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Friday, April 23, 2021

Fiscal year 2021 recap and fiscal year 2022 projections

 As we head toward the end of the academic and fiscal years, I wanted to provide you with an update on fiscal and budgetary matters. You can find previous fiscal messages by scrolling to the bottom of the CLA COVID-19 page. 

For the current fiscal year (FY21), by the University’s estimates the U’s budgetary shortfall, including all colleges, campuses, and units, is $170 million. That gap is expected to be met through various spending reductions across units, including the hiring and merit freezes; use of budgetary reserves; the pay reduction and furlough program; a loan to Gopher Athletics; and assistance through the federal relief programs which are to be used for FY21 only.

For CLA to date, on the spending side in FY21 the most significant items have been the pay reduction program; the merit freeze; vacancies resulting from the hiring freeze; and tamping down on graduate admissions for fall 2020 (e.g., not going into wait lists). There were numerous other savings throughout the year arising from the lack of in-person events, lower utility costs, units agreeing to defer spending on initiatives, and the like. 

On the revenue side in FY21, the college, like many others here and around the country, had a shortfall in enrollment, particularly among transfer students. As of today, our college has about 1000 fewer students today than two years ago at this time, and that drop unsurprisingly has a large impact on tuition revenue. On the Twin Cities campus, spring 2021 undergraduate enrollment held steady with spring 2019 in two colleges, increased by a few percent in one college, and declined from -5% to -8% in four colleges. CLA, where transfer students are twice as large a part of our undergraduate student enrollment as in other colleges, was at the -8% level. Campuses around the system also suffered enrollment declines.  

As a college we did have some boosts in revenue that helped offset some of the enrollment shortfall. The college’s summer 2020 enrollments were excellent and exceeded what was expected when the budget was being crafted in spring 2020. And although it is deeply disappointing that our students were not able to engage in learning abroad activities to the usual extent, the result was that additional tuition revenue resulted as they were taking classes in the college and at the U.  

Heading into the next fiscal year, FY22, each college, campus, and administrative office at the campus and system level needed to identify options for recurring spending reductions of 3% of “O&M” (tuition and state appropriations), 6%, and 9%. The 3% list is the most relevant, based on what we saw in the fall Compact exercise that involved the administrative offices. CLA’s list, which had to total about $7.4 million, built off of what we did in FY21. Reductions in instructional funding, resulting in part from the graduate admissions pause or reduction in fall 2021 incoming cohorts in many units; phasing in faculty hiring; and savings accruing from staff vacancies and attrition provide the bulk of the savings. Some additional savings come from eliminating losses we incur as a college when we host a major in which the courses are largely taken in other colleges, and adjustments to the “flow of funds” in various areas between the college and collegiate units. 

At this point, we are awaiting the results of several processes to play themselves out before we have a clearer picture of our FY22 budget. These include the level of state appropriations, whether there is a tuition increase, enrollment numbers for the fall, and the results of the Compact process. Summer tuition is another unknown. We expect it will be better than summer 2019 but perhaps lower than 2020. A robust summer enrollment helps our students make progress and explore new areas of curriculum and likewise helps our finances. 

We know that the coming year will be challenging and the recurring spending reductions I mentioned above will be difficult and painful. There’s no sugarcoating that reality. But my view of the next year is optimistic: we should be more able to be fully ourselves, to be fully CLA. When the hiring freeze lifts, as we expect it will, we will be able to move on faculty searches and refilling some staff vacancies. To be clear, we cannot go “from 0 to 60” and “pedal to the metal” when the light turns from red to green. That won’t be possible and we will all have to adjust to that fact. But we can gradually pull away as the light turns green and unthaw some of the activity that has been frozen (with apologies for the mixed metaphor.) We expect, but I cannot guarantee it at this time, that there will be a small compensation increase built into the University budget. We anticipate that our students will be able to engage in learning abroad and internships more extensively. Our research and community engagement should continue to ramp up and to expand as pandemic-related restrictions ease. And at this point, our undergraduate recruitment is up about 4% compared to this time last year. All of these developments are all to the good.  

I know this year has been an enormous challenge. And I know you have been remarkable in addressing that challenge. I thank you all for being there for each other, for giving each other appropriate grace and space. And for continuing to fulfill our purpose as a college to transform the lives of individuals, families, and communities through research, instruction, and engagement. It is noble work, it is the work of everyone in the college, and you have done that work superbly.