President's Message on Sustaining Our Mission
President Pinto discusses budget implications of COVID-19 crisis
Thank you for your extraordinary leadership in keeping our beloved institution running strong throughout this unimaginable crisis. I am both humbled and inspired by your courage and commitment. You have proven, time and again, our Bearcats family will persevere.
Now we must rise up again, united and determined, to tackle the financial challenges associated with this pandemic. I write to ask for your help and support. Unless we take decisive action now, we risk having a decidedly more dire situation down the road.
Let me offer some context. While our institution is stable, the world around us is reeling. This crisis has ushered in one of the most perilous economic periods in recent history. During the Great Recession of 2008, roughly 9 million jobs were lost over a two-year period. Only one month into this outbreak, nearly 22 million Americans have filed for unemployment benefits. The comparison is unsettling, to say the least.
At the state level, Governor DeWine has issued a freeze on hiring, pay increases and new contracts. He also ordered all state agencies to reduce their budgets by 20 percent for this fiscal year (FY20) and next (FY21). At the local level, Mayor Cranley furloughed 1,650 city employees, while the County has asked departments for 20 percent reductions. In the private sector, cost-cutting measures are more aggressive.
For UC, the financial impact is mounting. The necessary steps we took to safeguard our campus, while fulfilling our academic mission and fully maintaining our employee base and benefits, resulted in substantially less revenue and more expense, both unplanned. Meanwhile, given the State’s predicament, we are bracing for a major cut to our subsidy in the current fiscal year. Taken together, we estimate our shortage in FY20 to be $47 million and growing.
Looking ahead, if our FY21 state subsidy is reduced by 20 percent, another $42 million would be added to our shortfall. We also know our College of Medicine is experiencing significant declines in clinical revenue as a result of this economic paralysis. Furthermore, we anticipate our students, both current and future, will have greater financial need in the semesters ahead. We are also planning for potential declines in philanthropy and endowment returns. Meanwhile, we should hang a question mark on the viability of maintaining current levels of federal research funding given macro-economic trends. All in all, there is no doubt we face challenging times ahead.
Before sharing the strategies we will pursue in the near term, let me address an issue that is top of mind for our community. Layoffs, furloughs and pay cuts. Truly, I wish I could promise you that none will happen. Nothing would please me more than providing you such surety in a strikingly unsure time. But the truth is more complex. None of us have a good read on the breadth, depth and duration of this economic upheaval. Without more data and deliberations, I cannot say with integrity what additional steps may be needed beyond those below. What I can say is this: If layoffs, furloughs and pay cuts are necessary, we will do all we can to help those affected.
UC’s leadership team recognizes the gravity of this situation. I am pleased to report the provost, deans, vice presidents and vice provosts, in addition to several administrators, have voluntarily agreed to join me in taking a 10% reduction in pay for the remainder of this fiscal year and all of next.
Immediate plans to improve the University’s financial position also include:
Hiring Freeze: We are implementing a university-wide hiring freeze for faculty, staff and student positions. For open searches, unless an offer is finalized and a start date set, the process will conclude immediately. Exceptions may occur for essential personnel in key academic and research areas as well as support services. Requests for exemptions must be made in writing to the Executive Vice President for Academic Affairs and Provost or to the Senior Vice President for Administration and Finance. This action does not overrule collective bargaining agreements.
Salary Freeze: We are eliminating bonus payments in FY20 and FY21. Additionally, we are planning for no salary increases for unrepresented staff in FY21.
Spending: We are asking all leaders to strictly limit spending for the remainder of FY20. Only essential expenses should be incurred during this time. For FY21, we will provide direction and details on targeted reductions to discretionary spending in specific areas (e.g., meals, events, supplies, memberships, etc.).
Travel: We continue to abide by national and/or state guidelines on travel restrictions. When safe travel resumes, we are asking for your help and support in limiting university-sponsored travel to essential purposes—such as academic courses, scholarly pursuits, research endeavors, outreach programs, competitions and essential university business. Exceptions must be approved by the appropriate dean, vice president or unit leader.
Reserves: We are pursuing a more centralized approach for managing cash reserves. For FY20, any spending of cash reserves (planned or otherwise) must be approved by the Executive Vice President for Academic Affairs and Provost or the Senior Vice President for Administration and Finance. We will provide further guidance for FY21 planning in the weeks ahead.
Capital Projects: We are examining the necessity of capital projects in progress across the institution. Where appropriate, we will modify our efforts to provide greater flexibility and liquidity. Moving forward, no new capital projects will be approved until further notice.
Please note additional steps may be needed in the weeks and months ahead to further secure the University’s financial footing. We will keep you engaged every step of the way.
I realize these actions directly impact your lives and your livelihoods. But please know this: Your sacrifices for this great institution will make it even greater. Having devoted 29 years of my career to UC, I can tell you my heart and soul belong to this place. I feel a calling to see it thrive, no matter the storm. With strength in unity, I truly believe we can position UC to have a bigger, bolder impact on the new era that awaits us.
Neville G. Pinto
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