Here’s where KU expects to lose $120 million in the coming fiscal year

photo by: Associated Press

Sidewalks are empty around Strong Hall in the middle of the University of Kansas campus In Lawrence, Kan., Tuesday, March 17, 2020. Classes are not being held while moving online due to coronavirus concerns. (AP Photo/Orlin Wagner)

Three weeks after the new fiscal year began, the University of Kansas has released new details on the projected $120 million budget shortfall it faces as a direct result of the COVID-19 pandemic.

Over the coming year, KU has projected an $87 million hit to its core operations, which includes $62 million in lost tuition revenue, $5 million in lost revenue from course fees and a $20 million loss in appropriations from the state of Kansas.

In addition, the state’s flagship university expects to lose $19 million in revenue from services such as student housing, student recreation services, student health care and parking.

To round out the $120 million figure, KU officials have also calculated losses of $14 million from affiliates such as Kansas Athletics, the Memorial Union on campus, the Hilltop Child Development Center and the university’s Office of Research.

Those figures, however, are temporary depending on the severity and length of the pandemic. While the university is currently planning a mostly hybrid model of education for the fall semester — in which students will attend some classes online and some in person — if a dramatic spike in cases were to again force the closure of campus, losses could be even higher.

KU Provost Barbara Bichelmeyer and CFO Diane Goddard released the daunting financial challenges in an email Thursday afternoon to faculty and staff. The Journal-World has requested a breakdown of the shortfall intermittently since it was first announced in mid-May by Chancellor Douglas Girod, but had not received it.

The email also indicated some slight changes in tone from past statements from the university about the fall semester — namely in student housing. In past weeks, KU officials have said they expect on-campus housing facilities to be operating “at or near capacity” when the fall semester begins. Bichelmeyer’s and Goddard’s email, however, projected a revenue shortfall for student housing specifically because of “limitations on resident capacity.”

In addition to the losses projected during fiscal year 2021, which runs from July 1, 2020, through June 30, 2021, KU also announced it suffered $35 million in confirmed losses during fiscal year 2020, when the pandemic first forced the campus to close. Those losses were primarily from shortfalls in parking, student housing and dining packages — which KU refunded on a prorated basis.

KU also said it expected to spend an additional $30 million on various safety measures — such as personal protective equipment, COVID-19 testing and contact tracing, and enhanced sanitation — in preparation for the fall semester. Some of those expenses may be eligible for federal funding, the message said, but many will not be.

To mitigate some of the losses described, Bichelmeyer and Goddard highlighted the cost-saving measures KU has already taken as the pandemic unfolded. Those include a voluntary buyout program for certain faculty and staff, a voluntary pay cut for certain administrators, a universitywide scaled six-month pay cut, the partial absorption of departments’ rainy day funds and an administrative efficiency review.

Thursday’s message said those measures have saved roughly $58.6 million. When the universitywide pay cut, rainy day fund absorption and administrative review were first announced in June, it was estimated those alone would save $61.9 million.

Going forward, Bichelmeyer and Goddard said the most important aspect of KU’s financial situation would be enrollment and retention of students. The message did not address what kind of enrollment totals the university was projecting that would account for the $62 million in lost tuition revenue.

The Journal-World in mid-May reported that the College of Liberal Arts and Sciences, which accounts for more than 52% of KU’s students, had seen a 12% drop in enrollment from the same time period a year prior. It’s unclear, though, if that figure still holds.

“Now more than ever, there is a direct link between our enrollment and our ability to retain employees,” the message said. “This is one of many reasons why we have dual responsibilities to continue to prioritize the health of our community members, while at the same time doing everything we can to enable students to continue their studies at KU.”

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