COVID-19 Fiscal Impact - Update

May 28, 2020
Prabhat Hajela, Provost, and Curtis Powell, Vice President of Human Resources

Dear members of the Rensselaer community,

Over the last several months, the COVID-19 pandemic has not only changed how we live and work, the crisis has created significant financial challenges for Rensselaer. However, as a STEM-focused research university, we have proactively provided leadership, research, information, equipment, and practical solutions related to the pandemic, on local, regional, and national levels. We are tremendously proud of the ways in which Rensselaer has responded.

The COVID-19 pandemic and the global economic downturn have created particular financial challenges for higher education institutions. The financial impact of this crisis to Rensselaer is substantial, and we expect to see ramifications for some time given that the pandemic places intense pressure on our student enrollment, administrative operations, and associated revenue streams. 

We anticipate revenue losses related to the pandemic to exceed $17 million for the current 2020 fiscal year. We have implemented several measures to preserve the ability for the Institute to weather the significant revenue shortfalls of this crisis. These measures included: 

  1. Reduction of leadership salaries

  2. Reduction of discretionary expenses to the greatest extent possible, including travel, outside services, consulting, and purchases

  3. Suspension of faculty and staff hiring

  4. Suspension of faculty and staff annual merit increases

  5. Suspension of staff reclassification promotions

  6. Suspension of faculty and staff promotional increases

  7. Suspension of faculty and staff equity pay adjustments

  8. Suspension of faculty sabbatical leaves

  9. Suspension of research-sponsored positions and stipends from grants after May 16, 2020, unless fully funded by grant/contract

  10. Reduction of fixed-term employees, which includes non-renewal of contracts for some contingent faculty

  11. Staff furloughs 

As we continue to respond to this pandemic, the financial impacts continue to grow. Even when we resume on-campus activity (dependent on Governor Cuomo’s New York Forward planning), we anticipate revenue shortfalls to persist, driven by a phased and gradual return to full operations. The pandemic, and the resultant disruption in our economy and domestic/international travel, has also introduced significant uncertainty to enrollment planning. Significant declines in student enrollment will increase the estimated revenue shortfall. 

We will face these financial challenges as a community, asking for a shared sacrifice among administrative staff, academic staff, and faculty. We remain committed to protecting our workforce. However, as almost 70% of the Institute’s overall expenditures are for employee salaries, we will take additional steps:

Across the Board Salary Reductions

Employees earning between $60,000 and $200,000 will have a 2% reduction in salary; employees earning over $200,000 will have a 4% reduction in salary. The reductions will apply to all employees for the entire 2021 fiscal year, beginning July 1, 2020. 

Reduction of Institute’s Contribution to the Defined Contribution Retirement Plans

We will reduce the Institute’s contribution to the defined contribution retirement plans for faculty and staff, from 8% to 6%. This will be in effect for the entire 2021 fiscal year, beginning July 1, 2020. 

We are taking these actions in order to mitigate the effect of the additional $32 million to $60 million revenue shortfall that we currently project for the 2021 fiscal year, as well as additional costs associated with a safe return to campus when we are allowed to do so.

As we move through the summer and into the fall, we will continue to proactively share information with you.  Again, we deeply appreciate everything you are doing and look forward to moving our institution out of this difficult period as quickly and safely as possible. 

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