Facing $96M Shortfall, President Brown Announces Layoffs, Furloughs
Decision comes after operational cuts reduced expenses by $164 million
After cuts to operational expenses reduced a $264 million revenue shortfall by more than half, BU President Robert A. Brown announced Monday, a remaining budget hole of nearly $100 million has forced him to “reduce budgets in our academic and administrative units.”
Brown said in a letter to faculty and staff that he anticipated that 250 employees, at the most, will be laid off or furloughed (furloughed employees would maintain their benefits). The decision comes, he said, after approximately 200 vacant positions had been either eliminated or deferred in a further cost-saving measure. All of the budget cuts are a direct result of the financial impact the global COVID-19 pandemic has had on the University’s revenues and expenses.
There is the possibility that in the coming weeks some employees who are furloughed could be moved into other jobs that are focused on the University’s efforts to create a safe and healthy campus environment for the fall return of students, or other opportunities that surface across BU. Employees will be told individually sometime in July, but the exact timing remains unclear.
“As challenging as these decisions are,” said Brown, “our top priority is to treat every employee with dignity and respect consistent with the values of Boston University.”
I feel it is best to share the realities of our financial situation and to err on the side of transparency with you.
In his letter, Brown outlined various operational steps the University took before turning, as a last resort, to employee layoffs and furloughs—steps that he said decreased expenses by $168 million. He said reserve funds and budget contingencies were all used to reduce the shortfall. Salaries of faculty and staff were frozen, and the salaries of BU’s most senior executives were reduced by 10 to 20 percent. Also, BU’s contributions to employee retirement funds were frozen. Even with those reductions, however, Brown said the fiscal year 2021 budget still had a $96 million gap that had to be closed.
“At this moment, I feel it is best to share the realities of our financial situation and to err on the side of transparency with you.”
The president acknowledged in his letter that the fallout from COVID-19 could mean further budget cuts might still be necessary.
“I must reiterate the considerable uncertainty that still exists relative to what our enrollments will be in the fall, and thus, what actual revenue and expenses will be, compared to our revised budget,” he wrote.
Brown said there are some positive signs to point to for the coming fall semester: deposits from students for almost all of BU’s undergraduate and graduate programs are strong, but it’s unclear whether students will choose to attend—or will be able to attend depending on their personal circumstances. “This is especially true for our international students, for whom obtaining visas is not yet possible,” he wrote.
The Learn from Anywhere (LfA) learning model that BU is implementing, which will allow students the flexibility to learn from home or return to campus, will be critical to accommodating both the needs of students who come back to campus and require Housing and Dining and other services, and those students who choose to study remotely.
Brown wrote that the initial $264 million revenue shortfall BU faced this spring equaled about 16 percent of University expenditures—not including expenses connected to research or financial aid or debt service, none of which can be reduced.
“We have a budget, although not quite in balance, that is a good starting point for beginning the fiscal year on July 1,” Brown wrote. “We are all working and living with extraordinarily difficult circumstances as we attempt to define a new normal with COVID-19 in our midst.”