UA to Slash Budget by $30 Million to Counter Drop in Enrollment, COVID-19 Costs
The University of Alabama will slash its 2021 budget by $30 million to offset increased expenses caused by the COVID-19 coronavirus pandemic and an expected drop in undergraduate enrollment, according to documents obtained by Townsquare Media Tuscaloosa.
The cuts will not result in any layoffs but will affect all colleges and units at the University.
Dr. Rona Donahoe, the president of UA's Faculty Senate, wrote in a July 16th email to University faculty that 30 percent of the institution's revenue comes from out-of-state tuition enrollment -- around $180 million.
In a previous statement, the University of Alabama said "fall enrollment numbers won’t be available until September. Early indicators are very positive, and our admissions staff is working hard to communicate with many prospective students who are expected to make UA home."
A July 7th interoffice memo sent by two senior administrators to Donahoe, though, went over scenarios predicting a decrease in out-of-state undergraduate enrollment between 3.7 percent and 8.5 percent, which would mean a loss of between $6.7 million and $15.3 million. None of these numbers are final and all are subject to change.
The memo was written by Provost for Academic Affairs Dr. Kevin Whitaker and Vice President for the Division of Finance and Operations Matthew Fajack.
"Fall enrollment is looking better than we were expecting two months ago," Whitaker and Fajack wrote. "However, it is clear the university will have a decrease in out-of-state students whose tuition represents 30% of the university’s revenues."
"Any impact the Pandemic has on student enrollment will have a significant impact on University finances," Donahoe said in her July 16th email.
The University's response to the pandemic is also extremely costly, she said, amplifying the need for the budget cuts.
"The University has seen significant increases in expenses due to social distancing accommodations and increased technology in classrooms, expenses related to testing and exposure notification, the preparation of isolation space for students testing positive to COVID-19, and furnishing PPE, hand sanitizer, and cleaning supplies," Donahoe said. "At the same time, income from University endowments and returns from working capital that help fund UA operations have been down."
In response to all those factors, the University will immediately implement a 5 percent, $30 million budget cut. Donahoe said miscellaneous strategic cuts will cover $7 million and a 35 percent reduction of travel expenses will take care of another $5 million.
The remaining $18 million must be cut from the University's individual colleges, she wrote.
"The colleges have been instructed to make a 3.3% reduction in their budgets," Donahoe wrote. "How each college/unit implements the necessary reductions has been left to the deans, as long as the cuts abide by three rules: (1) All budget cuts must be recurring costs, not taken from reserves; (2) Current employees cannot be laid off; and (3) The impact of budget cuts cannot disproportionately affect lower-paid workers."
Donahoe said the $30 million cut is part of a "realistic and appropriate" financial plan, but warned that unanticipated changes could disrupt things further and that she would be in touch with faculty if and when such changes arose.
Donahoe acknowledged the stress the cuts will put on University faculty, but said that as of Thursday, the administration is not looking at cutting any of its staff.
"At this time, the University is not considering any furloughs, layoffs or salary cuts," she wrote. "President Bell’s priority is to protect current UA employee positions and salaries."
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