Dear Faculty and Staff:
We recently closed out the budget from the last fiscal year and also have final enrollment numbers for the fall semester. The impact of the pandemic has been broad, deep, and now enduring, with aggregate losses from spring through the fall semester in excess of $50M. We now have a good understanding of the resultant deficit for the current fiscal year. Over the course of the past several months, we have been actively working on strategies to manage this deficit informed by the work of the Budget Reduction Taskforce. As you are aware, our Department of Athletics announced staffing and operational budget reductions last week. Below is a summary of difficult steps we are taking across our auxiliary units in order to balance our institutional budget for the current fiscal year. To be clear, the colleges, academic, and research units are not impacted by the actions summarized below, that includes all faculty and staff in those units. We previously shared plans to balance their budgets for the current fiscal year. It is also important to note that we cannot raise tuition to offset these losses. We have made a strong commitment to containing costs given that the single greatest barrier to success our students face is financial.
We previously announced reductions in administrative positions across various divisions. This included some reorganizations, including position consolidations, eliminating some vacant administrative and senior administrative positions such as the Vice Provost for Enrollment Services and the Associate Vice President for Research Administration and Business Operations. We continue to evaluate our administrative structure with an aim to continue to consolidate functions, reduce operational costs and personnel. Additionally, the core leadership team (i.e., President’s Council members) are taking a 10% salary reduction through the end of the fiscal year, and I’ll be taking a 20% reduction through the end of the fiscal year.
Auxiliary service units at the University are self-sustaining, with their activities supported by the funds they generate. Auxiliary service units include Housing, the Holiday Inn, Parking and Transportation Services, Tiger Copy and Graphics, Mail Services, Dining Services, Conference and Event Services and a few other smaller units. These units are independent of our core academic and research mission. Given the limited number of students on campus and activities last spring, over the summer months, and during the current fall semester, service utilization and related revenue in these units have been profoundly reduced, a problem compounded by the lack of federal relief funds. We have already implemented significant operational reductions and, in accordance with the recommendations of the Budget Reduction Taskforce shared previously, we are moving forward with limited staffing reductions in these units in order to balance our budget as required by the State of Tennessee.
Overall facilities usage demand and usage rates are also down significantly since last spring and, accordingly, available workload has been dramatically reduced. In short, there is not adequate workload currently to sustain our existing staffing levels. We have already reduced energy and associated operational costs as much as possible over the course of the past seven months. We are now in a position to have to move forward with limited staffing reductions in facilities management and support services in order to balance our budget.
In previous Town Hall meetings, questions have been raised about the utilization of our reserve funds. We strategically allocated some reserve funding over the past seven months in an effort to avoid staffing reductions and to sustain the progress we have made across a number of areas. The uncertainty we continue to face in the coming months and year will require us to continue to strategically allocate limited reserves in order to navigate these difficult times, with investment in essential priorities. We cannot allocate reserve funds to auxiliary units that are required to be self-sustaining and to positions where work cannot be performed remotely. Depletion of our reserve funds would jeopardize the long-term stability of the University when it appears we will continue to face uncertainty for at least another year. We are making every effort to limit these reductions. It is our expectation that we will not need to revisit the budget again unless there are any unexpected enrollment changes in the spring semester.
These are incredibly difficult times. As our Budget Reduction Taskforce recommendations noted, staff reductions in these units come only after significant operational reductions have been implemented. These steps are necessary to sustain our core academic and research mission. Those affected have worked hard to support the mission of the University, to serve our students, facilitate research and to help make Memphis a better place. We are committed to assisting them during this difficult period. We will also do everything we can to expand our staffing when demand increases on the other side of this pandemic and our campus community begins the process of returning to better days.
M. David Rudd, President