Texas colleges cut budgets in response to economic impact of COVID-19

Texas higher education institutions have been awarded more than $1 billion through the CARES Act to assist students through emergency funding and to help offset the costs and disruptionsduring the COVID-19 pandemic.

Despite assistance from the federal stimulus bill, Texas colleges are still slashing budgets, slowing spending and halting hiring while predicting declines in essential sources of revenue and an increase in student need.

Baylor University will receive $10.7 million through the Higher Education Emergency Relief Fund — 50 percent which is required to be used specifically for student aid, but there will still be a significant gap between the federal funding and what the university has already provided to students in terms of credits and refunds, said university spokesman Lori Fogleman.

Baylor President Linda A. Livingstone announced last week that the private Baptist university in Waco will cut $60 million to $85 million from the college’s $750 million budget.

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“Despite Baylor’s overall strength and resilience, we are now experiencing declines in many essential sources of revenue, which is coupled with an increased need for student financial aid and uncertainty about future enrollment due to COVID-19,” Livingstone wrote. “In other words, most of our previously reliable sources of revenue — tuition and fees, fundraising, athletics and income from our investments and endowment — are certain to be significantly affected.”

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The university will also postpone decisions regarding merit raises for faculty, staff and administration, while also decreasing its employee retirement plan by 1.2 percent, freezing hiring, and reducing the number of adjunct faculty and temporary employees. Overtime pay will be eliminated for most university employees and construction for its welcome center and basketball pavilion will be halted.

Additional budget cuts across the college, including athletics, will be reviewed and might be essential if the economy further deteriorates or enrollment declines, Livingstone wrote.

“Simply put, we need to make immediate and difficult decisions to address the serious financial realities we face in the months and, potentially, years ahead,” Livingstone wrote.

Weighing options

Colleges across the country and the state are similarly reviewing finances as state governments balance budgets and as current and prospective college students weigh their options — some deciding to defer admissions or attend school closer to home, said Joni E. Finney, professor of practice in the Higher Education Division at University of Pennsylvania and director of the Institute for Research on Higher Education.

Private institutions, especially those that were struggling before the pandemic, could have the hardest time surviving without expected revenue, meaning they might take more drastic measures to reduce budgets and cut faculty and staff, Finney said. Some may decide to resume classes online completely, while others may choose to close all together.

Public institutions and community colleges, which already face issues with state funding, will encounter a different kind of future — possibly with steep cuts in state appropriations and a longer road to recovery in comparison to the 2008 recession, Finney said. Schools that have not successfully engaged or embraced nontraditional students — those who aren’t recent high school graduates — will also see a hit.

“Nobody will be untouched by this. It’s just leading to such a big economic recession, and it could take a really good time to crawl out of that,” Finney said.

While Texas A&M University will receive roughly $39.8 million from the government in emergency aid — the most of any Texas college and the 11th highest amount in the country — its university leaders have still been told to analyze budgets, said Amy Smith, the college’s senior vice president of chief marketing and communications officer. In addition, she said, all hiring must be approved by the president.

The flagship has estimated that it has already taken a $20 million hit for student reimbursements alone, with about $11.5 million for campus housing, $7 million in dining, and $1.5 million in parking. This does not take into account lost revenue from other sources, including walk-in businesses, sports, concessions and other events — numbers that likely won’t be available until the spring semester concludes, Smith said.

Regional colleges

Houston area schools have been granted about $145 million through the CARES Act.

The University of Houston, which is set to receive $36.7 million in federal funding — the second largest amount for Texas colleges — estimates that its total loss in revenue will be in the tens of millions, said UH spokesman Mike Rosen.

UH officials announced a “pause” on new financial obligations through Aug. 31. That measure suspended hiring, promotions, or any position funding changes and salary adjustments. And UH President Renu Khator created a Financial Task Force to develop recommendations for reductions and revenue enhancements for the summer and upcoming fiscal year.

Officials at the University of Texas at Austin, which will receive about $31.6 million, said last week that it would not offer merit raises or increases to faculty in the current fiscal year and will not hire staff on an interim basis. Moving forward, the university will only maintain faculty and student employees who contribute to the “core mission” of the university.

Many community colleges, which don’t have major student reimbursement costs, might be in a better position than most four-year institutions.

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At Lone Star College, there has been no increase in withdrawal or drop rates for courses, and so increased cost of reimbursement, according to Kyle Scott, vice chancellor of strategic priorities. Although the remainder of its funding has been set, enrollment at Lone Star and how much the state is able to distribute will play a part in how much funding the system receives in 2021.

There is no clear indicator of the financial impact yet, Scott said. He predicts that if campus experiences are not offered at four-year universities or there’s employment uncertainty, community colleges will be the preferred choice. Enrollment could increase as early as the fall in the case of an economic downturn or as people look to gain new skills in the search for jobs.

Still, Finney says it’s essential for for state and higher education officials to begin thinking creatively about funding for higher education. This means rethinking academic calendars and use of facilities, considering more investments in the online learning experience as they follow guidelines and news about possible resurgences of COVID-19 from health experts, and how post-secondary education can be an asset to people’s lives and the economy.

“If they see higher education just as an expense rather than a strategic investment, we’ll just see a lot of cuts,” Finney said.


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