Colleges across the nation have begun to make budget cuts as they see their finances suffering because of the coronavirus pandemic.
Iowa State University will trim $4 million from its athletic department, mainly in pay cuts. The University of Akron in Ohio plans to consolidate its 11 academic colleges into five to address a $65 million loss. And executives at the University of Oregon, the University of Delaware and the University of Southern California have volunteered to take pay reductions.
Although Nebraska institutions aren’t proposing executive pay cuts or specific program eliminations yet, public higher education leaders here anticipate a harsh budgeting situation this year and next. They say it’s too early to know whether the word “brutal” might fit.
The coronavirus outbreak threatens just about every source of money that colleges and universities rely on — state money, tuition, campus events and activities, residence halls, endowments — so administrators have begun to prepare for the worst.
“I’m telling you, we are looking at every option on the table,” NU chief financial officer Chris Kabourek said. “Hope is not a strategy.”
Colleges here and elsewhere have started addressing the reductions that will be required if state tax revenue slumps and enrollments fall.
“What we’re currently experiencing is a multitude of hits,” said David Tandberg, senior vice president for research with the Colorado-based State Higher Education Executive Officers Association. “It’s hard to exaggerate the extent of the problem we are facing.”
Tandberg said that in past recessions, enrollments tended to rise with unemployment. That isn’t expected this time, he said, because of uncertainty over what colleges will be able to offer this fall. Further, he said, the number of international and possibly out-of-state students will drop, he said.
Gov. Pete Ricketts said late last week that the state is well-prepared for the budgetary challenges posed by the coronavirus. He said that state revenue through March was $296 million ahead of the forecast made last year and that the state had a cash balance of $583 million and savings of $488 million through April.
Nebraska “is in a very strong financial position coming into this emergency,” Ricketts said. Budget tightening will take place, he said, but it’s too early to say how much.
“Certainly we know there’s going to be an impact,” he said. And the virus menace will persist, he said, until a vaccine is available.
Like everywhere else, public higher education in Iowa is suffering. Iowa State President Wendy Wintersteen told the Iowa Board of Regents in late April that she anticipates $88 million in refunds (for dormitory evacuations, for instance) and other lost revenue from March through August.
“The financial impact on Iowa State University will be unprecedented,” she said.
Many colleges, including those in the NU system and the Nebraska State College System, have assured families and students that they intend to offer on-campus courses during the fall semester. That’s seen as important for maintaining enrollments, because the online classes that have been delivered this spring fail to give a student in-person contact with professors or the college experience in general.
The University of Nebraska-Lincoln is considering scenarios that anticipate a 10% cut in state money and tuition, the key factors that make up the operating budget. Two sources at the University of Nebraska at Omaha say Chancellor Jeffrey Gold has asked administrators to consider budgets requiring 5%, 10% and 20% cuts. Gold referred budget questions to the NU system’s central office in Lincoln.
State Sen. John Stinner of Gering said he has suggested that weak state revenue will require cuts from that source of up to 10%, based on information from bond rating services. But it’s not clear how badly the pandemic will suppress state revenues.
The Legislature will need to consider at least four months’ worth of state revenues affected by the coronavirus to make projections, said Stinner, chairman of the Appropriations Committee.
Numerous administrators interviewed said no employees have been laid off or given unpaid leave in public higher education in Nebraska, and no academic programs have been slashed — yet.
The Nebraska State College System declined to discuss the looming budget problems, saying it’s too early to speculate on how bad they might be.
Kabourek said NU administrators generally are looking at 5% and 10% budget-cutting scenarios. Using 2019-20 as a guide, a 5% cut in state allocations and tuition revenue would approach $50 million. That’s in addition to a virus-related $50 million shortfall late in the 2019-20 budget year.
He said the NU system wants to protect students, faculty members and staffers from cutbacks as much as possible, but it’s realistic to expect some jobs will be affected.
The NU Board of Regents plans to approve a budget in June. That would be well before administrators, with faculty members’ input, could make specific program cuts.
University of Nebraska at Kearney Chancellor Doug Kristensen said he has no “fluff” to trim. He eliminated three intercollegiate sports in 2017-18 and about 35 faculty members, staffers and administrators.
Kristensen said he will know better what to expect from enrollment in August. Union contracts with faculty members preclude any prompt decisions anyway. The higher education concept of shared governance with faculty members also means bringing professors into those discussions.
Program cuts are a possibility, he said, but it’s wise not to discuss specific options until such announcements are necessary. “That kills that program, the moment you talk like that,” he said. “It’s premature to speculate on what’s going and what’s staying.”
Kristensen said he hoped enrollment will be more solid than many fear.
The NU system last month announced that the coronavirus-related $50 million shortfall in the current year would be covered through reduced spending, federal stimulus aid, reserves and other cash. Construction projects also will be reviewed and possibly delayed. And there will be more cuts in 2020-21, Kabourek said.
The six public community colleges in Nebraska expect trouble, too. But they have the advantage of using local property tax money, something the four-year public colleges don’t have.
“We know it’s gonna be bad, but it’s hard to know how bad,” said Greg Adams, who heads the Nebraska Community College Association.
Dave Koebel, vice president for finance at Metro Community College, put it this way: “We’ve been preparing for the rainy day. It’s raining now, I think.”
UNL spokeswoman Deb Fiddelke said her institution has established “a pre-planning committee of faculty and administrators.” They will develop the approach to potential budget reductions, Fiddelke said.
She also said each college and major unit at UNL will undergo its own budget review. UNL already planned to take on a new form of “incentive-based” budgeting that more rigorously considers programs’ revenues, expenses and enrollments.
Nicole Buan, UNL Faculty Senate president, said administrators and faculty members have started working together on the coronavirus budget situation. Buan said that “seeing how well that is going, we are confident that shared governance will continue to be normal practice” at UNL.
NU President Ted Carter has announced initiatives to give free tuition to students from families that earn less than $60,000 a year. And he has frozen tuition for the 2021-22 and 2022-23 school years.
Carter said the university wants to maintain its enrollment and make sure students feel welcome in the NU system.
Kabourek said he liked the word “transformative” to describe this time, in which profound changes might take place.
The university has been here about 150 years, Kabourek said. “We have to look on the horizon,” he said. “We plan to be here another 150 years.”