These are difficult and trying times. We all know that COVID-19 has ravaged black communities and other marginalized populations disproportionally; we all know that the economic impact has fallen hardest on those who can afford it the least; and now, we all are reminded — once again — that systemic racism in this country has an ugly and tragic face.
I wasn’t originally planning to address racism in this communication when I started preparing it following the May 20 meeting of our Board of Trustees. Instead, I intended for this email to begin with a thank-you to all those who’ve moved mountains in recent months to substantively address our budget challenges and to provide you an update on our response to COVID-19.
However, the death of George Floyd — an unarmed Black American killed by a white police officer — was an outrage and something everyone should condemn. Racism halts our ability to move our campus forward. Our students need us as they search for ways to right long-standing wrongs – even as we grapple with other hurdles.
During the past few months, you have ably demonstrated that it is possible to carry out multiple, complex tasks simultaneously and to perform well. It is possible to ready our campus for a safe return amidst a global pandemic, and it is possible to save money and operate more effectively. Likewise, it is possible to renew our determination to make our community more diverse, tolerant, welcoming, inclusive and safe for everyone.
Against this backdrop, it is hard to look ahead at other issues. Yet, the work of creating a sustainable campus in our new COVID environment looms large. This week, as we prepare for the June Board meeting, we will host another Campus Conversation at 10:30 Wednesday morning, as I owe you an update on our budget situation and a preview of some of the things that will be discussed at the final board meeting of this fiscal year.
Budget Mandate and Savings
As you know, TU’s Board of Trustees mandated we balance our budget by FY23, which would likely require at least $14 million in combined expense reductions and revenue increases. Deficit spending for seven of the past 10 years did not go unnoticed by the Higher Learning Commission in 2018 or by Moody’s Financial Services in their downgrade of the university in December 2019.
We have made significant headway toward meeting the board’s mandate. So far, we have identified almost $9 million in recurring savings, taking us a long way toward meeting our goal. I particularly want to thank the nearly 100 members of our staff and faculty who served on and supported the various issue-focused working groups addressing our budget crisis. Together, they identified several million in sustainable annual savings in areas from transportation to entertainment. These groups also identified many revenue enhancements.
Our early retirement programs generated another $5.5 million in annual savings. I acknowledge, however, that the retirement of your team members and colleagues now places additional burdens on remaining staff at a time when so much needs to be done and so much is changing. Finally, we are successfully renegotiating several large contracts, including our agreements with third-party vendors, which should yield $1.2 million in annual savings. Collectively, all of this is a tremendous accomplishment. Thank you.
Financial Impact of COVID-19
If COVID-19 had not touched our campus, we were on target to meet the board mandate. However, the pandemic has created new challenges. The financial impact of COVID-19 in FY21 is now expected to exceed $17 million. Some of this is due to expenses for heightened cleaning regimens, personal protective equipment and related costs, but most is projected lost revenue – a drop in freshman enrollment, canceled summer programs, lost athletic revenue and declines in the value of endowment disbursements due to stock market volatility.
We are not alone. In fact, most institutions of higher education are suffering significant financial challenges as a result of the pandemic. However, the existing budget issues that predated COVID-19 leave us with fewer available levers than many higher education institutions.
To address the additional fiscal impact of COVID-19 on our institution, further budgetary measures need to be taken, including reduced support for athletics, saving $1 million, and suspension of most outstanding faculty searches, saving $1.7 million. As shared in my last email, TU will make its 5% contribution to retirement (for up to $100,000 in salary) at a cost of $3.4 million, but we will not be able to fund the additional 4% contribution. Additionally, many on my leadership team, as well as some athletics coaches, and I have elected to take a 10%-15% salary reduction, depending on base salary, for the next fiscal year, saving the university an additional $600,000. This is on top of the salary reduction my team took earlier this fiscal year in lieu of participating in the staff furloughs.
These budget reductions impact everyone on campus to one degree or another, a shared sacrifice that deserves our collective recognition and respect. The professionalism of our faculty and staff in these difficult times has been exceptional, and TU owes you a debt of gratitude.
Preparing for the Unknown
Each of you deserves to know how this continuing budget crisis may touch you. However, there is much we simply don’t yet know. Before we can finalize next steps, several vital pieces of data remain outstanding, including our final fall enrollment numbers, NCAA and American Athletic Conference decisions that will impact our athletics revenue and expenses, and, of course, the path and effect of COVID-19 itself on TU, our community and the state.
You have my pledge that we will share new financial information with you as quickly as we can. In addition, I assure you that the same values that have informed our efforts to date will guide us in the next phase of our budget-savings process. We will continue to solicit the best ideas from stakeholders across campus, gathering reports and feedback from advisory groups made up of broad cross sections of our community including representatives from Faculty Senate and Staff Advisory Council. The University Council meets weekly throughout much of the year and will continue to fulfill its charge as “the university’s multi-stakeholder advisory body to the interim president, acting provost and CFO on the FY21 and FY22 budgets” and will continue to base its decisions on data, fairness and the best interests of our students.
Uncertainty is a part of our landscape today – here at TU, across the country and around the world. Anger and pain caused by systemic racism and inequality is justifiably palpable. Amid all of this, one thing is clear: Each of you has the opportunity to play a crucial and concrete role in helping the university emerge on a sustainable path that will ensure we can educate students and transform lives for generations to come.
Strength, Resources and Leadership
Now is the time to double down on our strengths. The greatest of these is our focus on students. When we put students first, we make TU an institution that students want to join. We ensure that they come back each fall until they graduate. We prepare them to be critical thinkers and to shine in their careers or in graduate school, strengthening the university’s reputation for excellence. And we keep them connected throughout their lives, as loyal alumni, as mentors and employers of future graduates and as generous donors.
To take care of others, you must take care of yourselves. Our students and the entire university need you. In this time of adversity and uncertainty, I encourage you to take advantage of the resources available in Human Resources and the Employee Assistance Group and through Counseling and Psychological Services.
I also invite you to participate in our virtual Campus Conversation at 10:30 a.m. Wednesday, June 10. We will discuss in greater detail the budget issues, our campus reopening plan and our various Huron-supported workstreams. While these matters are important, I also want to hear from you on how we, as Oklahoma’s premier private university, lead by example to address racism, inequality and injustice. I look forward to speaking with you soon.