AU estimates budget loss of up to $116 million for 2021 fiscal year

Projection is an increase from May estimate of $100 million loss for 2021 fiscal year

AU estimates budget loss of up to $116 million for 2021 fiscal year

The Mary Graydon Center, pictured in 2016. 

American University is projecting a potential budget loss between $104 million and $116 million for the 2021 fiscal year, resulting from the coronavirus pandemic, according to Matthew Bennett, AU’s vice president and chief communications officer. 

In an email to The Eagle on Thursday, Bennett said that some of the major causes of the shortfall include lower enrollment, a 10 percent tuition discount, and the loss of revenue from housing and dining, as the fall semester is essentially entirely online.

“The exact final shortfall will ultimately be determined by final enrollment numbers for the entire year, operating status in the spring, and other factors that are not yet finalized,” Bennett wrote.

Personnel and financial aid make up the largest share of expenses in AU’s nearly $777 million fiscal year 2021 budget, according to the University’s budget report, which was released in 2019. 

AU is considering an additional furlough week for University employees and is collecting input from the community regarding potential furloughs, according to Bennett. He wrote that AU is not considering large-scale layoffs, and the University “has not instituted any layoffs during the COVID-19 pandemic.”

The Eagle previously reported that 180 food service workers were furloughed in March, after AU extended its virtual format for the spring semester. 

The University is also not considering cutting financial aid to reduce expenses, Bennett wrote. In June, AU committed to dedicating an additional $13 million to financial aid. 

In May, President Sylvia Burwell told the AU community in an email that, “using a more conservative approach,” the University could lose $100 million in revenue and increased costs for the 2021 fiscal year. To address the deficit, Burwell announced that AU would pause new construction, cut salaries for her and her cabinet, implement a hiring freeze, and stop merit increases for faculty and staff making more than $40,000 annually.

“We are acting decisively and prudently to mitigate these shortfalls, including extensive efforts to meet enrollment goals for current and incoming students,” Burwell wrote.

In a June email to the AU community, the administration announced that the University would suspend matching contributions for employees’ retirement plans from August 2020 through January 2021. The email said that AU is also using unrestricted endowment income to help mitigate the impact of the University’s budget deficit.

In 2019, the Board of Trustees voted to raise tuition by three percent in fiscal years 2020 and 2021. When AU reversed its hybrid fall 2020 plan on July 30, deciding to host classes entirely online and cancel virtually all on-campus housing, the University announced a tuition reduction for undergraduate and graduate students by 10 percent. AU discounted tuition for online classes this summer.

The price of tuition for the fall 2020 semester is $22,744 for full-time undergraduate students taking fewer than 18 credits.

Tuition and fees make up 92 percent of AU’s revenue, Burwell wrote in her May 26 email. In addition to discounting tuition for the fall, AU eliminated or reduced some fees for the semester, including the sports center and student activity fees. 

AU is allocating half of the over $6 million in COVID-19 relief funding it received from the Department of Education toward financial aid.

AU is one of many colleges in the United States facing financial loss amid the COVID-19 pandemic. George Washington University, which has higher enrollment than AU, estimates a $220 million budget shortfall. 

This is a developing story and will be updated as more information becomes available.

saustin@theeagleonline.com

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