University System of Maryland Prepares to Weather Dramatic Reductions in State Appropriations, Other Revenues
Institutional Priorities Remain Minimizing Impact on Students, Employees, and Academic Programs
Baltimore, Md. (Sept. 9, 2020) – As the COVID-19 pandemic continues to wreak havoc on the economy, the University System of Maryland (USM) and its institutions are announcing plans to deal with the negative impact on university finances. Across the USM, institutions have experienced losses in tuition and auxiliary revenues, along with increased costs associated with ensuring a safe, effective learning and working environment for students, faculty, and staff.
These reduced funding levels and increased costs have forced the System to plan steps to close a significant FY 21 budgetary gap. Depending on the USM institution, those plans could entail a reduction in both non-personnel and personnel spending. Potential actions include reductions in operating expenses, cuts to capital spending, use of reserves, hiring freezes, furloughs, temporary salary reductions, and/or layoffs. In making these decisions, USM leaders have committed to minimizing as much as possible the impact on students, employees, and academic programs.
In total, the USM projects COVID-related negative financial impacts of at least $500 million when compared against the System’s original FY 21 budget. That budget gap is in addition to the roughly $230 million in COVID-induced losses the USM experienced in FY 20, when the System refunded a portion of students’ room, board, and fees following the spring transition to remote instruction. The FY 21 deficit includes a $130 million cut to the USM’s state appropriation.
In the coming academic year, nearly every source of System revenue will fall, including federal and state funding, tuition and fees, auxiliary services, and other income. In June, the USM Board of Regents voted to freeze tuition and fees at the 2019–20 rates to help ease the financial burden on students and families.
Already, the USM and its institutions have taken steps to meet this challenge, including instituting a near-freeze on new hires, eliminating vacant positions, cutting non-personnel discretionary spending, and deferring future construction projects and maintenance of facilities.
On June 19, the USM Board of Regents voted to authorize Chancellor Jay A. Perman and the USM presidents to take additional actions to close their deficits, including the use of temporary salary reductions and employee furloughs. In considering and implementing these measures, the chancellor has reaffirmed that the System will follow established union negotiation procedures.
“A major challenge for our universities is balancing their budgets without harming their mission and without unduly hurting their employees,” Perman said. “This is extraordinarily difficult, given that COVID has already taken a heavy toll on families’ finances. Protecting faculty and staff to the extent we can is a guiding principle for us, and executive leadership Systemwide has committed to bearing a greater share of any pay cuts we have to make. As chancellor, I’ll be taking a 10 percent temporary salary reduction. Even so, I acknowledge that the size of our deficit means that, to some degree, employees will likely have to share in the pain of budget cuts.
“But the fact remains that the University System is one of Maryland’s biggest employers, supporting $3.5 billion in wages, and $285 million in state and local taxes. Our employees and the money they invest in their communities are central to the state’s economic recovery and growth. So we’re mindful that any personnel actions we take will, in turn, affect our contribution to the state’s fiscal health.”
In the coming days, the USM Office and each USM institution will communicate its own budget decisions to faculty and staff. USM leaders have not ruled out additional cuts this fiscal year and next, should updated revenue estimates require them.
“We understand what a painful and truly unprecedented time this is in higher education. The pandemic’s impact on the economy is felt in every state,” said USM Board of Regents Chair Linda Gooden. “The board embraces the hard work and diligent planning of USM Office leadership in collaboration with the presidents and budget leaders at all of our campuses.
“Our goal remains to respond to the budget shortfall in a manner that preserves the System’s educational goals for the students we serve, while minimizing any hardship on our employees,” Gooden said.
The USM comprises 12 institutions: Bowie State University; Coppin State University; Frostburg State University; Salisbury University; Towson University; the University of Baltimore; the University of Maryland, Baltimore; the University of Maryland, Baltimore County; the University of Maryland Center for Environmental Science; the University of Maryland, College Park; the University of Maryland Eastern Shore; and the University of Maryland Global Campus. The USM also includes three regional centers—the Universities at Shady Grove, the University System of Maryland at Hagerstown, and the University System of Maryland at Southern Maryland—at which USM universities offer upper-division undergraduate and graduate courses.
Systemwide, student enrollment exceeds 172,000. The USM and its institutions compete successfully nearly $1.5 billion in external grants and contracts annually. USM institutions and programs are among the nation's best in quality and value according to several national rankings. To learn more about the University System of Maryland, visit www.usmd.edu.
Contact: Mike Lurie