To: OSU faculty, staff and students
From: Edward J. Ray, President
Date: April 15, 2020
Dear OSU faculty, staff and students,
I write regarding the impacts of the COVID-19 pandemic on Oregon State University, actions underway in response, and a financial future that remains unclear due to the uncertainty of the virus’ prevalence in the months ahead.
Despite the lack of information on the timeline and specifics for the nation to move beyond managing the pandemic, it is important to remind ourselves that we are resilient and focused and that the Oregon State University community is strong. Spring term enrollment remains steady thanks to the quality education we offer and the extraordinary effort of our faculty, graduate teaching assistants, advisors and staff to transition to fully remote instruction and student support. This is an extraordinary accomplishment.
University research continues, albeit at a reduced level, and this week we are launching a public health study that will help determine the prevalence of the virus in Benton County and could be used in other Oregon and U.S. communities. OSU Extension and outreach programs are operating via remote means throughout Oregon. Our faculty’s skill, inventiveness and expertise with learning technologies are impressive, and combined with our nationally ranked Ecampus programs are tremendous assets at this time.
Nevertheless, we face significant financial challenges and uncertainty going forward.
Hardest hit have been our auxiliary units, especially University Housing and Dining Services, where spring term residency is down to about 600 students from a capacity of more than 5,000 students. In OSU Athletics, spring sports are cancelled and significant revenue sharing from winter NCAA and PAC-12 conference tournaments will not materialize. Other units adversely impacted include Transportation Services, Printing and Mailing Services, Conference Services, the LaSells Stewart Center, Dixon Recreation Center, and the Memorial Union. All told, gross revenue losses to OSU related to COVID-19 will exceed $38 million in FY20.
The federal CARES Act will provide modest relief. The university is expected to receive approximately $15.7 million, including $700,000 for OSU-Cascades. The CARES legislation allocates half of those funds for emergency financial support to students. We will direct the other half to mitigating near-term losses, with a particular focus on needs in auxiliary units.
Because CARES Act funding will not be sufficient to offset financial losses, OSU is taking several steps:
We have dramatically reduced expenditures for services, supplies and business travel.
We have restructured debt payments in auxiliaries.
We are using cash reserves planned for UHDS renovations to cover some spring term student housing and dining operating shortfalls.
We have advised all senior academic and administrative leaders to limit hiring to positions absolutely essential to maintaining undergraduate and graduate students’ progress to degree completion.
We are evaluating staffing and benefit options for those individuals where work may no longer be available.
Support from the CARES Act, resources freed by the steps above, savings from the 2020 freeze of senior leadership salaries, and strategic use of limited reserves will allow us to minimize layoffs at this time. However, our financial position going forward depends on how quickly OSU returns to pre-COVID-19 operations; whether enrollments remain robust in the summer and fall terms; whether the state maintains our funding in the current biennium; and whether additional federal and state emergency relief is provided.
Beyond these immediate circumstances and given the impact of COVID-19, we are concerned about the State of Oregon’s financial capacity in the next biennium and adverse changes in college-going trends, especially among out-of-state and international students.
As a result, some auxiliary and other units may need to begin implementing targeted and limited staffing changes in response to COVID-19. We will protect our employees to the fullest extent possible, anticipating our eventual return to pre-COVID-19 operations.
With these concerns in mind, we are announcing the following additional actions:
Pandemic Scenario Planning
OSU’s COVID-19 Continuity Management Team, is evaluating several pandemic recovery scenarios based on varied timelines for a return to face-to-face instruction and on-site operations. The results of this analysis will inform budget decisions in the coming weeks.
Until further notice, and with limited exceptions, all hiring must stop. Exceptions to the hiring freeze must be approved by the Provost and the Vice President for Finance and Administration. Exceptions may be granted for positions that are essential to ensuring the continuity of academic programs; meeting terms of research contracts and grants; fulfilling funded commitments, such as those of the OSU Extension Service; and continuing progress on implementing SP4.0. Detailed guidance on the hiring freeze – including this webpage – will be provided to all senior hiring managers.
Freeze on Discretionary Salary Increases
Until further notice, discretionary off-cycle salary increases for professional and academic faculty must stop. Exceptions must be approved by the Provost and the Vice President for Finance and Administration and may be granted in limited situations to facilitate retention, pay equity or promotions. Guidance on the salary increase freeze will be given to all senior managers.
Services and Supplies Spending Restrictions
We must reduce expenditures wherever possible. Going forward, purchases are restricted to those critical to maintaining the continuity of our land grant research mission, meeting the terms of contracts and grants, and supporting priority operations. While some services and supplies spending is fixed, implementing a 5% reduction in the purchase of supplies and services university-wide (excluding grants) would save over $15 million next fiscal year.
FY21 Budget Reduction Planning
All academic and administrative leaders soon will be provided guidance to develop FY21 budget scenario plans that anticipate E&G spending reductions of 3%, 7% and 10%.
Consistent with the terms of Governor Brown’s Stay Home, Save Lives order, all non-essential OSU travel remains suspended until further notice. You may find information on travel here.
I pledge to keep you regularly informed and encourage you to share your suggestions and thoughts by utilizing this special COVID-19 response e-mail address: email@example.com
In closing, our goal is to maintain and fully advance OSU’s land grant research mission. I join you in looking forward to the day when we begin returning to our campuses and facilities around the state, teaching in our classrooms and conducting research in our labs.
At the same time, we must recognize there will be a new normal that awaits us in the months ahead, including greater integration of digital learning and remote access to resources, not unlike those we are experiencing now. The lesson of the moment is that we have faculty, students and staff with incredible energy, dedication and talent to ensure that the Oregon State University community will continue to thrive today and in the future.
Edward J. Ray