Go to the U of M home page

Monday, July 27, 2020

Budget results for fiscal year 2020

During the last academic year, I filled you in on the results of the Compact process, the fiscal challenges created by the pandemic and some of our initial steps, as well as some of the general pre-pandemic financial issues faced by the college. In that latter message, I wrote that “CLA’s budget has been basically sound in recent years, with end-of-year surpluses in fiscal years 2015 through 2018. In fiscal 2019, however, we had to draw more on our carry-forward and reserve funds than we’d prefer. We’ve been aggressive in faculty hiring and in other college and department initiatives that advance the CLA Roadmap, which I have viewed as absolutely necessary. However, we do need to be mindful to align our resources and expenses because reserves are not a well we can draw on excessively.”

We have now concluded fiscal year 2020 and the good news is that we held roughly steady with our draw from carryforward. The bad news is that we held roughly steady with our draw from carryforward.

The University's fiscal year ended on June 30, and the college closed FY 2020 with a draw on collegiate reserves that was modestly smaller than the previous year. Tuition revenue exceeded expectations due to the substantial uptick in summer 2020 enrollments. Because summer tuition is credited to two different fiscal years, that resulted in $2 million of unanticipated tuition revenue for FY 2020. Additionally, underspending of the college’s main instructional budgeting funds helped the collegiate bottom line at the end of the year. Overall, the college drew on $3.5 million of collegiate-level reserves to close out FY 2020.

Some of the steps we are taking to address the University’s COVID-adjusted budget as well as Contingency plans 1 and 2 should help us whittle away at the alignment of revenues and expenses, but as always we will need to be prudent in our financial decisions going forward. At present, the uncertainty about overall enrollments, international enrollments, economic conditions, and the impact of the economy on future state support intersect with growing sensitivity about tuition increases. The orientation toward fiscal prudence is even more crucial during such times to allow us to invest in advancing our mission and purpose in research, teaching, and engagement.