COVID-19 Budget Impact

Thu, 10 Sep 2020 11:25:17 -0400
covid19

Dear Colleagues,

We have faced many challenges as a community through the spring and summer, working together to support both academic continuity and campus health during the COVID-19 pandemic. Please know that you have our deepest gratitude for the hard work and commitment you have shown in preparing for a fall semester like no other.

While state officials and University System of Maryland leaders appropriately focused first on public health, Maryland and its public higher education institutions must also now respond to the severe impact of the pandemic on both the state’s economy and university finances. USM Chancellor Jay Perman announced Wednesday the need for campuses to take a number of budget actions to close a significant FY 2021 budget gap.

Like other USM campuses, UMBC finds virtually all of our revenue sources under pressure, and we anticipate a nearly $65 million, or 13 percent, decrease from the budget originally projected for this fiscal year.

The State has cut the USM base budget appropriation by $117 million, which has been passed on to all the institutions. UMBC’s share of this reduction is $11.8 million.

Tuition and fee rates are frozen at FY 2020 levels.

Enrollment for Fall 2020 is lower than in Fall 2019.

Auxiliary units have been hit very hard. The University returned over $18 million in room, board, and other fees to students for a portion of the spring semester and waived most fees in the fall. The Fall 2020 losses are estimated at $28 million.

In order to reduce density for health and safety, residence halls are operating at 34 percent of normal capacity, decreasing not only housing revenues but also dining services revenues.

All external events have been cancelled for the foreseeable future, impacting revenues at the UMBC Event Center and Conference Services, with estimated losses through December of nearly $1 million.

While this is one of the most challenging fiscal environments our campus has faced, we are firm in our commitment to our guiding principles of supporting the people who are part of the UMBC community and protecting the academic program. Our strategy is to avoid layoffs, if at all possible, and we have conferred with shared governance leaders about a financial path forward through these very difficult times.

Our revised FY 2021 budget process takes the following steps:

Identifiying expenses ﹘ such as dining services, travel, and utilities ﹘ that will naturally drop due to the lower volume of people on campus.

Scouring non-personnel costs to determine where cuts can be made without affecting the quality of instruction.

Deferring or canceling non-critical infrastructure projects.

Continually reviewing business processes to ensure utmost efficiency.

Finally, knowing that nearly 70 percent of the University operating budget is for personnel costs, we have necessarily had to turn to strategies to reduce those expenditures as well, including the following steps:

Eliminating a portion of budgeted vacant positions, and implementing a hiring freeze to achieve savings from remaining vacant budgeted positions.

Implementing a temporary salary reduction (TSR) plan for those staff and faculty earning $100,000 and above. The reductions will be spread across the remaining available pay periods of the fiscal year and range from 1.5 percent at the lower end of that salary range up to 15 percent for the President. This TSR will offset the State-funds shortfall by almost 6 percent and the total funds shortfall by approximately 2.5 percent. For more detailed information on the TSR plan, please visit the Human Resources website.

While these circumstances are serious and unfortunate, we know our UMBC community will navigate through successfully by continuing to work together. We are inspired by the dedication of our faculty and staff as you continue to support our students and one another. Thank you for all that you do for UMBC.

President Freeman Hrabowski and Provost Philip Rous