Taking Stock - A Look at the Impacts of COVID-19 on AY 2020-2021 Budget and Operations
Date: October 13, 2020
TO: The NYU Community
FROM: President Andrew Hamilton, Provost Katherine Fleming and Executive Vice President Martin Dorph
We trust that Academic Year 2020-2021 is going well for you so far, whether you’re on campus here in New York or teaching, researching, learning, or working from elsewhere. This year has presented members of our community with so many difficulties; we hope you are coping with them. We appreciate all that you are doing to keep our community safe, to keep our academic mission at the forefront, and to keep NYU operating well.
Last April, we wrote to you about the unprecedented impact of COVID-19 on the University’s budget. The consequences continue to be sharp this year — we expect coronavirus losses and costs to be in the range of $300 million for 2020-2021.
Even as we confront that very large budget gap, we remain focused on our priorities:
- The safety and well-being of the NYU community
- Fulfilling our research and teaching missions
- Sustaining our support for students
- Mitigating the impact of the budget challenges on our valued employees
A Quick Look Back: COVID-19 and Academic Year 2019-2020
Broadly, there were three elements that significantly altered last year’s budget — unanticipated revenue losses ascribable to the coronavirus; unanticipated costs due to the coronavirus; and savings and unanticipated areas of strength that helped blunt some of the negative impacts.
The greatest revenue losses were in student housing and dining, due to the closing of residence halls and provision of refunds. There were also very substantial costs associated with COVID-19: emergency grant aid to students, financial assistance to help Study Away students return home, the procurement of large amounts of personal protective equipment, and summer preparations on campus for the fall.
In the face of our losses and costs, our mitigations — strict spending restrictions (including delaying many capital projects), hiring restrictions — combined with greater-than-expected registration for summer courses enabled us to carry on with some plans that were priorities for our community, such as summer hiring of students and reopening labs and research facilities.
The results for the fiscal year ending August 31, 2020 are better than we might have expected in the face of the COVID-19 crisis, thanks to the significant work of faculty and staff. Our efforts to restrain spending have helped mitigate the substantial negative financial impact of over $140 million that the coronavirus had on NYU in FY20, including costs in the summer to procure personal protective equipment, modification of our classrooms and study spaces for social distancing and initial testing and contact tracing that is continuing into FY21.
Where We Find Ourselves Now: COVID-19 and Academic Year 2020-2021
We continue to face considerable uncertainty, revenue shortfalls, and significant costs in the current academic year.
NYU’s major source of revenue is tuition, fees, housing, and dining. Total enrollment revenue is down for the fall semester: while undergraduate enrollment is a bit ahead of last year’s figures, graduate and professional enrollment are below (and some programs — including non-credit courses and those with high percentages of international students — have seen steep declines). Housing and dining revenues are also sharply below budget, owing to deliberately reduced density in the residence halls (about 6,100 students, vs approximately 11,500 in a normal year). Together, these revenue losses total nearly $90 million for the fall semester, and are anticipated to total nearly $180 million for the year.
Other revenue shortfalls include the cancellation of Study Away, anticipated lower fundraising revenue, less interest income on cash accounts, and a decline in other auxiliary revenue due to fewer students on campus.
There are also substantial costs associated with the NYU Returns effort, including, among others:
- Our extensive testing, contact tracing, and isolation and quarantine program
- Investment in instructional support, including everything from expanding bandwidth to in-classroom IT apparatus to improved WiFi to supporting asynchronous learning
- Physical adjustments around campus — barriers, establishing and staffing new student study spaces, reconfiguring dining facilities, renting additional space for students, etc.
- COVID-related goods and services: everything from the procurement of protective gear (masks, gloves, sanitizer) to enhanced cleaning to establishing the Public Health Ambassadors
Again, between revenue losses and costs, we estimate the overall negative impact on the budget to be approximately $300 million in 2020-2021.
This is a very large budget gap. However, by keeping in place the mitigations we established in the spring — spending restrictions (including capital project delays) and constraints on administrative and academic hiring — and by foregoing an annual merit increase (AMI) this year, we have been able to avoid the more draconian steps that a number of other universities have had to take, such as University-wide lay-offs or furloughs, eliminating or reducing retirement contributions, or a University-directed, unit-by-unit program of budget reductions (other than those cuts described in the mitigation plans above).
Moreover, even against this backdrop we have been able to make important investments in activities that are central to our mission:
- Continuing to support our research program
- Selectively investing in academic programs
- Moving forward with the high performance computing effort
- Enhancing our child care support program
- Providing extensions for PhD students in their research phase
- Making continued outlays for delivering instruction
- Using University funds to help support students ineligible for CARES Act funds
- Establishing a generous voluntary early retirement program for faculty
- Increasing funding for food insecurity
- Providing incremental resources for Student Health Services
Looking Ahead, and Our Gratitude for Your Commitment
There remains considerable uncertainty about spring 2021. The sort of “magic bullet” many hoped might be in place by spring — a vaccine or effective therapeutic — does not appear likely.
However, as Dr. Carlo Ciotoli’s and Jack Brigg’s recent communication pointed out, our health and safety protocols seem to be working effectively, and we have thus far avoided the kind of outbreaks some other universities have seen. And from a budgetary standpoint, as long as the situation does not worsen and the mitigations we have described remain in place, our budget should continue to have a “rough stability,” and we should be able to continue to avoid broad-based and drastic measures that would be more disruptive to our employees or to our academic programs. We must all remain cautious, attentive, and mindful of the many uncertainties, and disciplined in how we approach them.
None of this has been easy. This crisis has demanded a great deal of everyone. And we know that a University is so very much more than its budget.
We understand that COVID-19 has imposed many hardships on you, and exacerbated others. Many of us are stressed, or anxious, or feel tired and overworked. It makes us all the more proud to know that the progress we have made and the successes we have had are a result of working together as a community, and all the more determined to try to help where we can.
We are very grateful for all you do for NYU, and deeply indebted for the work you are doing in these tough times. Thank you for your trust and commitment; we will continue to work hard to deserve it.