Statement by USM Chancellor Jay A. Perman on the Impact of COVID-19 on the University System Budget
Baltimore, Md. (May 27, 2020) -- The COVID-19 pandemic has had a devastating impact on our state and national economies. The University System of Maryland (USM) is among virtually every organization, public and private, undertaking difficult decisions in the face of this financial crisis.
There’s no doubt that budget cuts across the USM will be necessary. There’s no doubt that some of them will be painful. But the University System is committed to protecting our faculty and staff, to the extent possible, and using every other cost-cutting mechanism available to us to close our deficit before implementing personnel actions.
The USM sustained sizeable losses this spring, with our transition to remote learning and the subsequent refunding of a portion of students’ room, board, and fees. Research grants and other income also shrank significantly. Going forward, we anticipate that every source of revenue will be depressed: state funding; federal funding, including grants and contracts; tuition and fees; auxiliary services, such as housing, dining, and athletics; patient care; events and conferences; philanthropic support; and investment income.
Moreover, as we plan for a return to campus this fall, our institutions must modify their operations to safeguard their students and employees. The changes they’ll have to implement will be costly—for instance, safely distancing students from one another, standing up a COVID monitoring and testing program, providing sufficient personal protective equipment, accommodating increased demand for student health services, thoroughly and frequently cleaning campus buildings and adapting them to provide additional safety.
These challenges are daunting, but the USM does have a portfolio of options to offset some of these losses. Our USM institutions have stopped or greatly reduced new hiring. Additionally, we’re counseling universities to examine all vacant positions to determine whether those positions might be eliminated. We’re cutting non-personnel discretionary spending. And we’re reducing the amount of money we put aside to fund future construction projects and to maintain our existing facilities. We believe we can implement these measures without hurting our people, our operations, or our mission.
We do predict, however, that these tools, taken together, will be unlikely to spare all personnel actions. We expect that universities will need to enact furloughs and/or layoffs, and given the diversity of our institutions, and the fact that their financial positions are not uniform, we expect that some universities will need to rely on personnel actions more heavily than others.
Without question, this crisis and its impacts on the USM are unpredictable, and our financial forecast remains dependent on assumptions and on external factors beyond our control. For instance, several of our institutions are in counties that are still under mandatory stay-at-home orders. If these campuses cannot welcome students back in the fall, that changes their financial positions significantly. We also cannot rule out the possibility of future cuts to our state appropriation.
We understand that our USM employees are eager to know whether they’ll have to share the burden of budget cuts. Each of our institutions will communicate further with faculty and staff as soon as leaders have a better understanding of their particular circumstances—a fuller picture of the budget gap they must close, and the tools they have available for doing so.
As these decisions are made, I pledge that we will balance our obligation to steward our finances responsibly with our commitment to limit the impact that our people must absorb. I promise that we will uphold quality and innovation in our education, research, and service. I promise that the USM, its people, and its work will be a source of strength for Maryland and a key driver of the state’s economic recovery.
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Contact: Mike Lurie