May 11, 2020: Budget update for employees

Dear Spartan employees:

I continue to be incredibly proud of the ways our Spartan community has responded to the coronavirus pandemic. The value of Michigan State University has never been clearer, as we translate our research into new testing technologies, extend the lifetime of key protective equipment and help educate more health care workers and get them to the front lines, all while continuing to provide our key education and extension services as resources to the residents of Michigan and beyond.   

From the beginning of the outbreak, the health and safety of our campus community has been our highest priority, and we are taking every possible precaution to protect our students, faculty, staff and the community as we plan for a return to campus. The questions related to a safe return are foremost in my mind, and I know many of you would like to know what will happen this fall. To a large degree, the status of the virus in Michigan will be a major factor in our decisions and our return, as will how far we have moved in our capacity to test individuals and identify and isolate the contacts of those who test positive. I have appointed a task force led by Drs. Norman Beauchamp, executive vice president for the health sciences, and David Weismantel, university physician, that is making recommendations and creating implementation teams for our forecasted return to campus. I continue to work with university leaders, shared governance, faculty, students, community and business leaders and key stakeholders in evaluating multiple factors for consideration. I will be communicating much more on this topic in the upcoming months. 

As you know, the costs of this crisis to the university are substantial. We are not alone. The pandemic has thrown all of higher education into unprecedented circumstances, and all of the universities within our peer group are reporting significant shortfalls in this fiscal year as well as significant budget cuts for the next fiscal year. I previously shared with you that we have an estimated $50 million to $60 million in losses for fiscal year 2020, which ends June 30, and described some of the steps we are taking to address the shortfall.    

Now, as we look to fiscal year 2021, we see additional budgetary challenges. These include the risk of a significant decline in our state allocation based on forecasted large decreases in state revenue and new expenditures associated with the pandemic. In addition, the economic downturn is taking a toll on our students and families and may impact the ability of students to enroll or continue at Michigan State University. This was the impetus behind our decision to hold tuition and fees and residential and dining rates flat for the upcoming academic year — the third consecutive year of flat tuition at MSU. Given these issues, and the fact that limitations on large gatherings could have a significant impact on our athletics and arts programs, we anticipate an additional $150 million to $300 million in lost revenue to the university’s general fund budget and auxiliary units in fiscal year 2021.

In response, we are:

  • Tightening the hiring chill and limiting the filling of vacancies
  • Continuing to examine all capital projects to determine which can be paused, briefly delayed or indefinitely postponed
  • Reducing or eliminating consultants wherever possible
  • Continuing to limit travel
  • Continuing pay reductions for executive management
  • Implementing a minimum 3% budget reduction to academic and administrative units 

In addition, we are considering:

  • Proposing campus-wide salary reductions in a scaled manner for all other employees
  • Proposing reducing MSU’s above-the-match retirement plan contributions

The options above, if applied across the entire university, represent a shared sacrifice that would address our estimated budget shortfall, estimated at nearly 11% of our general fund expenditures. These proposed cuts and reductions are for fiscal year 2021, which begins July 1, but given the scope and scale of the pandemic and its financial impact, we may need to employ them beyond that fiscal year.  

I already have been working with Interim Provost Teresa Sullivan and Executive Vice President Beauchamp, in consultation with academic governance leadership and the deans, to discuss faculty and academic staff compensation, and we are finalizing those proposals. I recognize the importance of our existing labor agreements, as well as the need to involve the campus labor unions in the consideration of these issues to help balance our budget. Initial negotiations began in the past few weeks concerning unpaid furloughs with continued health care coverage and the university is continuing that discussion process. Those of you in represented positions may have heard from your union representation with updates on those talks. I will now ask our labor unions to continue to partner with the university as we work together to address the financial challenges the university faces. Given all of the hard work you have been putting in during this time, both personally and professionally, it is very difficult for me to ask even more of you. But I do need to ask you for greater sacrifices to address the current situation and preserve the long-term strength of our great university.

Finally, I also would like to acknowledge that the pandemic is impacting some of our Spartan employees and families harder and in different ways. Here in Michigan, and in other states, minority and marginalized groups are bearing a very disproportionate share of the morbidity and mortality of this terrible pandemic. I urge you all to continue supporting one another and to think about how some members of our Spartan family may be affected very differently from your own experience. 

Thanks to your dedication, innovation and Spartan spirit, our university has been a leader in the response to the pandemic across the state of Michigan and the entire country, acting to preserve public health and sharing our expertise to aid state leaders in decisions that impact us all. I am grateful to all our employees for your contributions to preserve our university, campus and mission. Keep up the great work, and please keep yourself safe and healthy.


Samuel L. Stanley Jr., M.D.