The University of Kansas faces a loss of at least $120 million as a result of the coronavirus pandemic, nearly 26% of its general use operating budget, Chancellor Douglas Girod said in a statement Thursday.
There are still a number of unknowns, Girod said, but the Lawrence and Edwards campuses will face a revenue loss of at least $120 million for fiscal year 2021, which is 25.9% of the total general use operating budget.
“I share this sobering assessment to contextualize the hard decisions we need to make,” Girod said in the statement. “As I have said before, all options must be on the table for KU to manage through this.”
This figure accounts for losses in areas such as parking, housing, dining, research and fee services.
If on-campus operations cannot resume in fall 2020, the projected losses will be significantly larger, Girod said in the statement.
The University needs to adopt new business models, reorganize, streamline and cut programs and implement long-term cost reductions to address these challenges, the statement said.
Girod said the University remains committed to paying employees through the end of the fiscal year, but “painful cost-saving measures” will likely need to be initiated this summer for the new fiscal year. Kansas Athletics and the Kansas Memorial Union have already enacted furloughs and salary reductions.
These changes could include sweeping vacant position budgets, utilizing budget reserves and maintaining the existing hiring freeze.
The University of Kansas dropped to negative outlook in the most recent S&P Global Ratings report due to the projected economic impact of the new coronavirus.
“As we work toward these decisions, we will prioritize core functions and seek to protect our most vulnerable populations to the greatest extent possible,” Girod said.
It is currently unknown whether state funding will be decreased, whether the University could receive additional federal stimulus money, or how the pandemic will impact enrollment. Girod told the Kansas Board of Regents Thursday morning that the University anticipates an enrollment drop of nearly 10% for fall 2020.
“This is a gut punch for our students, faculty and staff across the entire higher education system,” tweeted Kansas Rep. Brandon Woodard, a Lenexa Democrat who also works for KU Endowment.
University leadership already took a nearly 10% cut to their salaries over a six-month period — a move that’s estimated to save around $573,000 to be reallocated for urgent needs.
And it’s not the first time within the past two years the University has grappled with a serious economic shortfall. Throughout Interim Provost Carl Lejuez’s tenure, the University had to reduce its budget by $20 million. It also led the University to roll out a new budget model.
Higher education across the United States is projected to face high financial pressures as a result of the new coronavirus pandemic. The University was one of several that had a financial outlook downgraded from “stable” to “negative,” from a S&P Global Ratings report.
Chancellor Douglas Girod told members of the Kansas Board of Regents the University of Kansas anticipates a nearly 10% decrease in enrollment for the fall 2020 semester.
“We expect to see stressed operating budgets, the scope of which will ultimately be determined by the magnitude of lost revenues, the duration of the pandemic, fall 2020 mode of instruction, and ultimate enrollment figures,” according to the report.
Girod said an update on the plan will come no later than the middle of June.
“There is much work to be done during the summer, and I know I can count on your effort and participation in addressing fiscal recovery, planning for the fall semester, and designing the KU of the future,” Girod said. “With your help, I am confident KU will manage through this crisis, and I am grateful for your dedication to our university."