University projected to lose $27 million due to the COVID-19 response

In email to AU community, executive team outline changes to staffing, payment, long-term projects

University projected to lose $27 million due to the COVID-19 response
Cherry blossoms in bloom on an empty campus.

The University is projected to lose $27 million from increased expenses and reduced revenue as a result of its response to the coronavirus pandemic, AU’s executive team wrote in an email to the community on Friday. 

These losses could continue in the fall, the email stated, depending on the wider impact of the coronavirus over the summer. To address the situation, the salaries of the president, provost and vice presidents will be reduced for the year — 15 percent for President Burwell and eight percent for the provost and vice presidents. 

Hiring is also frozen until further notice, as are all new capital investments and construction. These changes will not affect the Hall of Science or the new campus plan. 

“We are all hopeful and planning for a return to campus in the fall,” the executive team wrote. “The decision will ultimately be determined by health guidance and scientific facts, and we are preparing for a wide range of possible scenarios. Should COVID-19 continue to disrupt our community, we will address the associated economic impacts and additional steps that may become necessary.”

Many of the increased expenses are due to the massive structural changes the University adopted in response to the pandemic, including adjustments for staff to telework, prorating housing and meal plan costs for students, strengthening online infrastructure and providing benefits and retirement plans for contract workers. 

In addition to hiring freezes, AU has applied for federal funding through the Department of Education to additionally address financial burdens, which includes aid for students.

Some universities announced they are considering canceling classes for the fall. Boston University suspended all in-person activities for the summer — as did AU — and said in an online statement that if public health officials recommend against a fall semester, classes could be online until the beginning of 2021.  

The Hatchet, George Washington University’s student newspaper, recently reported that GW is projected to lose approximately $38 million from COVID-19. GW’s losses come from adjustments similar to the ones experienced at AU, including proration and lost revenue. 

Although AU’s endowment could help address some of the lost revenue, that is not its intention, the executive team wrote. 

“The endowment is not an unlimited source of funding that can be used to cover unforeseen expenses,” they said. “It is governed by restrictions that direct much of its value to specific purposes and ensure that it can support the university and its students far into the future.”

The Eagle reported in April 2019 that AU’s endowment is the smallest of all universities that AU students typically apply to. Additionally, the University’s dependence on tuition for funding puts it in an uncertain situation, they said. 

“Depending on conditions for the fall, financial shortfalls for the University could significantly expand,” the executive team wrote in their email. “Like all universities, we are highly tuition-dependent and we have to prepare for potential negative impacts on those finances.”

news@theeagleonline.com 

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