Dear Colleagues,
I am writing today to keep you informed about budget discussions that are occurring. Over the past few days, the Vice Chancellors and I have had conversations with President Joan Gabel, Senior Vice President for Finance and Operations Myron Frans, and Budget Director Julie Tonneson regarding UMD’s budget. We are thankful for the continued support and collaboration with system leadership. COVID-relief funding has helped fill some budget gaps caused by the pandemic. As well, President Gabel allocated $2.5 million in additional recurring funding this fiscal year to help offset the decrease in tuition and other revenues we experienced last year. However, COVID-19 and enrollment declines this fall have once again created significant budgetary constraints for UMD, especially in the operations and maintenance (O&M) portion of our budget.
The major source of O&M revenues is student tuition. Prior to COVID-19, we were tracking fall 2020 tuition revenues to provide a virtually balanced budget for this fiscal year. The hard work we did last year to reduce our O&M expenses by about $5.1 million, combined with a projected strong fall 2020 enrollment, would have put us in the best financial position we have been in for many years. However, because of COVID-19 and the associated enrollment decline in first-year and returning students, our tuition revenues are approximately $4.8 million below the budgeted tuition revenue for this fiscal year. In important ways, this gap will carry over into next year as we endeavor to meet student enrollment targets for the 2021-2022 academic year.
Over the next few weeks, we will be developing plans to address budget shortfalls in all areas by examining the positions of people taking the Retirement Incentive Option and currently vacant positions. We will also be developing additional strategies that might include eliminating or reducing additional positions and cuts to operating budgets.
I know that budget reductions are difficult, especially given the work that was previously done to balance our budget and this unexpected COVID impact. While we have difficult decisions ahead, our work is important, our mission is critical, and I am regularly impressed with how our campus community demonstrates an ongoing dedication to ensuring student success.
On a related note, you received an email today from President Gabel announcing that pending Governor Walz’ approval, the Minnesota Legislature passed a bonding bill in a special session this week. I am extremely grateful to our strong local legislative delegation for their support and leadership. We have spent several years advocating for these projects at the Capitol and it is wonderful to see that come to fruition. This capital investment from the state will provide UMD with much needed one-time funding to make upgrades to AB Anderson Hall and other campus facilities.
Thank you. I will keep you updated as more information becomes available.
Sincerely,
Lendley C. Black
Chancellor
