Despite pandemic, KU not burning through cash reserves, report shows; also new details on KU’s $73M in COVID funds
photo by: Associated Press
Enrollment may be up slightly at the University of Kansas next school year, and the amount of money KU has in its rainy day funds after being battered by a pandemic may not be as small as you would expect.
In fact, KU’s new chief financial officer recently told a subcommittee of the Kansas Board of Regents that KU’s reserve fund balances are expected to end the fiscal year at about the same level as they began the year. New CFO Jeff DeWitt told the group that employee salary reduction plans, an early retirement incentive plan, an employee hiring freeze and other similar programs had allowed KU to avoid spending down large amounts of cash that it holds in reserves.
“We expect, based on everything to date, to end the year about the same as we did last year in terms of reserves and balances,” DeWitt told the committee. “In other words, those actions have balanced 2021.”
In total, KU is now estimating its budget impact from the pandemic will be about $43 million in its general use budget in fiscal year 2021, which runs from July 1, 2020, to June 30, 2021. KU previously has touted much larger budget impact numbers, however they have been falling as conditions change. In May, KU estimated a $120 million budget shortfall, but revised that number down to $47.6 million in October.
Much smaller than expected declines in enrollment were a major reason the budget impact has lessened from original projections. The recent report to the regents hinted that more good news may be coming on the enrollment front. Regents were told applications to KU for the Fall 2021 semester are flat compared with fall 2020 numbers, but the number of students admitted thus far for the 2021 semester is up 1.5% compared with a year ago.
“We expect it to be flat or slightly up in 2021,” DeWitt said of total enrollment at KU. If so, that would end a multiyear downturn in enrollment at KU, dating back to 2017.
The six-month financial report — which was presented to the Fiscal Affairs and Audit Committee of the Board of Regents — didn’t list how much KU continues to have in reserve accounts, which theoretically could be used to cushion the blow of a financial downturn. The report also didn’t address why KU didn’t spend down more of the reserves, perhaps in a way that would have lessened the need for some pandemic-related cuts.
DeWitt did tell the board that some units within the university certainly have drawn down their reserve funds significantly. He listed the housing, parking and student union divisions as areas that have seen significant declines in revenues that have necessitated spending reserve funds. However when you add up all the reserve funds and fund balances across the university, the total amount is expected to end fiscal year 2021 at about the same level as a year ago.
The report did not provide a detailed set of financial statements that list revenues received thus far in fiscal year 2021 compared to how much the university received in the same period a year ago, so it is difficult to fully understand how the university has largely balanced the budget during the tumultuous year.
But the report did shed new light on just how much financial assistance KU has received during the pandemic. Chancellor Douglas Girod when he spoke to a Kansas legislative committee earlier this month highlighted about $44 million in federal relief funds the university has received. However, the report delivered to the Board of Regents showed the amount is much higher when state and county funds are added to the equation.
The Regents report estimates KU has received $73.8 million in COVID relief funds. The report estimates $60.6 million of the funds are earmarked for the Lawrence campus, while $13.2 million is designated for the university’s medical center in Kansas City.
DeWitt said about $41 million in federal funds have been spent thus far and that KU is on track to spend all the relief funds before the various funding deadlines expire.
Here’s a look at how the dollars have been used thus far:
• $8.1 million for student support;
• $12.4 million for technology for tasks such as distance learning and remote work;
• $5.8 million for COVID testing and contact tracing;
• $5.6 million for personal protective equipment, safety items and other operational costs related to the pandemic;
• $4.9 million for reimbursements to students in housing, dining and other auxiliary services that were either closed or operated at reduced levels due to the pandemic;
• $1.2 million to operate quarantine housing on the Lawrence campus;
• $1.8 million for COVID expenses in various departments;
• $1 million for instructional support;
• $300,000 for remote education support for children of faculty and staff.
KU also is expecting additional relief funding. A KU official told the committee that some of that money is expected to be used to increase the number of full refunds given to people who paid for KU dining services but didn’t receive the food due to closures or remote learning. KU has given about $425,000 in dining refunds, the committee was told. However, there is about $1.5 million in potential refunds that haven’t been given yet. Instead, that money has been credited for future use on accounts. KU will now look at refunding some or all of that money when new relief funds are granted, the committee was told.
As for enrollment numbers, KU said the number of out-of-state students interested in applying to KU is bouncing back. Out-of-state applications are up 2.1% compared with a year ago, and the number of out-of-state students approved for admittance to the university is up 3.6% from a year ago.
The recent report to the regents committee did not provide an estimate for any type of budget shortfall for fiscal year 2022, which will begin in July. Girod, however, told legislators earlier this month that the shortfall for fiscal year 2022 would be $74.6 million.
It is not clear, however, how that number has been calculated and how it may change based upon the results being posted in 2021. The Journal-World has filed an open records request with the university for more specific financial statements for year-to-date 2021 finances.
KU delivered its six-month financial report to the Regents committee on March 17. The Journal-World viewed a video of the committee meeting after learning of the report as it was working on an article about the status of KU’s finances for fiscal year 2021. KU originally did not provide the Journal-World with a copy of the report when it inquired about a six-month update of finances at KU. However, the Kansas Board of Regents provided a copy of the report to the Journal-World, and KU subsequently provided a copy as well.