JMU works to address budget shortfall, possible furloughs

JMU works to address budget shortfall, possible furloughs
(Source: WHSV)

HARRISONBURG, Va. (WHSV) — James Madison University is working to address a multi-million dollar budget shortfall, and leadership may consider temporary salary reductions or furloughs for some employees.

According to a letter sent to JMU employees this week, the university is facing a $31.4 million deficit because of decreased student enrollment and the associated loss of tuition, fees, housing and dining revenue.

“This year, a record number of students committed to become members of JMU’s first-year class, but to date, hundreds of students, across all class years, have either deferred their admission to a later semester, withdrawn from the university, or not yet paid their bill,” read part of the letter obtained by WHSV.

Earlier this month, JMU transitioned to online-learning less than two weeks after the fall semester began when hundreds of positive COVID-19 were reported within the JMU community.

President Jonathan Alger, along with top administrators at the Harrisonburg campus, said the university reduced spending by freezing new hires, raises and bonuses as well as reduced all discretionary spending and eliminated travel which will last for the foreseeable future.

They added the university has carried forward savings from the previous fiscal year, leveraged interest earnings and are using cash reserves to help mitigate the budget shortfall.

At the moment, JMU said it’s unclear how much the university will have to scale back its budget based on funding from the commonwealth of Virginia. There’s no indication if JMU will receive any new money from the commonwealth for the education and general budget which covers costs for academic operations.

Another unknown for leadership is the changes in enrollment. JMU officials said they will not know the fall semester’s shortfall until Oct. 10, which is the final date for students to withdraw from the university and get a pro-rated refund.

Because of these factors, JMU said it may consider temporary pay cuts and limited furloughs for employees whose salaries exceed a certain threshold.

“As an institution, we will continue to prioritize our educational mission and academic progress for our students, as well as protection of employment for our faculty and staff,” the letter stated.

University vice presidents are working with staff on strategies and budget reduction plans with the hopes of further savings.

“As we have said since the start of the pandemic, we are all in this together and will persevere together. Never have we all been more interconnected, and all of us have a role to play in keeping one another safe. We look forward to a successful return to a mix of in-person, hybrid, and online learning on Oct. 5, made possible by your dedication, determination and support,” the letter to employees read.

You can read the full letter sent to JMU employees below:

Dear Colleagues,

The work each and every one of you has contributed in the past months to maintaining campus operations, helping our students learn in new and innovative ways, and keeping people safe and healthy has been remarkable, tireless and impactful. As at many other institutions, however, the pandemic has taken a significant toll on the university’s operating budget. We wanted to share a sense of where we are at this point in time, along with some of the uncertainties we currently face.

This year, a record number of students committed to become members of JMU’s first-year class, but to date, hundreds of students, across all class years, have either deferred their admission to a later semester, withdrawn from the university, or not yet paid their bill. This is a trend at universities across the country as students and families reconsider their plans for this school year. As a result of this decreased student enrollment, and the associated loss of tuition and fees as well as housing and dining revenue, the university is facing a budget shortfall of at least $31.4M this academic year.

Since March and the start of the pandemic, the university has reduced spending across the board. We have frozen almost all hiring, raises and bonuses, paused new construction, reduced all discretionary spending and eliminated travel. These measures will be maintained for the foreseeable future. Additionally, the university has carried forward savings from the previous fiscal year, leveraged interest earnings and utilized cash reserves to help mitigate the budget shortfall. University vice presidents are currently working with their colleagues on targeted divisional strategies and budget reduction plans to realize further savings.

It is unclear at this point exactly how much the university will have to reduce its budget as two key unknowns remain:

Funding from the Commonwealth: We do not yet know if JMU will receive any new funds from the Commonwealth for the Education & General budget, which funds our academic operations. This is an issue currently before the General Assembly as part of their ongoing special session. State legislators will work this week to reconcile the House and Senate budgets. The House budget would allocate $12.8M to JMU, $6.1M of which would be federal CARES Act funding. CARES Act funding can be used only to reimburse COVID-19 expenses that have already occurred, as well as to cover new pandemic-related expenses. The Senate budget does not specifically allocate any funds to JMU. However, the Senate budget includes $65M in federal CARES Act funding, which has not been allocated by institution. JMU could receive a portion of that funding. The reconciled budget will then have to be approved by the Governor.It is also important to note that while the Governor’s recent announcement regarding debt restructuring for higher education provides helpful financial flexibility and some relief with regard to the Auxiliaries budget (which addresses areas such as housing and dining that are not covered by tuition, and which has taken a heavy hit in terms of room and board fees), it does not make the operating budget reductions mentioned above any less necessary. The university is actively engaged in dialogue with the Virginia Department of Treasury regarding refinancing options that satisfy our short-term needs while minimizing overall debt-service costs.

Variations in Enrollment: The full extent of the fall semester shortfall will not be known until after Oct. 10, which is the final date for students to withdraw from the university and receive a pro-rated refund. Questions also remain with regard to what Spring Semester enrollment will look like.

Depending on the factors noted above, we may also need to consider additional options to address the budget shortfall, such as temporary salary reductions or limited furloughs for employees whose salaries exceed a certain threshold. As an institution, we will continue to prioritize our educational mission and academic progress for our students, as well as protection of employment for our faculty and staff.

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We are working with colleagues across the university to review the budget and our options. The colleges are working with their governance bodies on this front, and leadership from all divisions of the university are consulting with their teams. We will continue to be in touch as the details become clearer.

As we have said since the start of the pandemic, we are all in this together and will persevere together. Never have we all been more interconnected, and all of us have a role to play in keeping one another safe. We look forward to a successful return to a mix of in-person, hybrid, and online learning on Oct. 5, made possible by your dedication, determination and support.

Thank you for everything you do for this institution, for our students and for our community.

Sincerely,

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Jonathan Alger, President, James Madison University

Heather Coltman, Provost and Senior Vice President, Academic Affairs

Donna Harper, Vice President, Access and Enrollment Management

Charlie King, Senior Vice President, Administration and Finance

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Nick Langridge, Vice President, University Advancement

Tim Miller, Vice President, Student Affairs

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