am sorry this has happened. The increases were our top budgetary priority for this year, and we did everything we could to save them. Our commitment to this goal is unchanged, but advancing toward it this year is simply not possible given our current situation.
Budget Adjustments
Over the last four months we have tried to address the crisis with four principles in mind: the health and safety of our community; the financial health of the University; the quality of our educational experience; and the preservation of faculty and staff jobs. We announced six weeks ago that we would make budget adjustments in a stepwise fashion. On May 19, we took the first steps: a 3% cut in our operating budget, a redirection of funding from capital projects to our operating reserve, a $10 million draw upon that reserve, and a temporary reduction in leadership team salaries. These produced savings of $18 million.
With the emerging clarity of our financial picture, we are now ready to undertake additional steps to capture another $8.1 million in necessary savings this fiscal year, plus $2.5 million toward next fiscal year.
I want to begin this letter by thanking all of you who have reached out to me with your questions and concerns regarding our ongoing budgetary response to the COVID-19 pandemic. I have had the opportunity to discuss our plans with individuals and various stakeholder groups across campus, including all of our deans, the Executive Committee of the Administrative Council, the Academic Senate, the Committee on Faculty Economic Welfare, and the Employee Benefits Advisory Council. I appreciate your thoughtful and constructive ideas and recommendations.
With passage of the June 1 deposit deadline for new students, the University has a clearer picture of our first-year and returning classes, and of the impact COVID-19 will have on the budget the trustees approved in March. Our best judgment is that we will experience a net shortfall of $25-$35 million. Some of this is lost revenue from enrollment and auxiliary services. Some is the added cost of COVID-related testing, equipment, and protective measures designed to ensure a safe environment for living, learning, and working.
We need to make some immediate and difficult budgetary adjustments to ensure the continued financial strength of this University. Before I get to that, I would like to recognize that last spring we committed to investing in faculty and staff salary increases over the next three years. The first installment of those raises was scheduled for this fiscal year. Unfortunately, the pandemic has frustrated our plans. I am sorry this has happened. The increases were our top budgetary priority for this year, and we did everything we could to save them. Our commitment to this goal is unchanged, but advancing toward it this year is simply not possible given our current situation.
Budget Adjustments
Over the last four months we have tried to address the crisis with four principles in mind: the health and safety of our community; the financial health of the University; the quality of our educational experience; and the preservation of faculty and staff jobs. We announced six weeks ago that we would make budget adjustments in a stepwise fashion. On May 19, we took the first steps: a 3% cut in our operating budget, a redirection of funding from capital projects to our operating reserve, a $10 million draw upon that reserve, and a temporary reduction in leadership team salaries. These produced savings of $18 million.
With the emerging clarity of our financial picture, we are now ready to undertake additional steps to capture another $8.1 million in necessary savings this fiscal year, plus $2.5 million toward next fiscal year.
- Increased enrollment at the Columbus School of Law has allowed it to contribute $1.5 million in overhead toward mitigation efforts.We will postpone scheduled faculty and staff raises in the current fiscal year, saving about $1.7 million.
- We will temporarily suspend employer contributions and match to 403(b) retirement accounts for all plan participants, starting in September and continuing for 12 months. This will provide roughly $7.4 million in savings — two thirds in FY21, the rest in FY22. If our financial picture improves over the course of this year we have the latitude to renew contributions sooner.
- Other departments and programs across campus are voluntarily identifying ways to reduce current financial pressures on the University beyond the 3% budget reduction announced in May.
- University Advancement will leave many planned staff additions vacant for a time, and has returned funds budgeted for events and travel that have been cancelled.
Furloughs and Salary Reductions
After extensive consultation with faculty and staff, we decided against including furloughs at this juncture. The University remains committed, as much as possible, to preserving jobs and maintaining a work schedule that supports our employees and their families. After careful review, it was apparent that the staff must diligently prepare the campus for a healthy and safe return to in-person instruction and services this fall, and to this end we have no time to lose.
Nor have we implemented temporary salary rate reductions (other than those assumed by University leadership), although it is prudent to study their impacts in the event they become necessary. We will have a still clearer picture of our financial footing in September, after students have returned to campus. If furloughs or salary adjustments were to be necessary, they would be planned for and announced at that time.
Phase Two and Beyond
The District of Columbia’s decision to move to Phase Two of its recovery plan this week is a welcome sign that the region continues to recover from the pandemic. Here on campus we are finishing plans to reopen for students this fall. We will begin the academic year a week early, on August 24, and revise our class schedule to conclude on-campus instruction by Thanksgiving. This change, informed by the latest health guidance, will serve our paramount concern of protecting the health and safety of everyone in the community.
We can expect that the University’s financial response to COVID-19 will continue to evolve. With each significant development, we will keep the community engaged and informed. This next year will be filled with unique challenges, but I am sure we are taking the right steps to move forward with confidence.
Sincerely,
John Garvey
President