A Message from President Freeman re: COVID-19 Financial Impacts and Planning
May 29, 2020
Last year at this time, we had a solid view of what the next six months would look like. We had a firm sense of fall enrollment and housing figures. Course schedule and delivery modes were finalized. Fall events and activities were almost fully shaped. Budget planning for FY20 was nearly complete, and the overall pace of the university slowed slightly as we welcomed summer. As you know, this year is very different. Nearly every aspect of what we do and how we do it has been upended, and our situation requires us to build new plans around a series of unknowns.
COVID-19 has challenged us to live with ambiguity. What we know changes quickly, requiring us to develop new plans. As a result, our decision-making has to be flexible and responsive to the most current information. We’ve seen that determinations made one day might need to be revisited weeks later as the situation evolves. I greatly appreciate that I can count on our employees to come together at this time to not only to support one another, but to also strategize about ways to ensure the vitality and success of our university.
Since my April 30 update on financial implications and planning, the state has outlined its Restore Illinois program, and we have a better view into our state appropriation. We’ve communicated our intent to reduce physical density in our classrooms and residence halls, and we have taken multiple actions to reduce our costs and protect our cashflow. Keeping you informed is important. Below are several key updates to give you insight into current planning activities.
This past weekend, both houses in the General Assembly approved the state’s FY21 budget and capital re-appropriations bills. The bills now go to the governor for his review and signature. We are very appreciative of legislature’s actions. NIU’s state appropriation will be held flat to the FY20 levels, and the funding for the Health IT, capital project improvements and the NICCS hub will all be re-appropriated. At the same time that we are grateful for the General Assembly’s expressed support, we must also recognize that passage of the FY21 budget was possible only because the state was willing to borrow from the Federal Reserve with the expectation that it will receive more money in a future federal coronavirus bill. However, there is no guarantee the federal government will allocate funds to Illinois.
This reality has several implications for NIU – most notably the possibility that our FY21 appropriation could be delayed or even reduced later in the fiscal year. As of today, the university is still waiting to receive $24.3 million of our current fiscal year’s appropriation. Therefore, it is critical that we continue to reduce our costs and protect our cashflow, especially during the summer months and late fall/early winter when we typically receive less revenue.
NIU Budgeting Considerations
Despite the good news about our state appropriation, it only accounts for 20 percent of our revenue budget. The other 80 percent is largely comprised of tuition, fees, auxiliaries, gifts, grants and contracts – all areas where we must plan for continued revenue losses. On a national scale, the American Council on Education estimates that enrollment across higher education for the fall will drop by as much as 15 percent. While early indicators suggest that our potential enrollment decline would not be of that magnitude, we won’t know actual numbers until early September. What we do know is that changes we’ve made in residential life to respect public health guidance and protect our students, such as only offering single room accommodations, will have a significant negative impact on revenue from auxiliary operations.
As we near the end of this fiscal year and ready for the next, budget actions that were under development before COVID-19, as well as actions spurred by current financial situation, have been happening at the local level. These actions vary by division and college and include layoffs, position eliminations and non-renewals. In the past several weeks, approximately 100 employees have been impacted. NIU Employee Assistance Program is working to provide these employees with a variety of support services including counseling, coaching and career development as they transition from NIU.
Personnel actions of any kind are very difficult as each individual NIU employee is a valued colleague. The university weighs every option carefully, and will continue to thoughtfully evaluate every available option to reduce or eliminate costs. Accordingly, I want to express my deepest respect for our employees who recognize the situation the university is in and are willing to proactively share in sacrifices that might be needed. Recently, NIU’s Operating Staff Council adopted a resolution that proposes a voluntary pay and/or furlough program that employees could elect to participate in. This initiative speaks volumes about what it means to be a Huskie. We will take this proposal under serious advisement and consider it among all of our options in both the short- and long-terms.
Later in June, we’ll provide the university with an update about the budget being put forward at the June 18 meeting of our Board of Trustees. As this situation continues to evolve, the university leadership will continue to engage with shared governance and work collaboratively with collective bargaining units to help inform our strategies. Please continue to support your colleagues during this time and take care of yourselves. I sincerely appreciate your contributions and patience throughout this experience.
Lisa C. Freeman