KU’s financial situation remains mostly a mystery as COVID-19 threatens to upend higher education
photo by: Nick Krug/Journal-World File Photo
The entirety of the financial impact brought on by the COVID-19 pandemic — which has caused unprecedented job losses and brought the global economy to a screeching halt — might not be known for years.
Still, higher education institutions across the country have begun publicly documenting their specific losses, both confirmed and future, since the pandemic began. Even as state governments will be forced in coming months to make sweeping cuts to their budgets — putting higher education funding at further risk — many of the institutions themselves have made clear the staggering losses they’re facing.
The University of Kansas, however, has not been one of them — even as the state fiscal year nears an end on June 30.
Chancellor Douglas Girod has speculated that KU’s initial losses from the pandemic will be in the range of “tens of millions of dollars.” While the university has implemented some measures publicly to mitigate some of those losses, such as a hiring freeze and a six-month, 10% pay cut for top administrators, further details on a long-term financial outlook have been few and far between.
When the Journal-World pressed for specifics over the past two weeks, officials either deflected the questions or gave vague responses that university committees were still working on evaluating losses to KU’s nearly $713 million budget.
Officials did not give definitive answers to questions of what losses KU had documented; how much the university has in reserve funds; whether it will dip into those reserve funds, or unrestricted funds from its endowment, to mitigate some of the losses; and when faculty and staff members can expect to definitively know whether they will be furloughed or laid off.
“Administrators and budget managers across the university are working to address questions like that and to manage financial challenges caused by the pandemic,” KU spokesperson Erinn Barcomb-Peterson said in an email. “The Chancellor and Provost (Barbara Bichelmeyer) will share more information as it becomes available.”
Questions were also sent to Bichelmeyer’s office and to Diane Goddard, KU’s chief financial officer. Bichelmeyer’s office directed the Journal-World back to Barcomb-Peterson, and Goddard did not respond.
The only inkling KU officials gave of the current budget situation is that the university may be in a slightly better position as the result of a $20 million budget cut undertaken between 2018 and 2019.
“The $20 million cut was a self-imposed adjustment to remedy budget challenges and get back to a stable budget by the close of (fiscal year 2019), which ended back on June 30, 2019,” Barcomb-Peterson said. “Because we took that necessary action during FY19, the university is in a better position today.”
A $20 million cut, though, won’t cover all of the losses KU will face over the coming months. That said, the university has yet to reach out to KU Endowment to inquire about using any unrestricted funds to cushion the blow from COVID-19, the organization’s president, Dale Seuferling, told the Journal-World through a spokesperson.
KU Endowment’s long-term investment pool is valued at around $1.6 billion, Seuferling said, but of those funds, only 2% — or around $32 million — are unrestricted and available for priorities identified by Girod.
“We will work with (Girod) to determine how we might assist when the time comes but for now, he and his team are working with the funds made available via the (federal) CARES Act,” Seuferling said, referring to a federal COVID-19 aid package. KU was slated to receive about $15 million from that package, of which roughly half would have to go toward emergency grants for students, the Journal-World previously reported.
KU Endowment launched a COVID-19 emergency fund shortly after the pandemic began to take hold in the U.S. and since then has raised nearly $32,000 from 67 donors, Seuferling said. Of that, $25,000 was designated to go to the KU School of Medicine but no other allocations have been made.
One worry KU officials have voiced about publicly announcing budgeting decisions is that the university needs to ensure state funding for higher education won’t be cut to account for the state’s losses from COVID-19.
Gov. Laura Kelly said Friday in response to a question from the Journal-World that she doesn’t expect major changes to the state operating budget, at least for fiscal year 2020. Girod has previously said that budget was favorable to KU.
“We’re obviously looking at the budget very closely, and we have gone through line item by line item (to see) where we are,” Kelly said. “I think at this point we’re going to deal with Fiscal Year 20 and make sure that’s all secure, and with the ending balance that we have I’m comfortable we can get through the rest of this fiscal year without a lot of issues.”
As far as a budget for fiscal year 2021, Kelly said the state would wait to see if the federal government would provide further direct assistance to states before making any concrete decisions.
The state is expected to collect about $1.3 billion less in taxes over the next two years as a direct result of the pandemic, budget experts have said.
Correction: This story has been updated to reflect that $25,000 donated to the KU Endowment COVID-19 emergency fund was allocated to the KU School of Medicine.
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