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Friday, July 24, 2020

Initial fiscal steps in response to the pandemic

In previous messages, I’ve discussed some of the financial challenges brought on by or exacerbated by the pandemic. As you’ll recall, the University developed a COVID-adjusted budget for fiscal year 2021 (July 1, 2020 - June 30, 2021). And the University required every unit to submit spending reductions of 3% and 6% in what were labeled Contingency 1 and Contingency 2. 

For CLA, once we set aside the campus-level and system-level cost pools we must contribute toward, the 3% reduction for Contingency 1 amounts to 4.5% of the spending that we actually control. Our Contingency 1 target was $7.4 million in spending reductions. To use some budgetary jargon, that’s a lot. Our list of contingency reductions was due to central on June 20 and I want to update you on what we submitted. I’m grateful to the Council of Chairs and others who collaborated productively and constructively as we generated the list. 

These items were included on the 3% list submitted to central:

  • Furloughs/temporary pay reductions: the systemwide furlough and pay reduction program is estimated to save approximately $3.5 million in CLA in FY 2021 (full year impact) across academic and administrative units.
  • Faculty attrition: as previously communicated, we expect very limited or no faculty hiring to occur during FY 2021, resulting in estimated savings of $1.5 million.
  • Reductions in graduate admissions: we tapped the brakes on graduate admissions during the spring (rather than going to waiting lists, for example), which lowered the number of incoming supported graduate students ($1.0 million), and we anticipate similar reductions in the coming year. 
  • Shift costs to endowments: accumulated balances in some endowments allowed moving some expenses onto the endowments and off of O&M (i.e., tuition and state appropriations) during the next two years ($600,000).
  • Deferred spending from soft commitments: Associate Deans Blocker and Lavine asked departments to identify soft commitments that could be deferred from FY 2021 and units responded with specific items ($200,000).
  • Deferred collegewide spending from administrative units: the college will pause or limit some activities during the coming year (e.g., technology grants, travel, events, remodeling) in order to lower expenses ($600,000).

These are not easy moves. I appreciate everyone’s patience and spirit of goodwill and collegiality as we work on these processes together. In a future message, I’ll report on our items submitted for Contingency 2 (which are due tomorrow, July 25). 

On a happier note, we have had strong summer enrollments this year. Student credit hours in summer are up about 65% over last year. Although this increase is driven significantly by the poor job and internship market, which is most unfortunate, I am appreciative that the hard work of our summer instructors have given students excellent opportunities to expand their knowledge. From a strictly budgetary standpoint, the extra enrollments are a good thing for the present. We do not know, however, to what degree students are simply shifting enrollment and tuition dollars into the summer that would otherwise happen during this or a future academic year, but we have to assume that such a shift is part of what we are seeing. 

Lastly, I thank the staff and faculty across the college for their compassion, care, and understanding toward each other over these past months, and for looking out for our undergraduate and graduate students. Our colleagues are dealing with an array of challenges and circumstances brought on by the pandemic, working from home, neighborhood losses and rebuilding, and racial inequity. Our colleagues will continue to need our grace, understanding, and kindness so that we can thrive together.