Dear University Community –
We are facing three significant challenges at the same time: 1) race and equity and how UNH can ensure the well-being of all Black students, faculty and staff (more on that can be found in my recent message; 2) COVID-19 and our ongoing work to have students and employees back safely on our campuses in the fall; and 3) our financial situation. I’m writing today to provide a comprehensive update on the financial challenges we are facing and our plan to address those challenges.
In prior communications and at the State of the University on Feb. 4, I expressed the headwinds we were facing and why we engaged Huron to assist us in identifying efficiencies in our operations. This work was and is about building our financial strength, one of our four strategic priorities and the one that will help us make investments in the other three. The reality of the pandemic is that those financial headwinds are now significantly stronger and are forcing us to take additional measures to ensure our financial health in the coming years. There are three guiding principles we use as we make budget decisions: protect our mission and the quality of our education, research and outreach; keep UNH as affordable as possible for students; and treat employees fairly and with respect.
We will finish FY20 (which ends June 30th) with a deficit of up to $10 million, mostly due to the $27 million in refunds we provided to our students and their families. Another financial impact of COVID-19 is our need to prepare and maintain our campus for the safe return of students, faculty and staff. The added costs to test, trace, clean, etc. could approach $20 million in FY 21.
As you have likely seen in the media, higher education enrollment will be impacted by the pandemic and UNH is not immune to this disruption. We expect the size of the first-year class in Durham to be smaller based on the 2742 deposits received by June 1 which was 3.1% smaller than the same date last year. Additionally, financial aid was increased to meet the needs of this incoming freshman class. With extraordinary COVID-19 costs and declining net tuition revenue, we are projecting a large operating deficit in FY 21 that could reach $30 million. New England demographic trends tell us enrollment pressures will continue in the future and it is likely the pandemic will put additional burden on the financial needs of our students and their families beyond FY 21. Accordingly, our projections indicate the necessity to significantly reduce our operating expenses between five and ten percent by FY23 to get to a strong financial position. We have been working with the university system Board of Trustees on a financial path to get the university through several years of challenge while we rethink our work and how to best deliver on our mission. The pandemic brings with it much uncertainty; therefore, we will continue to refresh forecasts on a regular basis.
What steps have we already taken and are they helping? As I wrote on April 1, we have frozen hiring and travel (with strict waivers in place for both) and we have suspended the use of many P-cards. These efforts are helping, and your efforts are much appreciated. We will continue these restrictions into FY21. That said, they alone do not go far enough to address our challenges ahead.
Higher education is a human capital-intensive industry—people fuel our university. There is no doubt we will need to reduce the number of employees at the university to reflect our financial reality. I also want to let you know that due to COVID-19, we have furloughed and/or eliminated positions for about 100 employees; at this time the majority have been furloughs. These have been difficult but necessary decisions. Fortunately, many of those impacted employees have been able to take advantage of unemployment benefits through the state and federal government.
Earlier this spring, we announced a new voluntary program for staff not covered by a bargaining agreement in positions at least 50% or more hard funded (with 59 1/2 years of age and at least 10 years of status service) that allows early retirement with a bridge for health benefits. Today, I am announcing an expansion of that program. Along with the health benefits, eligible employees will receive 75% of annual base salary as salary continuation. Additional components include payments related to years of status service. To find out all the new details of this program please visit the HR web page. While the expansion of incentives reflects an investment, our hope is that this voluntary program will reduce the number of employees we will need to impact to meet our budget goals.
It is fortunate that we engaged Huron and started the implementation of their recommendations before COVID-19. The structural changes and opportunities outlined provide us with a roadmap as we navigate our new reality. The implementation teams in the first phase of the Huron work continue, albeit slowed down a bit by COVID-19. As I mentioned in January, we were anticipating a reduction in the number of employees as we restructure some of our work. This becomes even more important as we strive to meet our financial targets to return to positive financial results by FY23.
I am also announcing that many members of leadership across the university are participating in a voluntary temporary pay reduction for FY21; for example, I will go without four weeks of pay. I am grateful for everyone who is participating in this program, including most members of the President’s Leadership Council.
Despite this sobering news and the challenges before us, I remain optimistic that, as a community, we will get through this and that we will build our financial strength. We are fortunate that we entered the global pandemic with a strong financial foundation to weather this unprecedented storm. We must ensure that on the other side, we come out of it poised to continue to deliver on our mission to our students, their families, the citizens of the Granite State, our faculty, and staff. I remain confident because of you. The UNH community is strong, determined and gritty. I appreciate your efforts to date and for your help in the coming months.
A reminder that Provost Jones and I are holding two town hall meetings (June 16, 2020) tomorrow to discuss our three large challenges – I hope you can join us.
Details for the town hall meeting for staff at 8:30 am: https://unh.zoom.us/j/96811673172 or call +1 646 876 9923; webinar ID: 968 1167 3172.
Details for the town hall meeting for faculty at 3:30 pm: https://unh.zoom.us/j/94283628557 or call +1 646 876 9923; webinar ID: 942 8362 8557