Last month we wrote to you to provide an update on the university’s financial health, to share the priorities that will guide our decision making as we address our budget shortfalls, and to inform you of our initial steps to help address the financial challenges caused by the pandemic. Today we are announcing additional measures to fortify the university’s finances.
As we described in the previous budget communication, we are taking these steps guided by three core goals: maintain the high quality of a Tufts education, care for our faculty and staff, and ensure the long-term health of the university. As we’ve previously noted, all the university’s major revenue sources—tuition, room and board, research grants and clinical operations, endowment income, and fundraising—have decreased due to the pandemic. Simultaneously, the university is facing increases in IT expenses and financial aid, along with the cost of critical and necessary investments to reduce the risks for students, faculty, and staff when they repopulate our campuses.
Our initial budget actions, which included a hiring moratorium, a wage freeze, a suspension of discretionary spending, and a hold on capital projects, helped stabilize our financial situation in FY 2020, but they will not close the FY 2021 budget gap that has developed due to pandemic. As a result, we are implementing a second tier of actions, which are described below. We believe these steps are essential to addressing our financial situation while still allowing Tufts to fulfill its vital mission.
Endowment Payout: At the recommendation of the administration, the Board of Trustees at its May meeting voted to increase the FY 2021 endowment payout, which is the annual amount drawn from the endowment. Given the important role the endowment plays for the university, it should be noted that this action was taken after very careful consideration and in recognition of the extraordinary circumstances the university faces.
Capital Expenditures: To protect the university’s cash balances given our continuing financial uncertainty, capital expenditures will be limited to those necessary for life and safety, building integrity, and the university’s response to COVID-19. These exceptions include the next phase of construction of the Joyce Cummings Center to pour concrete to stabilize the steel structure; completion of the Dental School elevator project; critical renewal and replacement projects, such as the Aidekman roof and Michael Chemistry laboratories; information technology, including expanding online course availability for the summer and the fall; and Dental and Cummings clinics.
Staff Vacation Time: Currently, staff can carry up to two years of vacation balances. Under a change to the current policy, employees will earn vacation at the same rate but will only be allowed to carry up to one year of vacation balances. This change, which saves the university’s budget from having to absorb the cost of unused balances above this new cap, will take effect over the next 18 months, giving staff time to draw down their vacation to get to the new limits. Even though current circumstances make taking vacation challenging, we encourage staff to continue using available vacation days. For information on your current vacation balance, please visit eServe.
School and Department-specific Reductions: Each central unit or school has been asked to address budget shortfalls by looking for opportunities to increase revenues and reduce expenses. This may result in new or restructured academic programs, and it may also require some units, schools, or departments to make additional expense reductions beyond those announced in this email and in our previous budget communication. These changes will be communicated by the unit, school, or department once they are determined in the coming weeks and months.
In addition to these measures, all of Tufts senior leaders—including the president, provost, executive vice president, vice presidents, and school deans—have agreed to take voluntary compensation reductions. The president will be taking a 15 percent cut and the other senior leaders will take tiered cuts from 6 to 10 percent for FY 2021. Tufts senior leaders have requested that these funds be directed to support student financial aid.
We also invite you to share your ideas, not just for how we can reduce our expenses, but also how we can take advantage of our intellectual resources and traditional strengths to further fulfill our mission while creating novel revenue opportunities that help address challenges emerging from this pandemic. Please email your ideas to email@example.com.
While we hope that the actions we’re announcing today will put our budget in balance, there is still much uncertainty about the path of the pandemic, and its effect on our operations. Should our financial condition worsen through, for example, a delay in opening or a return to conditions experienced this spring, we may need to consider more difficult actions that we have tried hard to avoid and which remain our least desirable options. These could include reductions to salary, benefits, and staffing levels. We will have a better sense of our outlook later in the summer.
We know you likely have questions about what may lie ahead, and we’d like to invite you to join us for a virtual town hall for faculty and staff across the university next Friday, June 5, at 2 p.m. Details on the town hall are below, including a link to register and submit questions for us in advance.