17³Ô¹ÏÔÚÏß

Dear 17³Ô¹ÏÔÚÏß Community,

With our 17³Ô¹ÏÔÚÏß Forward plan, we are excited to be moving full speed toward the fall semester. Details and answers to many frequently asked questions are on the COVID-19 Resources webpage. Our deepest thanks to everyone who worked so hard to develop the framework and who are now focused on implementation. Further information will continue to be communicated by the schools, colleges, and administrative units.

As we begin 17³Ô¹ÏÔÚÏß Forward and our phased reopening, we are concurrently addressing the ongoing economic effects from COVID-19. We continue to face challenging times, and we are taking the steps needed to maintain financial stability. Today, we want to update you on the overall financial picture, our work to date, and our plan to manage the fall’s financial realities and mitigate the impact on our community as best we can.

Financial Overview

As we , we are projecting a two-year impact on the university’s finances and operations. Based on current information for fiscal year 2021 (which begins on July 1) and our preparation for a wide spectrum of contingencies, we are planning for potential financial impacts of up to $100 million in lost revenue and increased costs. Each day, we have more information about these impacts, including higher costs for health and safety measures.

A key element of our financial picture is enrollment for current and incoming students. It is central to our educational mission and we want to thank everyone who is working on this critical area. As we implement our fall plan, prioritize health and safety, and track the ongoing impact on enrollment, we will obtain greater insight into the corresponding revenue and costs.

Importantly, we are focused on supporting our community through these unprecedented times. To help with the financial hurdles many of our students are facing, we will dedicate $13 million – the total new revenue from this year’s tuition increase – to additional financial aid. We will also be investing in classroom technology and other related services to support our blended instructional model.

As you may recall, the urgent actions we took to address COVID-19 in the spring and summer cost the university more than $27 million. Our response to this fiscal situation sought to prioritize the well-being of our community and flexibility in our finances and operations. The ongoing measures to address this initial financial shortfall, which continue into the fall, included:

• Compensation reductions for the president and executive team;
• A hiring freeze;
• Pausing new construction; and
• No merit increases for employees earning more than $40,000 for the coming year.

These efforts helped to close the spring and summer financial gap, but additional work is needed for the upcoming fiscal year. Overall economic conditions and our specific financial situation will continue to change, based on the evolving trajectory of COVID-19. If things improve, we can take more steps to reduce the impact on our finances and our community. If conditions worsen, we will have to deal with further downturns and that is why flexibility and adaptability are critical to our efforts.

New Financial Actions

Prudent fiscal management over the last twenty years has put 17³Ô¹ÏÔÚÏß in position to now use a number of existing non-personnel resources for this challenging time. We will dedicate the following reserves and financial tools in FY 2021 to help offset lost revenue and increased costs:

• Enrollment Contingency Fund: In the interest of fiscal prudence, the university established a reserve fund and funded it over several years to prepare for unanticipated future enrollment shortfalls. This fund was part of the annual budget and we will now use it for the first time.
• Endowment: We will use all unrestricted endowment income towards this year’s financial deficit.
• Non-Personnel Spending Reductions: All schools, colleges, and administrative units are implementing a 5 percent reduction in non-personnel spending for FY2021.
• Deferred Maintenance: We will reduce spending on deferred maintenance, which means we will delay needed expenditures such as renovations in Centennial Hall.
• Infrastructure Spending: We will eliminate this year’s spending for facilities modernization, furnishings, and equipment, which affects many units on campus.

This represents an extraordinary reallocation of our budget and financial reserves. While it brings us much closer to addressing the shortfall, it does not cover the entire deficit. We cannot take such steps indefinitely and we will need to employ further actions that involve our workforce.

Workforce Measures

More than half of 17³Ô¹ÏÔÚÏß’s annual operating budget is dedicated to personnel (salaries and benefits). In an effort to balance the need for financial reductions and our goal of minimizing the impact on our workforce, the following limited actions will also be taken.

• We know there is great concern about layoffs, and we are pleased to report that there are no current plans for large-scale layoffs in the fall. As students return to campus and enrollment numbers are finalized, some one-year faculty contracts may not be renewed if we have lower enrollments, and there may be a small number of staff positions affected because they are not amenable to remote work and there is a lack of on-campus work during the fall period. These limited cases may result in a small number of targeted furloughs or layoffs. As we learn more about our final enrollment numbers, the Office of the Provost and Human Resources will address these individual situations in the coming weeks as we move to the next phase of how we work.
• To achieve additional cost savings while mitigating the immediate effect on our people, the university’s matching contribution to employees’ retirement plans will be suspended for six months, from August 2020 through January 2021. Our hope is to resume these contributions in February 2021, unless the financial situation is worse than expected in the fall.
• We are also prepared to implement a one-week unpaid furlough for the week after winter break (January 4-8, 2021). We feel this is the least disruptive approach, extending an existing period when we are already away from campus and providing flexibility. Faculty and staff will not work nor be paid for these days, but the reduction in salary for the furlough period will be spread over several pay periods so employees do not experience the full reduction in one paycheck. Faculty and staff earning less than $40,000 per year will be exempted from the furlough. If the fall enrollment numbers and finances are more positive, we may be able to avoid this action. We will provide more information well in advance of the furlough.

These developments impact our team members in a number of ways, and we understand that any change to personal finances is incredibly difficult. It is welcome news that we can draw on unrestricted income from the endowment, use reserve and contingency funds, and make targeted budget reductions to cover the majority of the projected shortfall. But any action that affects our people is one we do not take lightly.

We will continue to update you as the financial situation evolves. It is our hope and plan that no further actions will be needed this year, but we have to be prepared to respond to all developments in this changing situation. While the actions outlined today are focused on the first year of financial impacts from COVID-19, we are also planning for July 1, 2021, so we will be well-positioned to address the second year of pandemic-related economic effects.

The resilience of our community is remarkable. You have innovated, adapted, and delivered on our mission. You have also sacrificed. We are grateful for all you have done, and we are confident that our path forward will see us through the challenge of COVID-19.

Be safe and be well.

Sylvia M. Burwell
President

Dan Myers
Provost

Fanta Aw
Vice President of Campus Life and Inclusive Excellence

Matt Bennett
Vice President and Chief Communications Officer

Traevena Byrd
Vice President, General Counsel, and Board Secretary

Seth Grossman
Chief of Staff and Counselor to the President

Doug Kudravetz
Chief Financial Officer, Vice President, and Treasurer

Steve Munson
Vice President and Chief Information Officer

Courtney Surls
Vice President, Development and Alumni Relations

Peter Starr
Acting Provost Designate

Billy Walker
Director, Athletics and Recreation