NIU President Outlines COVID-19 Financial Plan

A Message from President Freeman re: COVID-19 Financial Impacts and Planning

April 30, 2020

Dear Faculty and Staff,

Just eight weeks ago, COVID-19 abruptly and significantly disrupted our professional and personal lives. Together we moved quickly and aggressively to do our part to ensure the health and well-being of our NIU community, maintain teaching and learning, support our students and provide the flexibility to our employees needed to continue delivering on our mission, vision and values. As I’ve shared before, I’m incredibly proud of what we have been able to accomplish in a short amount of time.

As the end of the semester nears and we consider the longer term, I want to help our employees understand the challenges ahead, and the very difficult decisions we need to make and consider for NIU’s future. My responsibility as NIU’s president is to ensure the sustainability of the university, and I’m committed to doing so in ways that are as thoughtful and transparent as possible, respectful of shared governance and in alignment with our values. Beginning today, I’m initiating a variety of difficult, cost-saving measures we will begin to implement to stabilize our finances through the summer and into the fall when tuition and other revenues will begin to return. By decreasing spending now, we will be better positioned to protect our cashflow and meet our obligations for the foreseeable future.

Specifically, COVID-19 continues to present us with mounting uncertainties and has adversely impacted our financial position. While we work to assess the full financial impact to date, we know that revenue reductions and real costs are already in the range of $40 million to $50 million for FY 2020. Future projected revenue losses and delays related to state funding, enrollment, housing, dining, cancelled summer programming and events, as well as philanthropy, are anticipated to be significant.

While NIU will soon receive approximately $14.8 million from the federal CARES Act, half will rightfully go directly to supporting student needs. The other half will be applied to COVID-related expenses, but it simply won’t put a dent into a growing situation. Further compounding matters is that we have yet to receive $31.8 million in state appropriations for our current fiscal year that ends June 30.  There is no guarantee when it will come or how much it will be, nor is there a guarantee about how much of an appropriation we’ll receive next fiscal year beginning July 1. I want to be clear that this delay is not the result of politics as we experienced during the budget impasse a few years ago. We recognize that our state has also been put in a precarious financial situation as a result of its fight against COVID.

Outlined below are specific actions that will serve as the initial effort to reduce our costs. As many universities across the nation are experiencing similar financial impacts, we all recognize that there is no one single action that we can take to get us to where we need to be, and everything cannot happen at one time. Measures will have to be taken over the months ahead and will require constant evaluation. Typically, we present a budget to members of our Board of Trustees in May, but this year, and with their support, we will use the next month to plan and then present our FY21 budget at the June 18 meeting instead.

Across the university, we have asked our deans and division leaders to immediately suspend purchases that are not time-sensitive or essential and to delay appropriate expenditures to the extent possible.  We’ve also provided guidance from procurement on how to re-evaluate existing contracts to identify opportunities to reduce costs or postpone services. I’m counting on every unit to work to achieve meaningful savings.

Non-essential capital projects and our campus master planning activities will be paused for an indefinite amount of time. Foundation-sponsored projects and grant-funded initiatives will continue to move forward. Additional, specific actions are as follows:

Voluntary Pay Cuts for Senior Leaders: Shared sacrifices need to be made, and I deeply appreciate that our senior leaders have stepped up to help by voluntarily offering to reduce their salaries for all of FY21. Multiple members of NIU’s executive leadership team, including CFO Sarah Chinniah, Athletic Director Sean Frazier, vice presidents, deans, as well as our head football and basketball coaches, have elected to take pay cuts beginning July 1. Executive Vice President and Provost Beth Ingram and I will each take a 12% pay reduction and will forgo bonuses in FY21.

Voluntary Retirement Program for Staff: Earlier this year, the university instituted a voluntary retirement program for faculty interested in retiring this summer. While we had planned to offer a program for staff later in FY21, we’ve decided to initiate it this May for retirement no later than July 31, 2020. Those who are eligible for retirement will receive a separate communication from HRS next week that will outline program benefits, requirements and associated timeline.

Extra Help: While difficult to do, we also need to significantly reduce our reliance on extra help at this time and until further notice. Given that some full-time employees have had reduced workloads under our current circumstances, there is more bandwidth to absorb much of the work our extra help colleagues have been providing. HRS will provide guidance Monday to managers who oversee extra help employees on next steps regarding reducing their hours. It’s important to note that these employees have been important contributors to the university, and our decisions about halting work at this time are not a reflection of the quality of their work or the value they provide.

Hiring: The term “hiring freeze” is often used during periods of financial constraint. Not hiring anyone over the coming months is impractical as certain positions will need to be filled in order to conduct important university business or to remain in compliance with federal or state regulations. NIU is instead implementing a “hiring chill” where select positions will be allowed to proceed pending approval. For the foreseeable future, and in consultation with me, all faculty hiring decisions must be approved by the appropriate dean and Provost Ingram, and all staff hiring will require approval from the related vice president and Provost Ingram as well. The hiring chill will also be applied to positions typically hired in the summer to support face-to-face camps and other events which are not able to proceed this year.

Any positions currently posted or in the search process will need to be re-evaluated.

Phone Stipends: Effective June 1, the university intends to pause all phone stipends while we re-evaluate our phone stipend policy and outline new eligibility requirements.

Moving Forward

While there are more decisions yet to be made, we will continue to engage with shared governance to help inform our strategies, and we will work collaboratively with collective bargaining units as this situation continues to evolve. We will assess every option available to us, weigh every decision carefully and be timely in our approach and communications. Our mission, vision and values will remain at the forefront of all we do.

Thank you for your continued patience and service.

Together Forward,

Lisa C. Freeman