ku budget update from president hawkinson and cfo delaney
dear ku campus community,
as we continue to face unprecedented times dealing with the covid-19 pandemic, it has become abundantly clear that our faculty, staff and broader university community are capable of great things. the level of commitment, professionalism, engagement and dedication to the education of our students have been laudable, and these traits will continue to help us to persevere in the coming months and years. in a future letter we will talk about the various options we have before us for the 2020 fall semester, but rest assured, we are planning to be back in the fall to once again enjoy everything our beautiful campus has to offer.
the pandemic has forced us to work in ways some of us never thought possible, and to find solutions to challenges we never imagined. we are asking for your help once again. as many of you know, the university is dealing with significant financial challenges. these challenges were presented in the financial sustainability plan, along with a proposed path back to solid financial health. as directed by middle states, the state system and our council of trustees, we all made major sacrifices to attain a balanced budget, which we have accomplished the past two years. we prepared a plan this year that also balanced our budget, and would allow us to gradually attain a higher level of sustainability (please see the president’s convocation address from august 2019 and the ku financial sustainability plan, february 13, 2020, on the president’s website).
that plan has been extremely stressed by the current pandemic and unforeseen financial implications.
first, the university was obligated to refund students $9.5 million for ceased auxiliary operations this spring. while we are thankful to benefit from the cares act, less than half of our loss will be covered by this stimulus package. second, we are now facing greater challenges next year with the tuition rate being held flat, versus the initial projected increase of 1.5%. an anticipated increase to commonwealth appropriation is now in serious question due to declining revenues at the state level as a result of the pandemic. finally, our enrollment which has been down significantly over the past decade, will be tested once again as students will face difficult choices for this upcoming fall semester. we bring this to your attention because we have two months remaining in the current fiscal year, and we have a chance to offset these significant losses, but we need to act now.
the president’s cabinet is implementing a number of actions to include an immediate spending freeze across university departments in order to preserve any funds accumulated due to reduced face-to-face operations this spring. this strategy only works if we tighten our belts university-wide and scrutinize each essential expense to an even greater level. to assist in this process, we will be implementing the following courses of action:
remaining available budgets for 2019-20 will be set aside in reserve within individual sap accounts across all university operations, with the exception of external grant-funded activity. these funds will show as encumbered and will not be accessible to the department budget holder without vice presidential approval. we understand that some expenditures will be necessary, and funds can be released to create approved purchase orders as required. examples include much need investments in technology to support our students – including laptops and equipment to enhance our remote teaching capabilities.
university-issued purchasing card spending limits will be brought down to $1 for the remaining two months of the current fiscal year. this will prevent any further preapproved spending, and render the card essentially inactive until the limit is restored. we will allow select individuals per division, as appointed by cabinet, to hold an active p-card with an increased limit in order to make required purchases for the division, if preapproved by the vice president.
No transfers of available E&G budgets will be allowed. We have many departments that request transfers of E&G funds to self-sustaining accounts across the university that are used for many reasons. This is not the time to allocate resources for future individual departmental needs.
in addition, the following actions have, or will, be taken as we approach next year.
hiring freeze – we are maintaining our hiring freeze for all non-faculty positions unless the positions are essential and approved through the cabinet’s exception process. this freeze has resulted in over 60 recently vacated positions being eliminated during the past year. we anticipate additional positions will be eliminated in the coming months as they come open. please note that discussions are occurring at the state system level that may result in retirement incentives for additional eligible employees across all bargaining units. these new incentives will lead to some unanticipated one-time costs in both fiscal years 2019-20 and 2020-21.
we must ensure all classes being taught are fully enrolled, if possible. as stated in the directive from the state system, the temporary faculty budget will be reduced and all efforts will be made to rely on existing faculty to teach our classes.
as a result of the recent retirement incentive, 24 faculty have announced their retirement. we anticipate that another retirement incentive opportunity will be agreed to in harrisburg in the coming weeks. with current retirements, additional retirements from the new program, and the reduction in temporary hires, we project to reduce our faculty complement by 30 fte. please note that we have been directed by the state system to attain a student-to-faculty and student-to-employee ratio more in line with the 2010-11 academic year, when we had 10,707 students.
another 10-15% across the board budget cut will be implemented to all base operating budgets next year (these would be non-personnel dollars). selected accounts that are not essential will be reviewed and swept to help offset the financial impact of the pandemic.
Non-essential physical plant projects will be canceled for the coming year. We will continue to move forward with select projects that impact the health and safety of our campus community. This currently includes the Old Main I-wing renovations for Public Safety & Police Services as required to satisfy a complaint filed with the PA Department of Labor & Industry, repairs to the stadium track and tennis courts due to safety concerns, campus ADA walkway and concrete repairs, residence hall roof recoats, as well as important projects funded by state or donor-raised funds through the KU Foundation.
we believe these immediate courses of action will help the university preserve crucial, available resources spread across many accounts assisting us in reconciling our current year financial results and balancing our upcoming year’s budget.
We will be meeting soon with all our union leaders at Meet & Discuss to address these actions, and more drastic actions, should our enrollment fall below projections. We will also discuss challenges we are facing, and possible actions we must take, with all summer activities being suspended.
for those employees looking for non-financial ways to assist the university and our students, please consider the following options:
- check in on students that you would normally interact with in our traditional face-to-face environment to ensure their success and to help the university with its retention goals.
- refer students who are struggling financially, due to the pandemic, to the emergency fund request website (//www.laquigua.com/news-and-media/announcements/ku-cares-emergency-assistance.html) and the financial aid office.
- continue to be proud of kutztown university and speak positively about the institution to others. our faculty, staff and students do amazing things on a daily basis, so don’t hesitate to brag about all the great things that happen across our wonderful campus community.
we greatly appreciate your support and understanding, and we hope that these measures will help save jobs and assist us in keeping our dedicated faculty and staff employed long-term across the university. despite this challenging fiscal situation, we remain convinced that, working together, we will all ensure that kutztown university remains vibrant and financially stable, and continues to provide the environment to make a difference in our students’ lives.
dr. kenneth s. hawkinson
chief financial officer