In my first weekly missive—a seeming lifetime ago, but only three months ago on April 10, 2020—I provided the campus community with an outline of COVID-disrupted finances and planning for Fall 2020. My missive of one week ago—the twelfth in the series—offered ample coverage of the latter topic, describing the aims and approach to the atypical semester to come. You can find a copy of that missive and Fall 2020 details at the TCNJ Fall Flex website, which I encourage you to check often for updates.
In today’s missive, I return to the former topic to describe the FY21 budget passed by the TCNJ Board of Trustees at its June 30, 2020 meeting. The budget is 4% smaller than that of the prior year–$246 million compared to $256 million—and reflects a combination of mostly atypical dynamics: COVID-driven reductions in revenues, resulting reductions in expenditures, one great financial reliever, sustained investment in strategic areas, and considerable shared sacrifice by our community, a deeply appreciated gift of loyalty.
Building the Fiscal Year 21 Budget: Principles and Process
The budget reflects four priorities recommended unanimously by the Council on Strategic Planning and Priorities (CSPP):
- Prioritize the safety of community members
- Maintain long-term financial health without compromising access and affordability
- Favor investments in core mission: instruction, degree completion, direct student support
- Invest strategically
The process of building the budget was similar to that of past years, albeit with greater variability and uncertainty in assumptions.
We prepared separate budgets for our two basic scenarios for Fall 2020, a hybrid partially on-campus experience and a fully remote experience. Treasurer Lloyd Ricketts and I presented preliminary findings in mid-April at the Board of Trustees Tuition Hearing, thereafter working with the cabinet and campus members to continually refine the analysis to reflect changing conditions. Through May and June we presented iterations of the budget to campus groups, including CSPP, Faculty Senate, Staff Senate, Student Government, campus labor leaders, board committees, and the TCNJ Foundation Board, using input to better align our budget choices with college priorities.
Fiscal Year 21 Budget: Elements and Outcomes
Described below are elements and outcomes for the budget approved by the board for the hybrid partially on-campus experience announced last week. It is balanced, thanks to heavy lifting and belt tightening from all units on campus.
Revenues. Compared to the FY20 year budget, we estimated a $33 million preliminary deficit. This reflects a sharp drop in state operating revenues ($15 million or 55% reduction), housing revenue ($13 million, from 38% reduction in occupancy), and enrollment revenue ($5 million, from lower estimated incoming and continuing students).
Commitments and Investments. The full budget deficit grew to over $44 million after adding $5.2 million in commitments ($3.7 million in contractual salary increases; $1.5 million in additional institutional financial aid) and $6 million in investments ($3 million in COVID-19 health and safety expenses; $3 million in strategic investments).
We preliminarily allocated the $3 million in strategic investments to support college interests in diversification and inclusive excellence, graduate education, marketing, Trenton region partnerships, remote learning (classroom technology and instructor training), academic innovation, administrative review, and environmental sustainability, the latter reflecting a new solar panel project.
Expense Management. We made a major dent in the $44.2 million budget deficit with $29 million in non-personnel savings identified by cabinet, deans, and directors. Prominent among the cost reductions is $8 million in expense management (including savings on fuel and utilities, services and supplies, travel, IT hardware and software, consultants, vehicles and other non-personnel items). We also applied $10 million in proceeds from a debt restructuring (sale of our bonds) to smooth out future debt repayments. This lever is the “great financial reliever” referenced earlier in this missive. Other levers reducing the deficit are federal COVID-19 stabilization dollars (an estimated $6.5 million applied for but not yet realized), deferred renewal of campus buildings and grounds until FY22 ($3 million), and additional support from the TCNJ Foundation ($1.5 million in new gifts and fee revenue).
These actions left a remaining budget deficit of $15.2 million.
Employment Actions. Hard as it is to take non-personnel cuts, it is measurably harder to produce a budget with employment cuts. In this light, I am moved by the outreach from TCNJ employees in this economic environment to help us close the deficit with $13 million in employment actions, including deferred cost-of-living increases, furloughs, a freeze on vacant positions and reductions in other staffing. More specifically, the budget reflects:
- $5.6 million in a freeze on vacant positions and elimination of one open vice president position
- $6.0 million in estimated savings from employees in the form of furloughs (unpaid days off, without loss of benefits, $3.8 million), deferred cost-of-living adjustments through bargained agreements ($1.6 million), and deferred merit raises for non-unit employees ($600,000). State officials have reached agreements with three college and university unions (CWA and IFPTE have ratified and AFT is still in the ratification process) for 12 furlough days in the coming year. To share the economic sacrifice, upon ratification of an agreement with AFT I will direct that the college’s non-unit employees take an amount of furlough days equal to that agreed to by AFT members. Cabinet members will equal or exceed this level through furlough days or salary reduction.
- $1.4 million in reductions in adjunct, supplemental, temporary, and other staffing budgets
Reserves. The employment actions leave a remaining deficit of roughly $2.2 million. To provide a cushion for unknowns and imprecision in assumptions and outcomes, the budget calls for a draw of $3 million from reserves.
The result of these actions leaves the college with a balanced budget.
A Silver Lining for Students and Families
Concern for our students and families, many of whom are directly impacted by the recession caused by the pandemic, was also an important consideration in our budget process. The difficult choices and shared sacrifice described above allow us to reduce the net cost of attendance for undergraduates and most graduate students for the coming year.
Fall undergraduate term bills will reflect the following:
- Tuition, which had been scheduled to increase by at least 2%, will remain flat. There will be no tuition increase this year.
- The Student Activity and Card Service fees will be eliminated for the year.
- The Brower Student Center Fee will not be assessed this fall.
- Board charges have been reduced to offset the COVID-required changes to the dining experience.
This translates to a decrease in the net cost of attendance for undergraduates of 3.5% for in-state students and 2.5% for out-of-state students. Most graduate students can expect to see their per-credit tuition cost drop or remain flat as well.
Although our budget preparation is challenging this year, let me put the FY21 budget in perspective. The 2009 recession and state actions resulted in belt tightening and one furlough day for all employees. The COVID disruption with millions in expense management, debt restructuring and employment actions, including 12 furlough days, is magnitudes greater. That we have crafted a smaller, tighter budget is a testament to the TCNJ community and evidence that we can weather fiscal stress in the most challenging circumstances.
Let me also emphasize how fortunate we are at TCNJ, not only for the willingness to share the pain of a contagious virus and its economic fallout, but for the strong financial position from which we started. For this I give credit and thanks for years of prudence and careful budgeting by the Board of Trustees and campus leadership. I thank them, too, for a continued commitment to invest and seek opportunity no matter the times. This will continue our momentum in areas that matter and position us well for the road ahead.
No one can confidently forecast smooth sailing in the days ahead—risks and surprises lurk everywhere—but I can confidently offer that TCNJ is a model for other colleges and universities in its planning and budgeting for the year to come. Your continued resilience and incredibly hard work, both evident in abundance since mid-March especially, ensure we live up to our reputation and reality as an exemplar of higher education. Thank you, sincerely and with pride, TCNJ.
With immense appreciation,
Kathryn A. Foster