Thank you for your hard work and perseverance this semester. Amid unprecedented circumstances, you have risen to the occasion to help the University of Kansas continue its mission of education, service, and research. While the days ahead will be challenging, your efforts will enable us to navigate this crisis and emerge as a stronger institution.
In recent weeks, Provost Bichelmeyer and I have communicated with you regularly, and we have appreciated your feedback. With your help, we continue to plan for various scenarios that position KU to resume on-campus operations in some capacity this fall. Today, I write to share additional updates regarding KU’s situation and the challenges we face.
Our financial situation
First, as I’ve said many times, there are still a number of unknowns that prevent us from having a full picture of the pandemic’s financial impact on our university. For example, we still do not know the extent to which state funding may be decreased, whether there will be additional federal stimulus funding, or the degree to which this pandemic will impact enrollment. Perhaps most significantly, we don’t know how external circumstances will impact our plans to resume on-campus operations in the fall.
Though these scenarios are still developing, we are beginning to get a clearer picture of the pandemic’s impact on KU. With some reasonable assumptions about the aforementioned unknowns, at this time we estimate the Lawrence and Edwards campuses will face a fiscal year 2021 revenue shortfall of approximately $120 million — which is 25.9 percent of the total general use operating budget. This figure includes losses in areas like parking, housing, dining, research, and fee services provided to external entities.
If we are not able to resume on-campus instruction this fall, the projected $120 million shortfall will be significantly larger. Moreover, even if we resume on-campus operations, the $120 million shortfall is not a one-year budget challenge that vanishes once the pandemic ends. The fallout from this pandemic will alter enrollment patterns, state funding and all of our revenue streams for years to come.
Our path forward
I share this sobering assessment to contextualize the hard decisions we need to make. With a budget shortfall of this magnitude, KU needs to adopt new business models, reorganize and restructure, streamline and cut programs, and implement long-term cost reductions to address historic financial challenges. As I have said before, all options must be on the table for KU to manage through this.
For example, we will consider sweeping vacant position budgets, utilize central and unit reserves, and maintain our existing hiring freeze for the foreseeable future.
Many of you have asked about furloughs, salary reductions and layoffs. As you may know, some of our auxiliary and affiliate organizations – such as Kansas Athletics and KU Memorial Union – have already enacted furloughs and salary reductions, and others may soon. As for broader university-wide furloughs, salary reductions and layoffs, we remain committed to doing our part to ensure remaining university employees are paid through the end of the fiscal year. But we will likely need to initiate painful cost-savings measures this summer for the new fiscal year.
As we work toward these decisions, we will prioritize core functions and seek to protect our most vulnerable populations to the greatest extent possible. We will provide you an update on our plan no later than the middle of June.
There is much work to be done during the summer, and I know I can count on your effort and participation in addressing fiscal recovery, planning for the fall semester, and designing the KU of the future. With your help, I am confident KU will manage through this crisis, and I am grateful for your dedication to our university.
Douglas A. Girod