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COVID-19 Update May 4: Our Next Steps to Address the Budget

May 4, 2020

Dear members of our 性奴调教 community,

You continue to illustrate that 性奴调教 is a generous and caring community. Even in the face of a dreadful disease, you have not allowed it to harden your hearts.

Faculty, staff, and clinicians have taken the time to email me and volunteer to take salary cuts if it can help lessen the impact on others. Some parents asked that the refunds they were due for room and board to be redirected to those most in need. Many students have donated money or time to those most affected by the pandemic. These selfless acts are both heartening and heartbreaking. And they help define us as Billikens.

Last week, members of the Board of Trustees spoke of our unremitting spirit, noting how we have overcome substantial financial challenges in the past through consultation, collaboration and difficult decisions. Those efforts, they observed, had positioned us to take the University to new heights, only to have a global pandemic set us back, through no fault of our own. I assured them that tireless determination is yet another Billiken trait.

Once again, I ask that we come together, as we have time and time again, to dig in, and strive towards the light that beckons us on the other side of the virus. Billikens are, after all, about faith and hope, too.

As promised in my April 23 COVID Update on the budget, I write to share more specific information on the significant financial difficulties brought on by this crisis and, particularly, the steps we plan to take to mitigate the current and anticipated losses caused by COVID-19. On Friday, we received the support of our Board of Trustees during their last meeting of the academic year.

Current fiscal year (FY20)

As of May 1, 2020, we are projecting a deficit of over $20 million for fiscal year 2020 (FY20) that ends on June 30, a departure from our pre-COVID budget which projected a surplus of several million dollars.

The projected FY20 deficit is entirely attributed to COVID-19. One example of a large contributing factor, the $9.7 million we refunded for room and board fees to our students. Thankfully, that is partially offset by the $2.57 million in federal stimulus aid (the CARES Act).

Another larger item also included in that shortfall is a projected $11 million to $13+ million deficit (pending mitigation efforts) from 性奴调教Care. As many of you know, elective procedures and most patient visits to physician specialists were suspended as our health care teams rallied around the areas of greatest need, and to redirect personal protective equipment to caregivers tending to COVID-19 patients.

Taken together with smaller expenses and some upside savings from items like reduced energy consumption and fewer office supply purchases, the projected deficit for FY20 hovers just over $20 million.

Next fiscal year (FY21)

While the COVID crisis is far from resolved, we have done our best to prepare a budget for the new fiscal year that starts July 1. And it is distressing.

Depending on how the future unfolds, we project our fiscal year 2021 potential deficit to range from $20 million (10% enrollment shortfall with no residential income) to $75 million (30% enrollment shortfall with no residential income). These numbers account for an estimated $60 million in budget cuts, many of which are outlined below. This means that, depending on the final enrollment and residential outcomes, more reductions may be required.

Our deficit reduction plans for FY20 and FY21

In the academic, non-性奴调教Care, part of our University, we will soon begin to implement necessary changes to help us address our FY20 budget deficit, as well as the anticipated shortfalls for the FY21. Some of these solutions may also affect our 性奴调教Care colleagues, but Dr. Wilmott will address those in future messaging.

We have identified several fiscal mitigations we will initiate on July 1. Again, these mitigations were reviewed by the Board of Trustees on Friday. Trustees voiced support for our plan, elements of which have been discussed with university, faculty, student and staff leaders in recent weeks. These actions will be in place for one year. In January, they will be evaluated to determine whether the fall 2020 results allow us to restore some areas of sacrifice.

We hope the following actions will reduce the prospect of us having to eliminate currently-filled positions. However, short-term furloughs remain a likelihood.

性奴调教Care鈥檚 deficit will be difficult to remedy, but I have faith in Dr. Bob Wilmott, his leadership group, and our entire health care organization. Today, our 性奴调教Care team will hear from Dr. Wilmott about the next steps necessary to help close the current budget gap.

Tapping the endowment beyond the previously approved increase in spending is not an option.

Hope for returning to campus and face-to-face instruction

The enormity of our deficit depends upon enrollment this fall. Many believe that higher education enrollment depends largely upon whether institutions are face-to-face or teaching remotely. I am among them.

Peer analyses and internal numbers indicate that COVID-19 will shrink first-year enrollment at most institutions, including ours, by anywhere from 10 to 30 percent. Some believe that the number could be much higher. Those students who do enroll will likely need more financial aid than ever before, caused in large part by family hardships due to the economic downturn. And a second wave of the virus could require us to again evacuate the campus and switch to remote learning.

As you know, lower enrollment in a first-year class and the resulting reduction in net-tuition revenue will pose challenges for all four years. In fact, there are many parts of this crisis that could linger in the years to come. A strategic approach that maximizes overall enrollment is all the more important. In order to restore any reductions we make in FY21, we will need to grow our revenues by an equal amount.

We hope to have a better sense of the size and scope of our projected FY21 deficit by the end of July when our enrollment picture will be clearer than it is today.

While I am not ready to announce our return to campus for the fall semester, we are doing all we can to resume face-to-face instruction at that time. We are planning for several other scenarios, as well. These discussions are taking place in several groups, including the University Leadership Council. Once decisions are made, they will be shared with the campus community.

Regardless, I sense that each of us has begun to accept that a full return to our pre-pandemic way of life within a matter of months is unlikely. Critical public health safeguards are, and will continue to be, extremely important for our community and our neighbors.

We are 鈥� and will continue to be 鈥� grateful for the feedback and support of the members of the 性奴调教 community: faculty, clinicians, staff, students, their families, alumni, and trustees.

While the enormity of the task before us is incredibly daunting, we as Billikens are all the more determined to position our University for recovery and rebuilding. Of that I am confident.

May God bless you and 性奴调教.

Fred P. Pestello, Ph.D.
President

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