‘The financial impact is profound'
With the unexpected mid-semester exodus of students from their residence halls, houses and apartments — all largely owned by the University of Dayton — the closing of most dining facilities, the shift of classes online for the summer, the cancellation of summer study-abroad trips and the uncertainty of fall enrollment, the COVID-19 pandemic hit UD’s budget hard.
The University is not alone. The pandemic has taken a dramatic toll on universities and colleges nationwide, where nearly 20,000 fewer workers were employed in March than in February and more than 48,000 have faced layoffs, furloughs or non-renewal of teaching contracts, according to The Chronicle of Higher Education.
“The financial impact is profound.”
“The financial impact is profound,” Andy Horner, executive vice president for business and administrative services, told faculty and staff at virtual town hall meetings May 6-7 after 446 staff were furloughed and another 60 positions eliminated. The step affected nearly one-fifth of UD’s workforce.
Horner estimates revenue losses of $26 million to $28 million through the June 30 fiscal year end since mid-March, including more than $15 million in room and board refunds for graduating seniors and credits for returning students. With most faculty and staff working remotely and the cancellation of in-person classes, conferences, summer camps and big events like the NCAA’s First Four, spring commencement and Reunion Weekend, UD’s once-bustling campus is eerily quiet. In an effort to help students make progress toward their degrees, administrators sharply discounted summer undergraduate tuition nearly in half for online classes.
“In the weeks before other universities around the nation announced steps to prevent budget shortfalls, we opted to take a proactive and conservative stance to preserve UD’s financial viability — and safeguard our future,” Horner said. “These were not easy decisions, but necessary ones.”
Horner, along with other vice presidents and deans, volunteered to take a 20% salary reduction through October, while President Eric F. Spina took a 30% cut. The University also temporarily drew on lines of credit during credit market challenges that emerged in March, instituted a hiring freeze, and halted all non-essential discretionary spending and nearly all capital projects, except for the renovation of the Music Theatre Building, already in progress to accommodate a growing number of computer science majors.
While tenured faculty received contract renewals on May 1, contracts for many lecturers and adjunct faculty have been delayed, and all unscheduled merit increases for faculty and staff have been eliminated for next academic year. In addition, the University has paused its contribution to employee retirement accounts until Oct. 1, while taking advantage of the CARES Act provision that allows employers to defer payroll taxes for the year.
“We’re planning for the ultimate worst, but I’m heartened that these cost reductions have helped,” Horner told the board of trustees at its virtual meeting May 14, noting that UD is faring better in the volatile higher education arena than others.
“We’re still rated as financially stable. Both Moody’s Investors Service and S&P, our credit rating agencies, have downgraded the outlook for higher education to negative and predict enrollment uncertainty. Almost a third of all institutions that Moody’s tracks are running operating deficits,” he said.
The volatile stock market isn’t helping, either. The market value of UD’s endowment and long-term investment pool of more than $900 million fell by nearly $200 million before rebounding appreciably. Still, the ongoing volatility of most investment instruments provides a continuing challenge for UD given that the endowment earnings support scholarships, faculty positions, curricular innovations and other mission-critical functions.
The biggest casualty of the pandemic may be the certainty of what’s ahead for universities, particularly a private, highly residential one like UD where the longstanding campus experience is cherished by students.
“The University continues to work hard and with confidence to prepare for students to return to campus in the fall, but it is understood that public health guidance will necessitate that faculty, staff and students make some accommodations for safety and be prepared to be flexible as the situation continues to evolve,” Spina said.
Administrators know that new international enrollment will not rebound quickly, and many new and returning students will likely require more financial aid. UD has set aside nearly $2.6 million in CARES Act funding to provide emergency financial support for students and will boost institutionally funded aid.
“This is a university known for perseverance and faith.”
“Agility and resilience will continue to be critical,” Spina said, “but this is a university known for perseverance and faith.
“Our Marianist spirit and charism give me comfort and a quiet confidence that we can work together to overcome these challenges.”