Markeshia Ricks File Photo
UNH President Steven Kaplan.
At the same time he immediately agreed to help the city house firefighters and cops in student dorms amid the Covid-19 outbreak, University of New Haven President Steven Kaplan was wrestling with tough financial financial decisions on campus.
In a campus-wide email this past week, Kaplan revealed that the crisis will in the short term cost the university at least $15 million in unanticipated losses.
As a result, he announced that the university plans to tap its endorwment and institute pay and benefit cuts, among other measures.
The full text of the email follows:
From: University President Steven Kaplan
Sent: Wednesday, March 25, 2020 4:09 PM
Subject: Important Update on Budget Impact of COVID-19
Dear Colleagues, Like so many colleges and universities here in Connecticut and across the country, we at the University of New Haven have been working day and night to navigate the new realities brought on by the COVID- 19 global pandemic.
Our first priority has always been the health and safety of our students, faculty, and staff, and I know I speak for everyone in wishing the first member of our Community with a confirmed coronavirus diagnosis a swift recovery. Our second priority has been to continue as best we can the uninterrupted delivery of academic instruction to our students. I am pleased to report that thanks to the tireless work of the faculty and so many others, online and alternative coursework is underway.
The harsh reality, however, is that this health crisis is also an economic crisis, putting immense financial pressures on countless businesses and industries as well as individual households. Higher education, and the University of New Haven in particular, is not exempt.
While we will not know the full extent of the financial impact on the University for some time, we do know that it will be substantial and that we need to take action now to sustain our ability to provide a world-class education in the immediate and long-term future. I remain very hopeful that decisiveness now better assures that likelihood.
At this point, we know that the financial losses for the current fiscal year due to room and board refunds and credits will be approximately $10 million, and the likely loss of Summer I and, perhaps, Summer II revenues could reach $5 million.
The silver lining here is that, with everyone’s help, we can minimize that loss if we can teach most, if not all, of the summer courses online.
These anticipated losses are in line with a number of similarly sized universities around the state, as are the budget reductions that I outline below. Schools with larger operating margins than ours will make different levels of reductions. I am working aggressively with our Congressional delegation, the leadership at the Connecticut Conference of Independent Colleges (CCIC) and other political leaders to impress upon them the need to include higher education relief in the stimulus packages currently working their way through Congress.
Even if we are fortunate enough to get some assistance, it will not come close to closing our financial loss. Because of this I, along with my senior leadership, have made some significant decisions that I want to share with you today. These decisions, effective at least through June 30, 2020, are difficult, but they must be made now with an eye toward serving our students and, to the best of my ability, preserving employment. Each one of us will need to share the burden of ensuring our financial stability. We will fulfill our obligation to discuss this, and any proposed changes to the terms and conditions applicable to Union employees, with the appropriate Union officials as required. We will also fulfill processes to confer with faculty leadership. Therefore:
- I will be working with the Board of Governors to take the extraordinary step of utilizing a portion of our unrestricted endowment funds to help us manage through the crisis.
- Effective with the first pay in April, the University will suspend all employer contributions to the retirement plan. This will be revisited this summer, but may need to continue into the next fiscal year. Employees can continue to make contributions to the plan
- There will be no merit-based, cost of living, or faculty benchmark salary adjustments for the 2020 – 2021 fiscal year.
- As many of our sister institutions in Connecticut are doing, we will be temporarily reducing all employee pay rates and salaries effective with the first pay in April, with percentages of reduction dictated by compensation levels. All employees will retain full medical benefits and would be responsible for their share of previous salary band contributions. Employees earning less than $50,000 annually will have their pay reduced by 3%. Employees earning $50,000-$100,000 annually will have the first $50,000 reduced by 3% and the next $50,000 reduced by 5%. Employees earning $100,000-$150,000 annually will have the first $50,000 reduced by 3%; the next $50,000 reduced by 5%; and the third $50,000 reduced by 7%. Employees earning in excess of $150,000 annually will have the first $50,000 reduced by 3%; the next $50,000 reduced by 5%; the third $50,000 reduced by 7%; and all earnings beyond $150,000 reduced by 9%.
- We also recognize that the work responsibilities of some employees do not lend themselves to the new work-at-home paradigm. In response, for this group, we will be looking at temporary changes to their employee responsibilities and salaries based on a review process that will include supervisors and HR. Full medical coverage will continue for employees currently enrolled in our plan regardless of hours worked and compensation, and employees would be responsible for their share of previous salary band contributions.
- We will entertain proposals for voluntary workload reductions, whereby employees would reduce their hours, and salary, by half but still retain full medical benefits and would still be responsible for their share of previous salary band contributions. Employees also could take unpaid leave, whereby they would not be paid but would retain full medical benefits and would be responsible for their share of previous salary band contributions.
- We will substantially reduce all of our operating expenses for the balance of this year and into the next fiscal year; we have begun a program of closing buildings to save maintenance and energy costs; and we are looking at what is now required of our auxiliary services for potential savings.
- We are reducing the number and scope of capital projects for the coming year.
- All open positions will be closely reviewed and filled only on a case-by-case basis.
While I understand the uncertainty this presents is difficult, we still have work to do. We will have conversations with staff and faculty leadership next week, and I am asking supervisors to evaluate the current workloads of all employees and anticipated demands on their operations. I will communicate the specifics of the workload reduction plan soon. An FAQ page has been created for you to get additional information about these decisions. Please understand that what I have outlined may be only the beginning of difficult financial decisions we make in the short-term.
Over the longer term, we are concerned about Fall 2020 enrollments, both in terms of returning students and new first-year students. Like other institutions, it is possible that we will fall short of goals and budgets set long before the pandemic arrived. Therefore, as we become more certain about our fall numbers this summer, we will reevaluate the steps outlined above.
This is a time when we must come together in shared sacrifice as the Charger Community. My commitment to you is that we will do everything possible to restore changes to your benefits and salary at a future date. With these actions and a laser focus on our recruitment and enrollment efforts, I believe we will see a brighter future. The University of New Haven is strong and will manage through this crisis, but doing so will require all of your assistance
I wish you, your loved ones, and all in the University of New Haven community good health and a soon-to-be-restored peace.
Steven H. Kaplan, Ph.D. President
This is just the beginning of an extended collapse. The idea that a school like UNH or Quinnipiac can still charge 39K per year, or that Yale, $75K per year, in a post-corona environment and still get applicants is, well... something that remains to be demonstrated.
With 10+% unemployment, businesses shutting down, and general deflation, far fewer families will be willing or able to afford this charges or take on such massive mountains of debt. Furthermore, there will also be massive defaulting on current student loan debt, which will further discourage lending.
These prices should have never risen to this level to begin with, but were driven by a massive "belief in the economic returns of education" bubble, one that is about to pop. After all, what advantage does a college degree confer if both you and your high-school only friends are both unemployed?
Yale, I suppose, will still be able to offer its concierge services to the children of Wall Street, but it will be much harder for all the other schools.