Budget Contingencies

Boston University Office of the President 

Dr. Robert A. Brown, President
One Silber Way
Boston, Massachusetts 02215
T 617-353-2200 F 617-353-327

April 17, 2020

Dear Colleagues,

I am writing you as we conclude the fourth week of having a nearly deserted campus, with our faculty teaching and students learning remotely. I am deeply grateful for the extraordinary and sustained efforts of our faculty and staff to accomplish the transition to remote learning; I am also grateful for the goodwill that our undergraduate and graduate students have shown in swiftly adapting to this new mode of learning. We are racing to the conclusion of what I hope will be a successful semester for all.

Our Facilities and Housing staffs have worked countless hours to keep the campus functioning. We are continuing to support housing for the more than 400 undergraduates still living in residence halls. Our teams cleaned and cleared space on the Fenway Campus so we could turn that space over to the City of Boston to provide nearby housing for healthcare professionals working on the front lines of the COVID-19 epidemic.

Last week we put in place a Recovery Organization with the mission to determine what we must do to restore our full residential campus operations in the fall. To provide sufficient time and organizational bandwidth to accomplish a full recovery, we made some very difficult decisions about our summer programs. We committed to teach all courses in Summer Sessions 1 and 2 remotely and have cancelled all in-person activities on our campuses. These decisions were necessary so we would not be caught in a cycle of short-term reactions, but rather could concentrate on the systematic recovery of our residential campus operations, taking into account the uncertainties caused by COVID-19 and putting in place appropriate safeguards for the health and safety of our students, faculty, and staff. The Recovery Organization is already hard at work, with the clear aim of restoring full fall 2020 operations. It is important to note that the team is also pressure-testing our plans in scenarios in which the return to residential operations is delayed beyond fall 2020 by a resurgence of the virus.

As we all adjust to the new strange professional and personal routines thrust upon us by COVID-19, I am writing to talk about the future and the finances of Boston University. I can only tell you what we can see today. The pandemic is having significant financial impact on the University. Our current estimate for the cost (new expenses and lost revenues) for the spring 2020 semester alone is $52 million. We are able to cover this cost using contingency reserves in the Fiscal Year 2020 budget and from savings generated by our hiring freeze.

Planning for Fiscal Year 2021 is much more difficult. There is considerable uncertainty around what will be possible—and permitted—for our operations in the fall. Enrollment predictions are more challenging because we are in uncharted waters. Within the scenarios we are exploring, it is prudent for us to do everything we can to control costs.

Here is a set of actions that I am taking today with respect to our budget for the remainder of Fiscal Year 2020 and Fiscal Year 2021 (July 1, 2020–June 30, 2021):

We plan to continue the staff hiring freeze through Fiscal Year 2021 under the guidelines put in place on March 5. We expect that the funding freed up by this hiring freeze will augment our reserves, which we will use to lessen the budgetary impact of the virus. The freeze on nonessential capital and similar projects that have not yet been started will continue through Fiscal Year 2021. Exceptions must be approved by the President, University Provost, or Senior Vice President for Operations. Faculty hiring will continue in the ongoing Fiscal Year 2020 cycle. A decision about hiring in Fiscal Year 2021 will be made by September 1, 2020. We are freezing all faculty and staff salaries through Fiscal Year 2021. Promotional increases for faculty and staff are exempt from this freeze. Staff covered by collective bargaining agreements will receive the increases provided for in those agreements. For Fiscal Year 2021, University Provost Jean Morrison and I will take 20% reductions in our salaries. Deans and Vice Presidents will take a 10% reduction in their salaries for the coming fiscal year. We are asking all units to work with the Budget Office to identify discretionary spending reductions, regardless of funding source, that can be made immediately so as to preserve funds for the remainder of Fiscal Year 2020 and all of Fiscal Year 2021.

Are these actions going to be enough to see us through the disruptions in the coming year? Will we need to implement budget reductions, furloughs, and layoffs? I know these are questions on everyone’s mind. Unfortunately, it is impossible to answer these questions today. Boston University is as strong financially as it has ever been, with cash reserves and a robust budgeting process that will help us adjust to the changing environment. The actions outlined above will increase the funds we have in Fiscal Year 2021 to cover shortfalls in revenues and additional expenses caused by the epidemic and help prevent budget reductions. Over 51 percent of our expenditures are for salaries and benefits for our staff and faculty, and 20 percent of our expenses go toward financial aid. So our actions are protecting jobs and providing for our students.

The overall status of our Fiscal Year 2021 budget will only be clear when we have definitive plans for the opening of our campus and better projections for our enrollments in the summer and fall. In all likelihood, we will not have this information until June. We will make decisions as soon as possible.

This letter is not what I imagined I would be writing on an April evening in 2020, as Boston University has been flourishing as a leading research university, educating wonderful undergraduate and graduate students, and growing in recognition. The return to our path will not be without the pain of dealing with the largest public health crisis in the century and the resulting recession, but I have no doubt that we will recover our residential campus and return to our trajectory.

Please stay safe and well.

Sincerely,

Robert A. Brown President