|Message Sent To:||All Faculty, All Staff|
|Message From:||Message from the Office of the President|
|Date Sent:||Friday, July 17, 2020 04:00 PM CDT|
University Update and Financial Impact: Phase II
Dear Loyola Faculty and Staff,
Thank you for your invaluable work throughout the summer preparing for our different semester.
Heroic efforts have been undertaken to prepare contingency plans for several potential campus scenarios. During this summer period, our faculty and staff have maintained the same flexibility that was shown this past spring. Your resilience, resourcefulness, shared sacrifice, and care for our students and each other that has enabled us to limit the negative impacts of COVID-19 to our community.
As shared with you in earlier messages, despite the extraordinary events leading to the repatriation of students this past spring, we managed to successfully conclude the 2020 fiscal year. We covered all our operating obligations and our commitments for debt repayment. In addition, we met previously budgeted payouts for our tenured faculty who accepted the voluntary transition program from the University. Through sound financial stewardship and your efforts, these goals were realized.
As we began the new 2021 fiscal year on July 1, we continue to stay vigilant and focused on two key priorities. The first is our preeminent concern for the health, safety, and well-being of our entire Loyola community. The second is creating and defining our new way of leading. We'll do so by innovating and engaging in the areas we know best: education, research, and community engagement. Moreover, we monitor daily key metrics for enrollment, retention, housing and financial aid. These metrics are key revenue drivers. As previously communicated, we remain committed to making decisions based on science, data, and other reliable information. The latter includes your feedback and the insights garnered through various forums. They have included multiple surveys and town halls, email suggestions, and numerous conversations at unit meetings and with academic advisory groups, deans, chairs, supervisors, and others.
On May 7, we shared the first announcement about Phase I budget reductions for this new fiscal/academic year. At that time, we communicated our expectation of how we would approach decision-making on any necessary changes or budget reductions going forward. These changes would be announced and implemented within the context of two additional phases in July and August/September.
Over the last several weeks, teams of faculty, staff, and administrators from across the University have been engaged in preparations for the fall semester. These preparations have included considering both an option for a hybrid program of both on-campus and online instruction for the fall semester long with an alternative option of a more online-based program of instruction, with some limited on-campus courses. Earlier this week, we made an announcement about our specific fall instruction plans. Both of these scenarios also included limited occupancy of the residence halls. All of this work has been done with primary consideration for the need to safeguard faculty, staff, and students. Therefore, we used the constraint of maintaining social distancing and de-densifying all indoor spaces. These necessary changes along with current data confirm that we will fall far short of our anticipated budgeted revenues for the 2021 fiscal year. Please recall that our fiscal year 2020-2021 budget was approved in December 2019. This early budget completion is our customary practice, in order to support the planning and timing of student admissions, financial aid awards, and academic hiring cycles. When we completed this work back in December, no one could have imagined the far-reaching implications or impact of COVID-19 on society and higher education, in particular.
Current Budget Shortfall Amount and Phase I Actions
At present, we project a minimum $50 million revenue shortfall. This “best case” scenario assumes no further unanticipated changes to our revenue given our recent announcement of more on-line course delivery. Again, this shortfall is driven by several factors, primarily the single occupancy in our residence halls, a decrease in the numbers of the incoming freshmen class, and the necessity for more institutionally-funded financial aid to meet the additional needs of our students and their families.
Following the recent decision to move our fall semester primarily to online instruction, we anticipate more students to consider a gap year or semester. We have also made the decision to reduce the cost of attendance by eliminating the student activity fee for undergraduates and graduates, thus widening our deficit. This fee is significant and covers many student services that will actually continue, and is several cases, expand (e.g. expansion of Wellness Center resources). Furthermore, we are projecting additional expenses of more than $8 million. These will be incurred from enhancements in our technology services, adaptations of instructional spaces, and preparations for the limited, safe return to campus.
Implementing the Phase I reductions in May and June enabled us to realize just over $22 million of expense reductions. As we move forward, all announced Phase I budget “freeze” parameters must still remain in effect. During this same Phase I time period, we also continued to add and pay for COVID-19 days through June 30. This payment covered staff who did not have any remaining PTO and could not work remotely. This enabled us to hold off on any potential furloughs and layoffs throughout the summer.
Following the Phase I announcement, we solicited feedback through surveys of and conversations with faculty and staff. We asked about several potential options to consider to remove additional costs from our operating budget in Phases II and III.
We continue to hold numerous meetings and discussions that provide us with your input as we work to make the best decisions possible. Provost Norberto Grzywacz and I convened and regularly meet with a group of faculty advisors from across the University. We discuss many operational issues facing us this fall. In addition, Winifred Williams, Vice President for Human Resources, and I recently met with two groups of staff members from across the University. We heard concerns and ideas from staff as we approach the fall semester. The solicited feedback, from these various sources, indicated that we should only implement wide-ranging furloughs or layoffs of our people as a last resort. This was an objective that we diligently worked towards, particularly by expanding the COVID-19 days as indicated above, and hoped to avoid altogether. Unfortunately, Phase II expense reductions will include some specific furloughs and layoffs in isolated areas. These areas will be closed or have significantly reduced operations in the coming semester.
Phase II Considerations and Actions
Phase I yielded $22 million in cost savings to mitigate the approximate $50 million budget gap. Hence, we need to identify additional expense reductions to further close this approximately $28 million gap. By incorporating your direct input and perspectives, I am sharing with you the next set of necessary actions. They comprise Phase II, in which we have a goal to realize approximately $24-25 million in expense reductions:
- The 5 percent University, non-contributory portion of the 403(b) retirement program will be temporarily suspended effective August 1. At this time, we will continue to provide the University match – up to 5 percent of your base salary – for those who contribute to their retirement account. I recognize that this will be a disappointment. However, the overall benefits program of Loyola remains very competitive and we are committed to reinstating this non-contributory component of the 403(b) as soon as possible. This change will save the University approximately $10 million.
- Effective immediately, we will reduce University operating budgets (across select accounting units) by 50 percent. Areas that will be impacted include, among others, conferences, meetings and travel, entertainment and food, recruiting, and supplies. Given the expected impact of the ongoing social distancing requirements for on-campus activities and campus operations for the coming year, we believe that these reductions will have the least impact on our academic operations and service support for our students. Academic departments can use reserve and gift funds to offset these reductions if spending is necessary. This change will save the University approximately $12 million.
- The Cuneo and LUREC campuses, designed to serve groups—both internally and externally—have been temporarily closed. Only minimal staffing required for building maintenance and ongoing contact with potential future bookings will be supported. The remaining staff have been notified of their furlough. This was a very difficult decision since we value the contributions of all of our staff members on these campuses. We look forward to bringing them back as soon as possible when campus operations at those locations can resume.
As we continue to evaluate campus operations based on enrollments along with any safety and security requirements and/or limitations, these evaluations may necessitate other select furloughs and layoffs. We would announce those in the coming weeks. I want to emphasize at this time, there is NO plan in place for widespread University layoffs to occur.
Status of Office of Strategy and Innovation
We have also made the difficult decision to close the Office of Strategy and Innovation. Thus, we will eliminate all the staff positions supporting this office effective October 1. Nevertheless, our ongoing development of the strategic plan remains a priority, despite the pause due to the COVID-19 disruptions. Throughout this 2020-2021 academic year, we will build on the work undertaken to date and work towards finalizing a new strategic plan. In particular, we will continue to support the new academic initiatives already underway in the Greater Good document. Moreover, we will utilize the Academic Innovation Fund through the Office of the Provost to launch new academic programs, such as an Institute of Racial Justice.
We are now navigating through significant operational limitations that have a direct impact on our financial resources. Within the context of this challenging financial position, we cannot continue to commit resources to staff and fund a separate office focusing on strategy and innovation. Nevertheless, strategic planning, innovation and academic-program development remain important to the University, and will become part of the existing resources within the Office of the Provost. Margaret Callahan, who has led the new Strategy and Innovation office, will be taking a well-deserved sabbatical following her impactful work in strategic planning, as the Provost of Health Sciences and as Interim Provost of the University. In that last capacity, she was instrumental in helping restructure the office of the provost to a single-provost model for the University. We are grateful for her many contributions in her various roles. Following her sabbatical, Dr. Callahan will continue to be part of our Loyola community as a full professor in the Marcella Niehoff School of Nursing.
It is difficult to fathom the scope of this public health crisis and the impact it has on our University leading to these decisions, especially the direct impact on our faculty and staff. All of us find this experience to be humbling and daunting. We continue to care for one another and cope with uncertainty, ambiguity, and constantly-shifting information in near daily developments. We are saddened and even mourn the loss of what we may have taken for granted as “normal.”
Our solace is the awareness that in life, each situation is unreservedly distinctive, making normalcy something that can seem illusory. Yet, as people for others, our faith provides us with solace, hope, and inspiration. Even during this unprecedented period in our history, we must remind ourselves that opportunities exist and await our action as we innovate and create solutions for our society and community. Now is the time for us to continue reimagining our work and leading the development of education and research for the future. Our Jesuit mission and heritage calls upon us to be adaptable and meet the needs of the times. We must discern where we need to work, not necessarily where we want to go or feel most comfortable. Our Loyola community already demonstrated this spring and summer that we can be nimble, innovative, persistent, and imaginative. Let us find ways to frame our work and efforts on what we can do, and how we can make an impact. Let us not merely dwell on what we lost. Let us combine our energies and aspirations at levels we have not done before. Only then, will we be able to break down barriers between us, build bridges, and strive towards audacious goals. We will move into the future together, tackling the greatest needs of society.
Every day, I am grateful for the well-being of our community. I am grateful for the efforts of all Loyolans, especially as we support the expectations and dreams of our students and care for one another. Please continue to keep each other in your thoughts and prayers.
Together in Loyola,
Jo Ann Rooney, JD, LLM, EdD