Last month, I updated you on the work being done to address the financial impacts facing UNC as a result of COVID-19. The progress and decisions underway are guided by our mission and promise to prioritize academic excellence and protect the health and well-being of our campus community. As we plan for a different kind of fall and face new economic realities as a result of the pandemic, I want to thank you for your continued commitment to UNC and your unwavering optimism about our future throughout these uncertain times.
During our June Board of Trustees meeting, UNC projected a revenue shortfall of $24 million for this upcoming year (FY 2020-21) due to the substantial decrease in state support plus declines in enrollment and lower demand for housing and dining. While many things are still unknown related to future enrollment trends and next year’s state budget, I recognize that our financial impact could have been much greater if not for our hard work over the past two years to put our university on a more sound financial footing.
Our projected revenue shortfall will be addressed in three ways –– 1) through general fund and cash reductions of $6 million that have already been administered as a result of summer furloughs, operating expense slowdowns, seasonal utility savings, the elimination of planned salary increases, and travel restrictions; 2) identifying temporary and permanent reductions of $10 million through the work of the Financial Task Force over the summer; and 3) the use of $8 million in operating reserves.
Comprised of faculty, students, staff, and administrators, the task force has reviewed the budget and, following presentations from division heads, provided valuable input to guide decisions. Each division head then developed cost saving measures and presented their proposals to the task force in late July and the first week of August. These plans are currently being finalized.
It is important that we take time to understand and discuss these decisions. I will lead a virtual Town Hall on Tuesday, August 18 from 3-5:30 p.m., which is open to the entire campus community. Each Cabinet member will present a detailed overview of their budget reductions as well as their operational and financial plans. In addition to the presentations, we have allotted time for a question and answer session for those in attendance. The information shared will inform the amended budget that will be delivered to the Board of Trustees at the September 25 board meeting.
There are several across the board measures that I wanted to share prior to the Town Hall. To maximize cost savings, we have extended travel budget reductions, changed moving expense eligibility, and have reduced professional development funds and the central budget for search firms.
The Financial Task Force and I felt strongly that employee salaries should remain intact unless savings could not be found elsewhere. At this time, other than the 10 percent salary reduction already taken by the Cabinet, there will be no pay reductions for faculty or staff. However, should conditions worsen or change, UNC may need to reconsider this option in the future. Our financial health will be reevaluated at different touchpoints throughout the year as enrollment fluctuations, state funding, or economic recovery could change our outlook and cause us to adjust to our approach. The first checkpoint will be in early September when we review our fall enrollment numbers and our housing occupancy.
UNC will also offer an early retirement option to faculty and classified staff with 15 or more years of service. The Office of Human Resources will send details to eligible faculty and classified staff later this week with the application deadline and plan details.
We have proven our ability to overcome challenges during these past few months and years and I am confident we will get through this together, as well. UNC persists and thrives because of our resilience, ability to work collaboratively, and our strength and determination to maintain focus on our academic mission and by putting students first. I promise to keep you informed as we navigate the work of addressing these current challenges.
Rowing, Not Drifting,