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EMU Announces 'Difficult First Steps' Making Several Budget Reductions Due To COVID-19 Crisis

Apr 29, 2020

EMU President James Smith
Credit Eastern Michigan University

Eastern Michigan University President Dr. Jim Smith announced what he called “significant budget reductions to address economic losses due to the COVID-19 crisis.”


Saying the impact of lost revenue is already significant and with the uncertainty of returning to any type of normal operations, they have to plan for a challenging road ahead.

Included in the cuts at Eastern, the University's senior leadership will take a 7 percent salary reduction, and all university travel is frozen until further notice.

Capital projects are being suspended or delayed, and non-bargained for staff will not receive a salary increase in the next fiscal year.

The EMU president said, "While these are difficult first steps… They cannot be the last.”

EMU President James Smith's Statement:

To Eastern Michigan University faculty and staff:

Universities, state and local governments, and businesses across Michigan and the nation are implementing unplanned and significant budget reductions to address the serious disruption of standard operations due to the COVID-19 crisis. While none of the institutions I listed above want to enact such measures, the economic circumstances of the current situation make them unavoidable.

We at Eastern Michigan University are not exempt from these issues. The impact of lost revenue is already significant and, with the uncertainty of returning to any sort of normal operations, we have to plan, and adjust, for a challenging road ahead.

Before I detail specific actions we are enacting and the planning underway for future operations and cost savings, it is important to know the lay of the land prior to mid-March, when the COVID-19 crisis hit Michigan full force and disrupted the entire state and our University operations. 

Enrollment projections for fall 2020 were very positive – applications were up 20 percent year-to year. Undergraduate and graduate numbers were both trending strong. Financially, the University was in a significantly better operating position than we were in previous years.

This improved financial picture was the result of our turnaround plan, which represented a significant commitment over the last several years to cost containment and repositioning our operations to restore financial stability. As I outlined in my State of the University address in October 2019, the turnaround plan included budget cuts, early retirement incentives, and new initiatives to reduce costs and increase investment with the help of outside partners. These efforts succeeded in doubling our unrestricted reserves and turned seven years of deficits to balanced operating returns in FY 18 and FY 19, and, as I indicated, we were on our way to another positive year in FY20.

As has been the case for every university in the nation, that situation changed drastically, and quickly.

As an example, take a look at one operating area alone -- Auxiliaries. The revenue loss in Auxiliaries this year is $6 million. This doesn’t begin to project what those losses may look like if the current distancing directives extend into the summer and the next fiscal year. This exemplifies a single area of operations and does not begin to project the added impact on revenue of changing enrollment patterns and state funding models.

As a result of the direct budgetary impact already identified, and the uncertainty surrounding future revenue, we are compelled to take significant actions to further reduce expenses.

I am announcing the first of these actions today:

·      The University’s senior leadership team that reports to me will take a 7 percent salary reduction. This reduction takes effect the next pay period, beginning Friday, May 1, and will continue until further notice.

·      All University travel is frozen until further notice.

 

·      Capital projects are being suspended or delayed, other than those prioritized.

 

 ·     Non-bargained for staff will not receive a salary increase in FY21.

 

While these are difficult first steps, they cannot be the last. The University’s leadership team is identifying other budget reduction plans that will involve both SS&M reductions and additional personnel savings. We will continue to work closely with our labor partners as we address these difficult issues and determine next steps moving forward. It is my promise and commitment to share information with you in the days ahead.

It is also my promise to you that we will work to treat people fairly and with respect as we proceed through this process. Our people are what make Eastern Michigan University the great institution it has been for 170 years.

As I have stated from the beginning of this crisis, the resilience of our community has never been as evident as it is today. While these actions will be difficult, I know that we all understand their importance and necessity.

With deep appreciation,

James Smith, Ph.D.

President

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