May 19, 2021: Update on financial situation


Dear Faculty and Staff Colleagues,

Last week, we wrapped up a joyful two weeks of in-person and virtual graduation ceremonies, capping off a successful, albeit unusual and often stressful academic year. Thank you all for rising to the challenges of the past year, for pushing through the constant changes brought on by the pandemic and for focusing on our core missions for the university.

We are also wrapping up our fiscal year, which will end on June 30, and preparing for the start of the next fiscal and academic years. I’d like to take this opportunity to update you on a few points regarding our financial situation.

In addition to the personal toll that COVID-19 has taken on so many in our community, Michigan State University has also had to manage the financial impacts of the pandemic. Last summer, we estimated we would have $1.6 billion in General Fund and Auxiliary revenues, down $418 million from a typical year. We also estimated that, even with planned reductions in place, we would have $1.8 billion in expenditures. And, while we seem to be on track to hit that number, we still needed to cover that $200 million gap through a combination of our operating reserves and federal stimulus funding.

As I’ve shared before, the sacrifices across our university in salary reductions, decreased retirement contributions, unit budgets and delayed construction projects all have helped with our overall financial situation. Unfortunately, we also had to make the difficult decision to furlough more than 800 full-time employees, 700 student employees and 1,000 on-call temporary employees. I remain grateful that we were able to negotiate agreements with some labor unions to maintain university-provided health insurance coverage for employees on furlough.

It has also helped significantly that we spent less than we traditionally would on university-related travel, office expenses, residential and dining hall expenses and other items impacted by the pandemic. I know these cuts have required sacrifices from many of you, and I greatly appreciate your patience, commitment and partnership in addressing these challenges created by the global pandemic.

Looking Forward
Moving toward our next fiscal year, we are planning to end the current wage reductions to faculty and executive managers. When I initially announced these reductions, I anticipated they would last for a year. Human Resources is starting the process to pull back the wage reductions and bring faculty and executive managers back to their full salary starting July 1. Unfortunately, a close review of the numbers suggests it may be another year before retirement contributions can be restored to the previous levels.

The university has worked with labor unions on campus to extend some furlough agreements through July 31. The university has also begun negotiations with the Coalition of Labor Organizations at MSU, which includes the eight unions that represent our non-academic staff. We look forward to continuing our partnership with organized labor during these challenging times.

We have already distributed approximately $30 million in student financial aid through two rounds of federal stimulus dollars. The Office of Financial Aid is currently working to determine the best way to support our students with the $40 million we received in the third round of the Higher Education Emergency Relief Fund (HEERF III).

The third round of federal relief funds also includes an additional $40 million to support institutional activities impacted by COVID-19. In certain circumstances, we might also utilize relief funds to offset lost revenue resulting from the pandemic’s impact on our operations. Although these funds are welcome and helpful, it is important to remember that there are strict federal guidelines for how these funds must be spent. We continue to see increased costs with several pandemic-related initiatives, such as the Early Detection Program, COVID-19 testing at Spartan Stadium and Olin Health Center and the COVID-19 diagnostic support provided by the Veterinary Diagnostic Laboratory. Increased costs associated with shifting to online class delivery modalities, technology upgrades and cleaning and sanitation also continue. The $40 million in additional support will only help us address some of the overall impact we experienced.

Conclusion
I am humbled by the sacrifices shared by so many of you in our community. I know many parts of the last academic year haven’t been easy, and I sincerely appreciate all that each of you do to help MSU continue to provide a world-class education, conduct high-caliber research, and offer impactful outreach and engagement locally and globally.

Sincerely,

Samuel L. Stanley, Jr. M.D. (he/him)
President