From the PresidentPosted: Thursday, October 15, 2020
2020-2021 Budget Update
The resolve and spirit of our Buffalo State College family is strong. We have banded together over the past nine months to overcome challenges we could never have imagined before these most trying times. From our quick shift to remote instruction in the spring to the incredible efforts to restart our campus this summer and our thorough precautions to keep our COVID-19 infection rate low this fall, the Buffalo State community has consistently risen to the occasion and persevered.
As I wrote last May, we face a cruel reward for our dedicated efforts and comprehensive response to the pandemic. While we have avoided the worst-case scenario outlined in May—thanks in part to only a modest 3.2 percent decline in enrollment this fall (8,339 total enrollment)—we still face significant and distressing financial challenges in the year ahead. In August, Vice President for Finance and Management Laura Barnum presented an update on the 2020–2021 budget implementation, citing SUNY System Administration’s decision to initially provide us with only enough direct state tax support to cover six months of operations. The balance of our state tax support remains in flux as New York State grapples with an anticipated $14 billion deficit from the pandemic.
While we remain hopeful that a federal stimulus bill will provide some much-needed relief to state and local governments, giving New York State the means to provide our full allocation of tax support, SUNY continues to advise campuses to expect a 25 percent reduction in funding in view of the state’s projected deficit. At Buffalo State, that reduction would be roughly $5 million.
Furthermore, before the onset of the pandemic, we talked at length as a campus community over the past three years about our structural financial challenges from declining overall enrollments and unfunded negotiated salary increases. Despite a successful effort to reduce our expenses by $7 million during our three-year budget rebalancing effort starting in 2017–2018, the significant revenue shortfalls from declining enrollments—most notably due to declines in retention and transfer students—and compounding costs of unfunded negotiated salary increases, presented us with a difficult budget scenario for 2020–2021 even before COVID-19 created cascading problems throughout the country.
Last week during the October 9 College Senate meeting, Vice President Barnum presented an updated budget projection for 2020–2021 based on our existing challenges and the growing effects of COVID-19. All told, we expect an operating deficit of at least $14.8 million this year. Coupled with an unexpected $8.2 million final operating deficit in 2019–2020 due to pandemic-related expenses and refunds, our unrestricted reserves will be entirely depleted (and running at a deficit) later this academic year. We, along with other SUNY campuses, also face possible 25 percent reductions to university-wide programs (e.g., Educational Opportunity Program) and financial aid programs administered by the Higher Education Services Corporation (e.g., Tuition Assistance Program and Excelsior). These reductions could have an additional $6 million to $8 million impact on our deficit.
Before the pandemic, we planned to leverage our reserves through a multiyear Strategic Resource Planning Process and reset our spending to align with our new revenue reality. This approach would have allowed us to gradually reduce our workforce—which makes up more than 85 percent of our operating budget—through less drastic actions like attrition and retirements. But as noted earlier, we no longer have a two-year window to gradually reduce our spending and the size of our workforce. During her presentation, Vice President Barnum noted that for every $1 million reduction in our operating budget, an average of 14 positions would have to be eliminated. To reduce our expenses by $15 million, we are looking at a likely reduction of 150 to 200 positions to balance our budget. This number could improve if federal stimulus funding is passed and directed to New York State, allowing SUNY to provide our full state tax support allocation. This number could also worsen if additional constraints are placed on university-wide and HESC programs.
Currently, we have in place a freeze on all but essential hires, a prohibition on campus travel, and a strict spending constraints process (PDF, 420 KB). Today I am announcing an immediate 14 percent reduction of all OTPS (other than personal service) accounts in 2020–2021. In the next 30 to 45 days, we will launch a transparent process to plan for significant reductions in campus expenses. A new Bengal Business Forum will create a campuswide setting to discuss new ideas and emerging plans. Please watch the Daily Bulletin for updates and meeting details.
This financial reality is undoubtedly unsettling for all of us. Just as we have overcome the operational challenges of COVID-19 as a campus, we must respond to these financial challenges together. I remain committed to being transparent with you about our financial outlook, and I pledge to continue our close collaborations with campus constituents in the weeks and months ahead.
We have persevered before and we will persevere again. Thank you, as always, for all you continue to do to support Buffalo State’s mission and our talented and promising students.