Taking Stock – The Impact of COVID-19 and Looking to the Future
Date: April 27, 2020
TO: The NYU Community
FROM: Andrew Hamilton, President; Katherine Fleming, Provost; and Martin Dorph, Executive Vice President
Dear faculty, students, administrators, and staff,
This has been quite a semester. It was only late January when we first announced a delay in the start of classes at NYU Shanghai; now, without precedent, our entire University is operating remotely.
We hope you, your family, and your friends and loved ones are safe and well. Few of us will be untouched by the disease before circumstances allow us to be together again. Your well-being is rarely far from our thoughts.
Customarily, we issue an annual budget message in late April or early May. But what has transpired since the beginning of the semester and what may yet come represent the most serious financial damage to NYU in nearly 50 years. Costs related to the current semester already approach $100 million, the potential revenue shortfall for the summer could be as much as $150 million more, and we are concerned that if there are revenue losses in the fall and beyond, they could exceed these amounts.
Now is a moment to take stock of the virus' impact on the University, the principles by which we will continue to be guided, the direction of our future planning, and the uncertainties we still face.
Support For The NYU Community And Financial Impacts
We have sought to support the NYU community and our academic mission and to act equitably; yet those actions have resulted in substantial additional unforeseen expenses.
Among the $100 million in expenses in spring 2020, the housing and meal refunds alone cost some $60 million; in addition, we refunded numerous school- and course-based fees. Financial assistance to help students return home from Study Away cost nearly $3 million. We have provided $4 million in emergency aid to students at our New York campus in the last few weeks. And we know these costs represent only the past few months’ costs and revenue losses, and they are only the start of costs associated with COVID-19.
We have also spent funds to double our internet capacity; committed to covering the costs of coronavirus testing and unlimited sick leave for those infected; and offered 90-day rent abatements to those small mom-and-pop businesses that lease space in our buildings.
We have taken these steps even as we have continued to keep all NYU employees at their full pay and full benefits; maintained financial aid to students; continued to pay the vendors who provide goods and services to us; assured that the employees of our major service contractors (dining, bookstore, and cleaning and housekeeping) are employed or otherwise economically supported; offered several of our residence halls rent-free to front-line medical personnel; and made donations of protective equipment to medical workers from our schools and labs.
To be clear: the costs we are incurring and revenues we are foregoing are not sustainable over the long run, or even the short run. NYU is considerably more dependent on annual revenues from tuition, fees, housing, and meal plans to sustain a balanced budget than many of our academic peers, which have far larger endowments* (relative to their size) that contribute a great deal more to their budgets.
NYU is an academic institution, not a business. However, being an academic institution does not immunize the University from financial reality – we have to be sure that we address the risks and provide the resources to continue to fulfill our mission.
*A note on NYU’s endowment: While in absolute dollars NYU’s endowment is 26th in the US, in per-student terms it ranks about 180th. For the most part, funds in the endowment cannot be used to resolve revenue shortfalls, both because most of the funds are restricted (i.e., legally designated for specific purposes by donors) and because the endowment is not a “rainy day account;” rather, it must be managed as a perpetual source of support for fulfilling NYU’s academic mission, both now and in the future.
Looking to the Future – Our Plans and Next Steps Amid the Attendant Uncertainties
We must make decisions based on our best assumptions in an atmosphere of considerable uncertainty.
Summer Session and Summer Housing
Last week we announced that both summer sessions would be conducted remotely. We will not make student housing – which is usually filled in the summer – available before the fall semester.
Typically, revenues from summer activities account for approximately $200 million of our annual budget; this year, they are at considerable risk.
University Administrative and Business Operations
Currently, the State's "NY on Pause" Executive Order is scheduled to be lifted on May 15. Even if it were to end as planned, NYU will need to proceed carefully, and we estimate that administrative and business units will likely continue to operate remotely into the summer.
Student Summer Employment
We are still assessing the need for summer student workers. Based on the anticipated reduction in summer activities, there will be substantially fewer student summer positions available. The only student summer positions that may be filled are those that help support our essential services. As we conduct our planning and review processes, additional information will be forthcoming.
NYU is proceeding on the basis that it will resume in-person operations in New York City for the fall semester, cognizant though we are of challenges and changed circumstances caused by the coronavirus.
There is considerable unpredictability, including likely impediments to travel to New York or other destinations for some NYU community members. So we have teams doing contingency planning to take account of these other prospects, too. NYU is committed to ensuring the education continuity of all students enrolled next fall, and will offer a flexible and robust array of options to students such that they can feel confident that the University will continue to deliver high quality academic instruction, no matter the circumstances.
NYU Abu Dhabi and NYU Shanghai are closely coordinating with our New York campus; however, they are each in different local circumstances and will make decisions about fall accordingly.
The Principles That Guide Us, and the Steps We Plan to Take
The health and safety of the NYU community remain overriding priorities. Other core goals include fulfilling our responsibilities to our students and our research enterprise; maintaining our program of financial aid; retaining our outstanding faculty and other dedicated employees; resuming normal operations as soon as safely possible; and ensuring the long-term stability of the University.
To preserve resources in the face of great costs and revenue uncertainties and to fulfill our core academic mission, for the 2020-2021 budget the University is planning:
- For a 0% salary increase (annual merit increase (AMI)) for all employees, other than where required by contracts or supported by promotions, subject to review and conditioned on circumstances;
- To continue the hiring freeze we have already put in place;
- To maintain the ban on all non-essential spending; and,
- To consider dividing up responsibilities differently to make sure we maintain a high level of service because some people may be working in person, and others will continue to telework.
We are hopeful that these steps we will be taking will provide a sufficient cushion to see us through this profoundly unsettled moment without doing anything to jeopardize our ability to retain our dedicated employees and maintain our staffing. Still, we would be irresponsible if we did not inform you all of the possibility that certain severe budgetary outcomes might require that we consider more serious actions, such as reductions in work hours, furloughs, or lay-offs.
In the coming days, in addition to the work being done by the contingency planning teams, the Provost and Executive Vice President's Offices will be working with schools and administrative units to discuss these steps and additional savings that can safeguard our core mission. We shall continue to keep you updated.
There is nothing wrong in hoping that things will get better soon, and that we will not have to face some of the sharper challenges that confront us. NYU Shanghai, where we took our first actions in response to the coronavirus, will start slowly welcoming seniors back next week. And NYU Abu Dhabi has been able to keep most of its students, faculty, and staff on campus. Nevertheless, it would be wrong if we did not collectively prepare for the possibility that the campus in New York has not returned to something like normal by the fall.
We thank you for your ongoing commitment to NYU, your adaptability, your professionalism, and your steadfastness. Together we shall see this through.