COVID-19: Univ. of Minnesota Facing Possible Huge Financial Hit
Minneapolis (KROC AM News) - Facing a loss of coronavirus-related revenue that could exceed $300-million, the University of Minnesota is taking steps that include pay cuts for its leadership and possible salary and tuition freezes.
The U’s Board of Regents was briefed on the plan Tuesday.
To form a basis for future budget discussions, University leaders presented three scenarios of potential financial impacts:
Based on a theoretical “best case” scenario where summer and fall activities returned to near-regular operations — an unlikely outcome given the University’s decision on Monday, April 6, to move all Summer 2020 courses to alternative instruction methods — this model anticipates approximately $77 million in projected revenue losses and expenditure increases across many units at the university.
A moderate scenario that assumes extended reduced operations will continue through the summer, along with non-trivial effects lingering into the fall semester as the University transitions toward more regular operations. This scenario anticipates revenue losses and expenditure increases of approximately $163 million.
A more difficult scenario in which reduced operations continue beyond the beginning of the Fall 2020 semester, a model that indicates the University may experience a financial challenge greater than $315 million.
Plans to deal with the expected financial challenges include:
a voluntary 10 percent salary cut for President Joan Gabel and her cabinet starting July 1 until the University returns to normal operations;
one full week of unpaid work before June 30 for approximately 200 of the University’s senior leaders;
subject to Board approval, a proposed salary freeze on merit increases and other adjustments during fiscal year 2021 for all University employees systemwide — not including labor-represented faculty and staff units with collective bargaining agreements.
The Board Tuesday also amended the start dates for the Comprehensive Student Fee Refund Plan, based on the recommendation of University administration. The plan will now prorate student financial credits for housing, dining and other fees starting from the first day classes were scheduled to resume after spring break (March 16 on the Duluth, Rochester and Twin Cities campuses, and March 23 at Crookston and Morris).
The Board also approved prorated financial credits starting from March 28, the first full day of Governor Tim Walz’s statewide “Stay at Home” order, and continuing through the end of finals in May.
The Board will be updated on the university’s financial challenges
in the coming weeks as it plans for budget review in May and expected action in June.