2020-2021 THEC Budget Memo
Dear Faculty and Staff:
The Tennessee Higher Education Commission (THEC) provided the attached 2020-2021 budget memo late last week. As summarized, the 111th General Assembly adjourned on June 19 after passing a revised budget. The news for higher education is mixed. Although the University of Memphis will not experience any additional reduction in formula funding as anticipated, levels will return to those of last fiscal year. In short, we will not receive funds that were originally allocated for pay and operational increases this coming fiscal year. Additionally, our capital maintenance support has been reduced by approximately $9.5M, funding critical to supporting basic maintenance of facilities, including HVAC issues and classroom improvements. All Tennessee public universities, including the University of Memphis, have committed to zero tuition increase, certainly a very good thing for our students and critically important in light of the current chaotic economic environment. This will come with some challenges, though, particularly given annual increases in University costs (e.g., benefits). On the positive side, the Legislature agreed to provide $32.9M in funding for the UofM STEM Building, a remarkable accomplishment. I would encourage everyone to express their gratitude to Ted Townsend and Katie VanLandingham in our Government Relations Office. They did an exceptional, and arguably historic, job during one of the most turbulent economic times in recent Tennessee history.
As previously shared, summer enrollment has been positive, given unparalleled incentives available in light of the CARES Act. We successfully navigated a $27M aggregate deficit during this current fiscal year. Although we remain hopeful and optimistic about the fall semester, the situation can best be described as fluid. Among positive indicators, our new student orientation numbers are up over last year (2728 vs. 2433, up 12%), as are current housing applications. However, there is significant uncertainty about fall enrollment, particularly when it comes to continuing/returning students, not just in Tennessee, but nationally. The economic impact of COVID-19 has been both broad and deep, impacting our students in significant fashion. There is no clear consensus on how this translates to eventual fall enrollment. Financial barriers have always been the most significant challenge for UofM students, with over 50% being fully Pell-eligible. Please remember that over 60% of our total budget is tuition and fee revenue. Assuming our enrollments mirror that experienced last fall (i.e., no decrease), we anticipate a budget shortfall for the coming academic year in the range of $17M. If enrollments do not mirror last fall, the gap is expected to increase by approximately $2.5M for every 1% decline in enrollments. We expect that we will continue to close this gap over the next 60 days and will keep you updated on a regular basis.
Our hiring moratorium remains in place. We will, however, continue with strategic hires consistent with our aspirations and vision as a major public research university. Similarly, we will continue to invest in core infrastructure that supports high quality teaching and overall academic excellence. Our capital projects continue as scheduled, including our Fitness and Wellness Center, the Scheidt Family Music Center and the STEM Building. Capital funds are separate and distinct from annual operational funds. Our fundraising efforts were successful for these projects, and they will be completed using a mixture of private funds raised and related state allocations specific to those projects. Please recognize that we are not allowed to move funds across categories. We have considerable momentum and are committed to continuing our very positive trajectory.
Given the anticipated budget shortfall for the coming academic year, we have started planning for a range of possible scenarios. We will be working with deans, chairs, program directors, the Faculty and Staff Senates, along with individual faculty to finalize both projections and the appropriate response. I will keep you updated over the coming weeks as more detailed information becomes available, both with respect to eventual fall enrollment and related budget implications.
These are difficult times, but I remain hopeful and optimistic. Over the course of the past four months, we have demonstrated that by working together we have the capacity to meet and overcome any challenge. I am convinced we will emerge from this stronger and remarkably well positioned to achieve our Carnegie I goals and continue to expand our national footprint with more meaningful relationships across Memphis and Tennessee.
Be safe and stay healthy.
Dr. M. David Rudd, President