BOONE — The University of North Carolina system on July 31 released a report summarizing plans submitted by institution leaders for budget cuts in the event of decreased enrollments and other potential revenue impacts due to COVID-19.
UNC system Board of Governors Chair Randall Ramsey on July 14 directed chancellors to submit plans for “worst-case” 25-50 percent budget cuts that were to be “very specific and include details of which programs will be shuttered (and) which positions will be furloughed, laid off or eliminated entirely.”
But the plans summarized in the report present a more graduated series of budget models, with seven potential scenarios ranging from 2 percent enrollment reductions up to 50 percent, with additional decreases in revenue and expenses factored into each model.
“This scenario-planning directive is an important part of our board’s responsible oversight as we continue to confront and adapt to an unprecedented and unpredictable situation,” Ramsey said in a July 17 statement. “This financial analysis gives us an essential understanding of a situation that we hope not to be facing.”
Appalachian State’s estimated revenue impact scenario begins with a baseline enrollment of 18,582 students and total revenue of $446 million, including a $150 million state appropriation, $85 million in tuition revenue and $45 million in student fee revenue. Scenario A foresees no changes to these figures.
App State last year announced its intention to increase enrollment from its fall 2019 count of 19,280 to 20,000 in fall 2020. On Aug. 10, Interim Provost Heather Norris said the current projection for fall enrollment is 19,874.
Scenario B, which reflects the impacts of social distancing restrictions, anticipates an $11 million decrease in revenues from athletics, dining and a budget line identified as “sales, services and other auxiliary.”
Scenario C1 projects a 2 percent decrease in enrollment, or 372 students, resulting in $36 million in lost revenue. Scenario C2 is a 5 percent enrollment decrease (929 students), with a $57.4 million decrease; C3 projects a 10 percent enrollment decline of 1,858 students, or $65.5 million in decreased revenue.
Scenario D, a 25 percent reduction in enrollment (4,646 students), projects a revenue loss of $89.8 million, and Scenario E, a 50 percent reduction (9,291 students), projects a $130.4 million decrease.
Under Scenarios A and B, no changes in the areas of instruction, student services and academic and institutional support are indicated in the plan submitted by Appalachian. Beginning with Scenario C1, Appalachian State administrators indicated they would rescind off-campus scholarly assignments, eliminate low-enrolled courses unless required for graduation and reorganize departments.
Beginning with Scenario C3, the university would begin to consider temporary and/or permanent reductions in faculty and administrative staff, ranging from temporary furloughs; temporary salary reductions for EHRA non-faculty employees; layoffs; retirement incentives for long-term employees; a hiring freeze on vacant non-essential positions; hiring adjuncts and lecturers to fill positions reserved for tenure-track faculty; to shifting state-funded employees to non-state sources.
Under Scenarios D and E, the university would consider further departmental reorganizations, adjusting class sizes and teaching loads, streamlining general education courses and returning the university’s lab school in Winston-Salem to the local public school district, per state approval.
Education and technology services would see no changes under Scenario A, but under Scenario B would begin depleting fund balances, delaying equipment and classroom upgrades and further reducing non-essential operating expenses. Beginning with Scenario C2, temporary furloughs, hiring freezes and departmental reorganizations could be implemented.
Scenario B responses for campus services include depleting fund balances, delaying equipment and classroom upgrades, further reducing non-essential operating expenses and reducing services and hours of operation. Temporary furloughs, salary reductions, hiring freezes or layoffs would begin to be considered with Scenario C1, along with the closure of dining facilities, elimination of parking operations and reduced payments to AppalCART.
For athletics, the plan notes the elimination of three men’s sports programs and staff furloughs implemented by the Athletics Office earlier this year under Scenarios A and B. Under C1, athletics would begin depleting fund balances, further reducing non-essential operating expenses, assessing the potential elimination of additional sports and considering further departmental reorganizations, as well as temporary and/or permanent staff and pay reductions.
In Student Affairs, reduced services and furloughs in areas where services are limited are implemented under Scenario B. Fund balance depletion and reduction of services would begin under Scenario C1. Student health, counseling and wellness services would be offered via Zoom, with in-person services available for students living off campus. Campus activities and career services would be offered in an electronic format.
Under C1, housing would have a 100 percent revenue loss, Appalachian’s plan indicates, and that division would begin depleting its fund balance and implementing furloughs.
Beginning with Scenario C2, the Student Health Center, student union and campus recreation centers would close for fall 2020, student housing would close except for students who have no other options, programming would be reduced or temporarily eliminated, and non-essential employees would be furloughed or salaries would be reduced.
During an Aug. 10 Faculty Senate meeting, Vice Chancellor for Business Affairs Paul Forte said that the scenario planning was done under the assumption that fall classes would be all online — which would result in a revenue decline from fee-supported activities if auxiliary operations were discontinued.
Forte added that the university’s enrollment was looking “fairly strong” as App State had only about 600 student cancellations. He said while officials never know exactly what will happen with enrollment, he hoped the scenario planning wouldn’t be needed. Administrators should know more about how enrollment numbers will affect funding by the middle to end of September.
Budget Committee member Jim Westerman — a professor in the Department of Management — said that he felt like the university’s response was “relatively aggressive” in terms of the consideration of faculty furloughs or layoffs in comparison to other UNC institutions.
Westerman pointed out that some institutions didn’t mention potential faculty furloughs until the 25 or 50 percent range, and others didn’t mention furloughs at all.
The university’s response differs from the Faculty Senate budget committee’s July 20 recommendations, which would have delayed the consideration of temporary faculty salary reduction furloughs until the 50 percent cut scenario, according to Westerman. He added that the committee recommended asset and property sales to offset revenue declines, which was not mentioned in the App State response.
Westerman said he hopes there will be a more collaborative approach from administration with the budget committee so that faculty voices are heard.
Kayla Lasure contributed reporting to this article.