Campus budget update

Dear Colleagues:

Over the past five months, the University at Albany has been tested like never before, and we are very proud that our community has risen to the occasion with creativity, compassion, and patience. Through it all, our top priority has been to support the delivery of excellent education, research/scholarship, and student services, with a clear focus on the health and safety of our campus community—and we have a very robust plan to achieve this.

However, there is another challenge that we must face together.

Before COVID-19, we were working to close a small, but manageable structural deficit in our budget. However, like so many institutions across the country, the pandemic has severely escalated our financial challenges. Assuming no further major adverse financial impacts, we anticipate a $59 million operating deficit this year. We can reduce the impact of this deficit using our cash reserves, but will need to reduce our spending because we do not have adequate cash to cover the entire deficit. A number of factors contribute to this deficit, as follows:
 

Undergraduate Enrollment: As a result of extraordinary efforts to recruit and retain undergraduate students, we have come within 2% of our enrollment target of 13,396. Moreover, our first- to second-year student retention rate is at 83.2%—up four percentage points from last year—which would have been a phenomenal accomplishment even in a typical year. This additional retention generated an additional $1.0 million. First-year and new transfer in-state enrollments are higher than we anticipated a few months ago. However, we are still 8% below our overall undergraduate target for new students and transfers, resulting in the loss of about $2.1 million in revenue. In addition, we budgeted based on an anticipated modest tuition increase—the cancellation of which represents a $3 million budget hit. 

Graduate Enrollment: We are very pleased to report that our investments in graduate scholarships, increased stipends, and marketing have paid significant dividends. We have exceeded our graduate target of 4,296 students by 4.6%, generating $1.0 million in additional revenue relative to our budget. This is a strong statement about our faculty, research, scholarship, and overall reputation. In fact, graduate enrollments are the highest they have been since 2013.

Student mix: The national conversation regarding international immigration as well as restrictions placed by the federal government on travel and visas over the past few years, coupled with COVID-19, has resulted in a significant decrease in the number of international students. The pandemic has also impacted our out-of-state enrollments. Consequently, this year we are seeing a 13% drop in out-of-state and a 47% decrease in international students. This represents a tremendous loss for our campus diversity, as well as creating a $4.8 million shortfall.

Fees: The reduction in enrollment, combined with less-than-budgeted inflationary increases, has resulted in a decline in revenue of $1.0 million dollars. We also elected to reduce the Athletics fee to reflect the deferment of fall sports, a loss of $1.2 million.

Housing:  The number of students living on campus this fall is approximately 4,000—or 56% of capacity. The lost housing revenue is $29.2 million relative to what we planned for in our budget. The significant decline in on-campus student residents will also impact other operations (e.g., dining, retail, parking, etc.) where reduced fees will result in additional losses.

State support: We have been informed to expect a 25% cut in state funding this year which is an $11.9 million loss. While reductions to state support are not yet official, we need to plan for these now, as our one-time cash reserves are being expended in their entirety this year.

Carryover deficit: As has been communicated on previous occasions, we entered the pandemic with a structural deficit of $4.8 million.

Coupled with about $3 million in other COVID-19 related—and unexpected—expenses, these factors create a $59 million deficit this year, and a reduced gap next year of nearly $39 million, assuming our revenue rebounds by $20 million. 

We have been working to identify $39 million in permanent budget reductions in ways that limit the impact on academic excellence and student success. Our first steps to address these significant budget issues were an immediate hiring pause and an essential-only spending directive, measures that will continue into the future. We created a COVID-19 Budget Workgroup to recommend ideas to generate permanent and significant budget reductions. We instituted 15% budget-reduction targets for all divisions. We anticipate that these measures will close our $39 million deficit by the end of 2021, barring any further unanticipated changes.

Over the last five years, our central reserve fund, or our “savings account,” which is both our “rainy day” fund and our reserve to support strategic investments, has averaged $52 million—between 14%-16% of our total academic and research operating budget. This is in line with suggested minimum requirements for an organization of our size by the National Association of College and University Business Officers (NACUBO). We must now use this fund for a one-time offset to our deficit which will essentially eliminate our central reserve fund.

Reducing our budget so drastically and quickly is going to require the same level of collaboration and innovation you brought at the height of the pandemic response. We have a University of excellent educators, dedicated scholars, committed staff, aspiring students, and inspiring community support. It is not going to be easy, but if we continue to share our best ideas, challenge assumptions, and build on UAlbany’s excellence, we will move this great institution forward. 

Again, thank you for all of your hard work through this extremely challenging time. We truly appreciate your continued support, understanding, and commitment to our students and to our collective success.  #OneUAlbany.
 

Sincerely, 

Havidán Rodríguez
President
 

Todd Foreman
VP for Finance & Administration