Email from President Robert J. Zimmer (May 7, 2020)
From: Robert J. Zimmer, President
Subject: COVID-19 Financial Implications Update
The impacts of the COVID-19 pandemic are profound in the United States and around the world. In the face of these challenges, I am deeply grateful for and admiring of the tireless and ongoing response by students, faculty, staff, and others in our community – in providing health care and analysis in the Medical Center, in working in support of the South Side communities and citizens, in the massive effort of remote education, and in research efforts in multiple directions regarding COVID-19. I am writing today to provide an update on the financial implications facing the University.
Most projections indicate that the economic difficulty and uncertainty caused by this pandemic will continue for some time. In the United States, more than 33 million workers have lost their jobs since late March, a decline with no parallel in recent history. We have seen significant decreases in equity and other financial markets, and a sharp slowdown in economic activity in the United States and across the globe.
The University is not immune to these financial developments. We estimate the negative impact for this academic year, ending in June, will be approximately $220 million, not including the impact on the Medical Center. For next year, losses could be even greater. The Medical Center faces similar financial challenges.
The pandemic and related economic challenges are having a dramatic impact on most aspects of the University’s finances. Every major revenue source of the University and Medical Center is significantly affected. This includes net tuition because of needed increases in financial aid for students, philanthropy and endowment payout because of the decline in equity and other financial markets, and patient care revenue because the required focus on COVID-19 has decreased the ability of many patients to come to the Medical Center for other care. These declines will likely continue if the impact of the pandemic continues for a prolonged period.
We are committed to overcoming this challenge, but it will require major actions. The financial and operational decisions we make now are essential to upholding and building upon the quality of scholarship and education at the University in the years ahead.
Guiding our decisions in the face of this evolving crisis and the uncertainty of its trajectory is the commitment of the University to maintain the most intellectually free and challenging environment possible, and in doing so, to provide the most empowering education for students and an environment that fosters the most original and impactful research of our faculty.
In response to the financial challenges, I have previously announced the following actions to date: salary freeze – all individual faculty, staff, and administrative salaries for the 2020-2021 academic year will remain at current levels (except when contractually required); staff hiring freeze and slowdown in academic hiring – new staff will be strictly limited to those fully supported by external grant funding or critical to the core mission of the University; suspension of discretionary spending; and a 10% reduction in non-personnel spending including supplies, services, and other areas.
While these actions will make a meaningful impact, as greater clarity about the full economic impact of the crisis has emerged it has become evident that additional cost saving measures will be required in the coming months. We are exploring a number of different possibilities. We recognize the challenges and uncertainty that this crisis is causing throughout our community and will continue to communicate with you as we make these important decisions.
The University has confronted and surmounted considerable financial challenges before, most recently during the global financial crisis that began in 2008. That crisis had a far-reaching impact on the University, from which it took us several years to fully emerge. However, the difficult decisions and resulting financial discipline during that crisis set a foundation for an ambitious approach to building the University’s academic programs and support for our students in the subsequent decade and beyond.
While this pandemic poses even greater challenges and uncertainties, I am confident in our ability to overcome them by staying true to the University’s enduring values and by exercising discipline in the pursuit of our goals. As with the financial crisis that began in 2008, this will lay the foundation for fulfilling in the years to come our highest aspirations and ambitions in education, research, and impact. Thank you for your continuing dedication to our shared purpose and work in this challenging time.