UWM faces unprecedented challenges as a result of the COVID-19 pandemic. The top priority is the health and safety of students, faculty and staff while planning fall classes, ramping up research activities and continuing to engage meaningfully with the community.
But the pandemic also has had a major impact on UWM’s budget, which will require difficult decisions in the months ahead. Here is an update on the current financial situation as the start of the Fall 2020 semester nears.
For the fiscal year that ended on June 30, UWM has been anticipating an operating deficit of $15 million to $18 million, based on the net impact of pre-COVID-19 enrollment declines, COVID-19 refunds and expenses, and the state budget lapse at the end of the fiscal year. Very recent end-of-year information suggests that reductions to spending in the final quarter were larger than expected, such that this anticipated deficit may be reduced significantly. Final results for FY 2020 will be shared when available.
For the 2020-21 fiscal year, which started on July 1, we anticipate a net loss for the academic and non-auxiliary administrative units of $25 million to $54 million, without considering measures to cut costs. These units are funded mostly by tuition and state support.
We currently estimate an overall decline in enrollment of 5% to 10% for Fall 2020 compared to the previous fall, which will result in a reduction of tuition revenue.
In addition, the state announced a $250 million state spending cut last month, and UWM’s anticipated portion amounts to a 7.5% cut in state appropriations. UWM had anticipated additional reductions in state appropriations in FY 2021, so the latest spending cut has been accounted for in our planning. The state could increase that cut in the future, before the fiscal year is over.
Other factors affecting UWM’s budget include:
- Expenses for personal protective equipment, supplies and other health and safety measures related to COVID-19.
- Fewer students living in University Housing as we reduced capacity during the pandemic. As of July 29, we anticipate residence halls being at about 60% capacity in the fall. A smaller housing population means fewer students using dining and transportation services, reducing overall auxiliary revenues.
The university announced early in July a $25 million cut in academic and administrative expenses for the 2020-21 fiscal year. University-wide actions that started in the spring, such as furloughs and hiring and travel freezes, will help get UWM to that goal.
In addition, every school, college and division has been assigned a portion of the cut and asked to contribute savings from such things as reducing supplies and expenses, leaving vacancies open and instituting additional furloughs. Divisions may also consider layoffs where a permanent reduction in staff is needed, although the preference would be to shrink the workforce through attrition if budgetary savings can be achieved through other means.
For more information on the university’s financial situation, please view Vice Chancellor Robin Van Harpen’s remarks during the July 29 town hall for faculty and staff. Chancellor Mark Mone also detailed some of UWM’s budget issues in a campus update last month.