U of M predicts substantial revenue losses from COVID-19

University of Minnesota Regents this week learned the system could lose between $85 million and $315 million due to the coronavirus outbreak and may implement a tuition freeze in the future. Students were also notified via email that all summer courses will be provided online this year. Individual campuses will communicate how courses will be implemented and offered as summer approaches.

Regents will get a full picture of the U’s budget in May when President Joan Gabel makes her proposals. U of M officials outlined the budget concerns in “best case”, “moderate case”, and “worst case” scenarios” during their virtual meeting this week; a best-case scenario would be operations returning to normal this summer, moderate-case looks like things returning to normal by fall, and the worst-case would be things not returning to normal until next spring.

Projected revenue losses predicted are:

  • Best case: $85 million
  • Moderate: $160 million
  • Worst case: $315 million

The next steps to address the budget shortfall include: hiring, reclassification, and merit increase freezes for the next fiscal year; actions by senior leadership across the institution to voluntarily take one week unpaid leave in the current fiscal year; additional, voluntary, temporary pay reductions for the President and Cabinet leaders in the next fiscal year; and the tuition freeze for fiscal year 2021 that would need Board approval.

Several Regents suggested a tuition freeze earlier in the meeting, though no action was taken, and no formal motion was made to do so. University administrators are also waiting for more specific information on the $36 million in federal stimulus funds of which a minimum must be spent on student assistance. President Gabel noted the University will take other steps to mitigate the impact of the pandemic on funds, including seeking reimbursements and refunds from external parties; philanthropy; implementing cost savings; tapping departmental reserves for volatile revenues and departmental and unit balances; and using available central University balances and central reserves.