Schools, colleges, and academic and administrative support units across the University of Colorado Boulder campus continue to explore ways of reducing costs in response to the financial impacts brought on by the emergence of COVID-19 earlier this year.
In March, the campus shifted quickly to a remote instructional model for the first time in university history––but the CU Boulder campus community is not alone in rising to this unparalleled challenge. All of higher education has struggled with the sobering public health and financial impacts of the ongoing global pandemic.
In June, the CU Board of Regents approved campus budgets that included a $41.1 million reduction to CU Boulder’s 2021 fiscal year general fund budget. Since that time, the general fund revenue shortfall has grown to $96.6 million, largely due to enrollment declines and tuition revenue losses. Auxiliary operations are expected to lose approximately $115 million in revenues this fiscal year, which ends June 30, 2021.
To ensure the campus’s financial resilience, the provost and chief operating officer in October asked units to implement general fund budget cuts of no more than 5%, with some of them lower based on enrollment and strategic priorities. They also asked campus units to plan strategically for the next three years and beyond because of lingering economic uncertainty due to the pandemic.
While budget planning is a yearly exercise for the university, multiple forces are contributing to its current financial struggles. Tuition revenue, a key source of funding for the university, has declined this year along with domestic and international enrollment––trends that are expected to set the university’s budget at a lower level for the next several years, said Chief Financial Officer Carla Ho-a.
More first-year students are taking gap years and deferring their enrollment in hopes of leap-frogging over the pandemic until an effective vaccine is in place. Families weathering job losses and other COVID-19-induced financial impacts are reconsidering whether now is the right time to send their high school graduates to college at all.
This past summer and fall, campus administrators began working collaboratively to identify areas of critical need to allocate federal CARES Act dollars, including infrastructure, technology, COVID-19 testing, expanded mental health and wellness services, and emergency relief funds for students and employees.
A cross-section of multidisciplinary administrators working to solve the campus’s budget problems were guided by the premise that academic and research continuity, above all else, were critical to upholding the university’s mission.
“We have a responsibility as the state’s flagship university to be good stewards of our resources, especially during crises like these,” Ho-a said. “We can’t support student success without being able to fund our programs, research and strategic initiatives, support services and our people.”
Adding to these pressures, she said, are depleted one-time federal stimulus funds and cuts to state higher education funding. There is no guarantee either the state or the federal government will provide additional emergency funds, which is why the university must look for ways to optimize resources and reduce costs where it can.
To meet budget-reduction targets this fiscal year, units, colleges and schools were asked to absorb recommended cuts of up to 5% and to temporarily reduce salaries, delay noncritical hires and provide retirement incentives for those who qualify. The long-term goal is to build greater financial resilience in support of the university’s academic and research mission as a top-tier public university.
It’s a theme that is resonating nationally. Last week, a coalition of the nation’s top higher education groups sent a joint letter to Congress advocating for $120 billion in additional emergency funding to weather “the massive new expenses campuses are incurring” because of COVID-19.
“The situation currently facing America’s colleges and universities is a crisis of almost unimaginable magnitude. Colleges and universities have already pushed their financial capacities to the limits in addressing this crisis,” the advocacy groups said. “Campuses are now dealing with a massive, accumulated loss of revenue that is likely to grow worse in the near future, and in most areas will persist for several years.”
Though additional cuts are not expected this year, the leaders of CU Boulder’s schools, colleges, departments and administrative units are weighing myriad cost-cutting strategies and are considering proposals, scenarios and innovative ideas with the goal of building more flexibility into their budgets. Colleges and schools are at various stages of budget planning and are tracking enrollment projections for the upcoming academic year in order to make informed decisions.
“Each college, school, department and administrative unit has the autonomy to make its own budget-reduction decisions, and faculty and staff can expect updates during the spring semester and during the next academic year,” said Provost Russ Moore.
In a recent budget update to faculty and staff in the College of Arts and Sciences, James White, interim dean of the college, laid out a plan to offer university-approved incentivized retirements on a voluntary basis to tenured faculty. With more faculty reaching retirement age, White said the timing seemed appropriate to consider this option, especially because most of his college’s budget goes toward salaries.
White’s goal is to reduce his college’s budget by $10 million over the next few years, which would require 60 tenured faculty members to retire over that time frame.
The challenge ahead is how the college will reinvest its savings to carefully rebalance the ratio of tenure-track research faculty and instructors and provide remaining faculty with mid-career advancement opportunities, “good idea grants,” and the staffing support they need to focus on student success and research.
Following the 2008 Great Recession, the college’s pool of critical support staff such as advisors and lab techs plummeted and remains at half the levels at peer Association of American Universities (AAU) arts-and-sciences colleges.
“It really is the only lever to pull right now to cut our costs. My goal is to avoid program eliminations and layoffs,” White said. “The college is exploring all of its options. We may never have another pandemic––but we want to be ready for any other financial downturns that lie ahead so we can preserve and enhance the campus’s academic and research mission while building financial flexibility.”
The provost added, “As we look to the future, the university budget will benefit from greater flexibility for strategic investments instead of being locked into legacy decisions that may no longer be relevant. We are working toward being in a stable budgetary position––one that allows us to respond to the rapidly changing higher education landscape, including new opportunities and crises that may arise.”