N.H.’s state universities face $70M deficit amid COVID-19

  • A lone skateboarder rides through the empty campus at the University of New Hampshire in Durham, on May 8. AP

NH Public Radio
Published: 10/7/2020 5:01:12 PM

The pandemic has had a negative financial impact on many New Hampshire institutions, including higher education.

The University System of New Hampshire did receive and benefit from some CARES Act funding, but the costs associated with COVID-19 have meant major revenue losses. Chancellor Todd Leach has been working on plans to address the losses, and make the university system stronger. He joined Morning Edition Host Rick Ganley to discuss the efforts.

Ganley: What is the projected deficit that the system is facing next year?

Leach: Well, we’re anticipating somewhere around a $70 million deficit, and that’s due to a number of factors. One of those was the implementation of many, many safety measures that we put in place this year. A lot of the costs associated with testing and PPE, cleaning and also a cost associated with reducing the density of our dorm spaces. All of those things collectively, even with some significant cost-cutting measures we’re taking, we’re expecting to lead us to somewhere around a $70 million deficit.

 Were you facing deficits before the pandemic?

 But we weren’t in the short term. What’s happened, Rick, is that higher ed has gone through a lot of changes over these past few years and anticipating a lot more in terms of demographics, in terms of the pressures on on pricing. And so we had already embarked on a road to really try to rethink our cost structures and reduce those cost structures by around the $70 million mark. We weren’t expecting to be in this kind of a deficit territory, but what covid did essentially was really accelerate all the factors that financially were going to impact us.

 Let’s talk about how you plan to reach that reduction goal. What kinds of cuts are you looking at making?

 Well, in the short term, just to give you a little context, you know, the end of last year when we sent students home to finish their semesters, we ended up refunding about $42 million that we refunded for room and board and certain other fees. And we were able to make adjustments in the short term around travel freezes, raise freezes, pulling back on purchasing. And that helped us greatly in the short term. We also received some dollars from the federal COVID fund that helped us and we almost broke even, we were just under the break-even mark, had a small deficit this past year, but those are short term measures. So as we look ahead and we’re looking at this year, we’re realizing we still have to continue some short-term measures. We still have to have some restrictions on what we’re doing relative to spending in general. But we really need to be focused long term because ultimately, if we don’t put ourselves in a position that we can really build off and strengthen our mission, then we’re going to struggle for many, many years. So what we’re trying to do is put some permanent cost-restructuring in place. Primary focus is really on those back-office kinds of functions, administrative costs, areas like procurement, having more common contracts across all four institutions. So we do believe we can get to the $70 million number. But higher ed is a labor-intensive industry, and there’s no question a lot of that savings has to come by finding efficiencies that combine things and that ultimately reduce some of that workforce.

Well, what you’re saying essentially is reducing faculty and staff. I mean, you’ve implemented an early retirement program to try and reduce the need for layoffs. I know. How successful has that been?

 Well, that’s exactly right. We’re trying to take both a humane approach to this, but also one that is strategic. And so we have an early retirement program we put in place. We were expecting that we would get at least 200 takers across the system on that. It looks like we’re going to have more than 300 of which will go a long ways to helping us get to right-sizing the workforce.

 NHPR has heard from university system faculty who are concerned about program cuts and how they may affect professors and students. Are there plans to cut academic programs?

Not at the system level, but every one of our colleges is looking internally and looking at their own structural costs. And I think the piece to this that the board and all the presidents have been really in alignment with is that we’ve got to protect and maintain our mission. There are niche area programs, things that change over time in terms of of student interest. And, you know, we’ve got to take an honest reflection of where the market is, where student interest is, and what can we do well, what can we serve well. I think higher ed overall is going to be downsizing some across the country, and that’s just going to be the result of demographics. So we want to strengthen our our core areas of focus and strength. And that’s going to be meaning that we’re going to have to be looking at how we align resources, the cuts we’re planning, even at the administrative level, and not just to lower costs, but to give us dollars we can reinvest in areas that we think are really more important to the core missions of the institutions, and some of that will be in academic areas,

You announced recently that you’ll step down as chancellor next year. What are you hoping to accomplish in the time you’ve got left?

 You know, that’s a great question. I feel really good about what we’ve been able to accomplish over these over these eight years. A lot of focus on keeping affordability, several tuition freezes in there and the introduction of the Granite Guarantee. I think the other thing that I’m proud of over these past eight years has been our work with the community college system, setting up a dual admit program and even a colocation at Keene. So as I look ahead in these next few months, I think it’s really just about setting the plan and the pathway for the long term. And I think our board, for example, and our presidents have been very focused on not just getting through this year, but how do we ensure strength going forward. For us, the public mission is still around affordable access. It’s still around supporting the state’s workforce needs. And we have to be a key to the state’s overall rebound and we’re going to have to be in a position to help do that.

These articles are being shared by partners in The Granite State News Collaborative. For more information visit collaborativenh.org.

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