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The University of Kentucky campus in 2013. Photographer: Andy Lyons/Getty
Bloomburg
Public Colleges Face Gut Punch From States’ Covid Deficits
Enrollment seen declining anywhere from 5% to 20%, Fitch says
University of Kentucky expects a 16% decline for fall semester
By Emmy Lucas
August 4, 2020
America’s public colleges and universities are facing one of their
toughest financial challenges ever as the economic collapse hammers
state tax collections and tens of thousands of students opt to wait out
the pandemic or study online.
With the recession ravaging the finances of millions of American
families, as well as students balking at the risk of heading back to
campus and fewer arriving from overseas, public college administrators
say they expect enrollment to plummet this fall. Traditional revenue
sources such as housing and dining -- even collegiate sports like
football, a cash cow -- have all been upended, while the colleges take
on staggering costs to conform campuses to social distancing and
provide new technology for virtual classrooms.
At the same time, states are being forced to slash subsidies for higher
education as record budget deficits mount and the prospect for massive
federal help dims. That’s adding to the financial pressure colleges
were already contending with due to rising tuition costs and stagnant
enrollment.
“As states continue to feel immense financial pressures, we worry
greatly the burden may be disproportionately felt by public higher
education,” said Craig Lindwarm, vice president for government affairs
at the Association of Public and Land Grant Universities.
Even with the fall semester poised to start, the outlook is uncertain,
with some schools refining their plans as the number of cases soars far
above what they’d initially hoped for and the testing remains in some
places dogged by bottlenecks and delays. Fitch Ratings in June had
estimated fall enrollment could drop between 5% and 20%.
California lawmakers in June slashed spending on higher education by
$1.7 billion, causing a 12% cut to the University of California’s
budget for fiscal 2021. The system’s flagship campus in Berkeley said
Covid left the school $340 million short of its budget projection, a
dramatic turnaround from when it had expected a $60 million surplus a
year ago. School officials recently were forced to say they may not be
able to open for a fall semester after fraternity parties led to a jump
in covid cases.
Ohio reduced funding for the state’s public colleges and universities
by $110 million in May, according to Governor Mike DeWine’s office. The
University of Kentucky estimates it will see about a 16% decline in
freshman enrollment this fall. The school is facing a $72 million
shortfall.
The federal government’s more than $2 trillion stimulus package
provided states with some help with the costs of responding to
Covid-19, including about $14 billion for emergency relief for higher
education institutions. But lobbyist groups like the APLU say it is not
enough.
“As a public institution, we do really hope that the states see
funding,” said Angie Martin, vice president for financial planning and
chief budget officer at the University of Kentucky. “If not, it could
be a real double whammy for us because we are also incurring a lot of
costs right now.”
“We’ve budgeted conservatively,” said Martin. “The storm has not
cleared, and a lot of it is going to depend on what the federal
government does.”
The Board of Trustees at the University of Akron, a 20,000 student
campus that’s part of the University System of Ohio, had to eliminate
178 faculty and staff positions as part of its need to cut $65 million
from its $325 million budget. With about 60% of the budget being
personnel, the layoff is expected to save $16.4 million -- or 5% -- of
its budget. The school has said freshman enrollment could be off by as
much as 20%.
“We looked at every possible financial scenario before we did this,”
said University of Akron President Gary Miller. “We consulted pretty
widely with the union and various shared governance groups, and it was
just very clear that we really had to do this. And we had to do this
right now because the university does not have the financial reserves
to wait this out.”
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