Staff Editorial: AU's budget losses are concerning for the long-term future
With a tuition-dependent budget and the depletion of available endowment funds, what comes next?
Editor's Note: This article appeared in The Eagle's October 2020 virtual print edition.
As announced in September, the University could lose between $104 and $116 million for fiscal year 2021. The impact of these losses will be felt until fiscal year 2022, according to reporting by The Eagle. The University is cutting president and cabinet salaries, instituting a five-day faculty furlough for those making over $40,000, no longer contributing to faculty retirement funds for the year and taking other measures to attempt to make up for this loss.
We are reminded every day that “unprecedented” is the word of the year. The coronavirus pandemic has fundamentally changed our society, and nowhere is that more obvious than in higher education. Schools have had varying responses, from fully in-person to online classes, from staff layoffs to continued football games. The differences in response make clear that there is no perfect response to any aspect of university life. However, huge budget losses raise serious concerns about the future.
The University is tuition-dependent. This has been a fact of AU’s budget for a long time, and focus has often been on growing the endowment. The tuition cut, no charges for housing and dining, and the March housing and dining refunds are all serious revenue losses when the budget is dependent on students. This pandemic proves that such a budget structure is detrimental not only in the long-term, but in short-term emergencies as well. There is now an expectation among students that the next time an emergency happens, there will be some level of reimbursement or cost cuts.
This continued reliance on students is absurd. We are responsible for funding our own professor’s paychecks, our own finals season “de-stress” events. AU has been increasing enrollment to increase tuition revenues, but with a fully-online semester, deferrals from students are expected. That loss to the budget is detrimental. The tuition reduction and other refunds keep students in school, but they are also hard hits to the budget.
The University has not been successful in diversifying revenue streams, and the pandemic makes that even more concerning. With the pandemic causing long-term financial hardship on individual and organization levels with no clear end, it is hard to believe that there will be increased donations. Even as the alumni association may work to develop these networks, AU does not produce the kind of students who go on to make the kind of money that allows for large donations to the endowment.
Frankly, as students look at these budget loss announcements and mitigation efforts, another largely online semester, although the University plans to expand some in-person operations, will exacerbate the financial challenges AU has already faced this academic year. We know more clearly than ever how our payments and presence at the University affect funds overall. With the Board of Trustees expected to vote on tuition prices in March 2021, it remains to be seen how that will put students once again in the position of paying too much for too little.
This reliance on students especially feels unsustainable when considering the salaries of some of the highest paid staff on campus. While the President Sylvia Burwell, her cabinet, former deans and provosts, and the former president are all taking salary cuts is a nice gesture, it rings hollow. In a time of such economic loss and strain, the act seems performative when it is such a low percentage of their salary. Burwell’s salary cut is only a few thousand dollars more than the total University cost per year for students. These members of our campus are not, in fact, suffering financially alongside the rest of us. Larger salary cuts or some measurement of how this is actually making some difference in the budget would make such a gesture less performative.
Another concern for the future is the loss of AU’s “rainy day” funds. Much of the University endowment is restricted for various legal reasons, leaving $38 million in unrestricted income funds. The University is using all of that $38 million to offset the budget losses.
It is clear that replacing those funds needs to happen immediately. Unfortunately, with the climate emergency increasing the likelihood of large-scale disasters, the University has to be better prepared for the future. COVID-19 has made it clear that no university had contingency preparations for a situation like this. But rainy days will come again sooner than anyone thinks, and the endowment may not be there to save the budget. Action steps for these future emergencies remain unclear to students, leaving many wondering: What about next time?
There are positive decisions the University has made. Students and employees who are in lower salary brackets have been prioritized, as things like financial aid, student support services and layoffs have all been avoided for cutting expenses. The University also has no plans to make any sport team cuts so that we maintain Division I status. Other schools have not been able to avoid these measures, as peer institutions, like George Washington University, have laid off staff and cut some teams from their athletics program. AU’s situation, however, is still unsustainable.
We are the ones who support this budget, and yet our voices are ignored. We aren’t provided with real-time updates. Meanwhile, our hopes are strung along for a return to normal that won’t be coming anytime soon. Students need to grieve what is happening to us starting now, and AU’s total false sense of hope and positivity prevents that. The cynic in us might assume that this false hope is to keep students paying so the budget sees smaller losses.
The future is unclear for us all, but the loss of endowment funds and continued tuition dependence are the reality. The University can either plan for the future or wait for the next disaster to put us in this situation again.