But endowments come with restrictions and are meant for the long term. The short term for Hopkins and other schools from coast to coast looks brutal.
Rising expenses and plunging revenue are leading to a budget gap of more than $100 million for Hopkins for the final third of this fiscal year, university President Ronald J. Daniels wrote to the school community on Tuesday. The shortfall for the next fiscal year, starting in July, is projected to total $375 million.
“These tremendous financial pressures are not unique to Johns Hopkins," Daniels wrote. "Many of our peers are grappling with similar challenges,” Daniels said he and the university provost will take 20 percent salary cuts starting in July and that other top officials will take 10 percent cuts.
Salary increases for faculty and staff will be put on hold, Daniels said, and “furloughs and layoffs are regrettably expected to be necessary within some units of the university.” In addition, the university will halt for one year its contributions to certain retirement accounts known as 403(b) and 457(f) plans. That step alone, which Daniels said “we take with great reluctance,” will save $100 million.
Hopkins has about 6,000 undergraduates and another 20,000 students in graduate and professional degree programs.
Higher education advocates have warned Congress that colleges and universities are bleeding money at an alarming rate. Last month they sought more than $50 billion for colleges and universities to alleviate the crisis, but lawmakers pared the request. Higher education will receive an estimated $14 billion in aid through the recently enacted $2 trillion coronavirus spending law. Education groups say much more will be needed as state budget deficits hit public colleges and private colleges contend with the threat of falling tuition revenue and numerous unforeseen expenses.
The four campuses in the University of Missouri System are bracing for budget reductions of up to 15 percent and considering layoffs, unpaid leaves and other cost containment. The state flagship at Columbia announced Monday 12.5 percent cuts across all departments in the coming fiscal year. All cabinet members will be taking 10 percent salary cuts that will last until at least the end of July.
University of Missouri System President Mun Choi has told senior leaders at the four campuses to prepare for similar pay cuts. The proposed cuts follow a decision by Gov. Michael Parson (R) to withhold about $36.5 million from the Missouri system and $17 million from the state flagship school because of the economic impact of the pandemic. Choi warned this month that a projected revenue shortfall could reach $180 million.
The University of Kentucky is grappling with a shortfall of more than $70 million. Much of that is the result of sharp declines in investment income and tuition revenue, officials say. The state flagship has imposed 10 percent budget cuts across the campus, canceled raises, paused hiring, reduced retirement contributions and begun furloughing employees.
“Many of these decisions will cause pain. They will require shared sacrifice,” university President Eli Capilouto wrote to the Kentucky campus Tuesday. “But they are necessary if we are to meet our financial obligations, honor our principles of education, research, service and healthcare, and lay a foundation for the future.”
Adding to the fiscal pressure for all colleges, public and private, is a growing outcry among students and parents who argue that tuition and fees should be cut. Many say remote instruction this spring is not what they signed up for, and they fear fall instruction may be forced to continue online if campuses cannot reopen. Others say families suffering job losses, salary cuts and shrunken savings cannot be expected to pay normal rates.
Davidson College, a private liberal arts school in North Carolina, this week announced it will allow students to defer paying fall tuition bills for as long as a year. The public College of William & Mary announced Thursday it intends to reverse a previous decision to raise in-state tuition 3 percent for incoming undergraduates. That would mean a tuition freeze for all William & Mary students.
Even the wealthiest universities face extraordinary uncertainty, increased costs and lost revenue. Stanford University recently announced a $200 million budget shortfall. The university does not know yet whether there will be layoffs, the provost said in a virtual forum last week.
Yale University’s president, Peter Salovey, told the campus this week that the value of the school’s endowment has diminished amid financial market declines, and talked of shared sacrifice and planned budget cuts. This year the endowment supplied nearly a third of the university’s $4.3 billion budget, so the gap anticipated this year will affect nearly every school and program, Salovey said. Like many schools, Yale is freezing hiring and salaries, suspending travel and curbing other spending.
The Massachusetts Institute of Technology was hit with $50 million in unexpected costs this spring, including equipment for the shift to online learning, refunds of housing and dining charges to students and financial assistance to help students forced to leave campus. MIT’s president told the campus the school expects the pandemic to reduce many of the school’s major sources of income, including donations, research grants and payouts from the endowment.
Harvard University’s top three leaders cut their salaries by 25 percent this month, and other senior leaders are reducing their salaries or contributing to a fund to help support employees.
Some universities with the largest endowments announced this week they would not accept federal emergency relief through the recent federal spending bill and asked that the money allocated to them be given to colleges and universities in their states that face existential threats.
Urbana University, a branch campus of Franklin University in Ohio, announced this week that it will close in May at the end of the spring semester. The rural campus had struggled with low enrollment in recent years, according to a school announcement, but the pandemic added stress and uncertainty that made operations “impossible to sustain.”