Urgent Steps to Mitigate the Financial Effects of COVID-19
April 24, 2020
Dear Rutgers Colleagues:
Today, with the health and safety of our community as our utmost concern, we are beginning to determine our path forward to a new chapter for Rutgers as we recover from the unprecedented crisis of COVID-19. Rutgers will weather this storm, but our university—and indeed all of higher education—confronts perhaps the greatest academic and operational challenge in its history.
I am writing now to share with you the immediate strategy for the University as we respond to the effects of the pandemic. In what follows I will outline for you the urgent steps we are taking to mitigate the financial effects of COVID-19, as well as our approach to financial planning for fiscal year 2021.
Let me start by thanking every member of the Rutgers community for stepping up to meet the challenge of this public health crisis. Our community is in uncharted waters and we have all had to take unprecedented steps as our personal and professional lives have been so dramatically affected by the outbreak. Each of you has displayed patience and flexibility, and your compassion for one another speaks volumes about the values we hold so dear and the generosity that defines the Rutgers community.
Compared to most of its peers across the country, Rutgers has been uniquely impacted by the pandemic. We are located in the epicenter of the COVID-19 outbreak in the United States, creating challenges around both the length of our expected recovery and our ability to attract new students. Perhaps no other state government has been hit as hard financially as New Jersey, which has necessitated the freezing of many appropriations, including a significant portion of funding for Rutgers.
The University anticipates a shortfall of $200 million in our budgeted revenues over the remainder of our fiscal year that ends June 30. Looking into fiscal year 2021, we must prepare for a similar, potentially greater, financial impact. The chancellors and universitywide responsibility-centers and offices have been tasked with modeling double-digit decreases in budgets as they prepare for next year. No aspect of our budget will be unaffected by the current crisis.
However, although much remains to be determined about the coming budget year, one thing is certain—we cannot and will not close this gap on the backs of our students and their families.
To that end, I am making this commitment today: we will recommend to the Board of Governors a 2021 budget that freezes undergraduate tuition and fees at their current levels.
While this is the correct action to take to protect our students and their families, I know that freezing tuition represents a significant further strain on our finances.
With this in mind, the chancellors, executive vice presidents, and I, as well as the athletic director and the head coaches for football and men’s and women’s basketball in New Brunswick, will take a 10 percent reduction in salary over the next four months.
In addition, the vice presidents, provosts, vice chancellors, and deans who comprise our administrative council, as well as the entire leadership team for Athletics in New Brunswick, will take a 5 percent pay cut over the same period.
Furthermore, the university’s limited reserve funds will be utilized wherever possible to offset lost revenue. Under normal circumstances, these funds support numerous critical forward-looking projects required for major strategic initiatives, faculty recruitment and support, deferred maintenance on buildings, and unexpected expenses. I have charged University Finance and Administration to work with the chancellors to review all critical needs and to offset lost revenues by diverting any portion of these reserves that are not absolutely essential to the continued functioning of our institution. Please know that these are one-time funds, and that, once used, they will no longer be available for any future needs.
At this time, we are also undertaking a number of additional steps to address our emerging financial crisis. These include the following:
- All plans for new capital construction projects will be stopped and all active projects will be reviewed. Working through Institutional Planning and Operations, the University will review all plans for construction or renovation. Projects currently in the queue for approval by the board will be individually reassessed for financial feasibility.
- All discretionary spending related to University operations including hiring consultants, conference expenses, and other items is suspended. Any new contracts or commitments must be reviewed and approved on an individual basis by University Finance and Administration before proceeding.
- The ban on university-sponsored travel will continue until further notice.
- The hiring freeze, announced earlier this month, will also continue until further notice. All new postings and job offers have been suspended indefinitely, with the exception of key health personnel and certain other exceptions as recently outlined by University Human Resources.
- Non-contractual pay increases will be prohibited until further notice. This applies to all non-aligned personnel, including the senior administrators who are having their pay temporarily reduced as mentioned above.
- The University, in parallel with discussions with union leadership, will urgently explore all available and necessary personnel options, including furloughs, reductions in force, and further wage freezes.
The steps we are taking today will help us address the immediate impact of the COVID-19 outbreak, but they are only the beginning of what we must consider. Equally substantial steps will be needed as we craft a budget for the coming year.
I know that many in our community are suffering great financial hardships, uncertain employment prospects, and disrupted personal and professional plans. Holding tuition and fees flat for undergraduates will help to ease part of this burden for our students, but more help is needed. We will continue to advocate aggressively at the federal and state levels for programs that would minimize the burden of this crisis on our employees and our students.
Rutgers has a 250-year legacy of resilience. I have no doubt that we will weather this storm and that Rutgers will emerge as an even stronger institution. However, during this continued crisis, we will face difficult immediate challenges and uncertain long-term issues that will require shared commitment, vision, and sacrifice.
Finally, I urge you all to continue your efforts directed at limiting the spread of COVID-19 and supporting the recovery of our great community. It is my fervent hope that all of you and your families will remain safe during these difficult times.