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Fiscal carnage: Universities in Michigan face $1 billion in COVID-related revenue loss

The coronavirus has claimed another victim of sorts — universities in Michigan.

Public universities across the state are reporting projected revenue losses for the upcoming 2020-21 year that, when added up, exceed $1 billion.

Bridge Michigan, a nonprofit news agency, reports that the situation is so dire, some universities “may not survive.”

The University of Michigan’s three campuses — Ann Arbor, Flint and Dearborn — project a total shortfall of $400 million to up to $1 billion, the Detroit Free Press reports. Michigan State University has projected its losses at up to $300 million, the Lansing State Journal reports.

The schools’ presidents are reportedly phasing in ways to offset the losses, including pay cuts, reducing retirement contributions, salary and hiring freezes, reduced hours and construction delays.

At Western Michigan University in early May, it announced staff layoffs, with an estimated projected 2020-21 shortfall up to $85 million, WWMT Western Michigan reports, noting some 240 union campus and food service workers would be let go mid-month.

Along with the releases, all non-union employees will take around a two percent pay reduction over the summer, and senior executives will take a 10 percent pay cut moving forward.

On May 11, Western Michigan University’s President Edward Montgomery went a step further and announced plans for employees from every university department to be laid off as he will require each department to submit a plan to cut 20 percent of its budget for the year, according to local news reports.

“We have to do the process sooner rather than later,” Montgomery said. “You need to aim high rather than aim low, so we don’t have to repeat the process. If we wait and don’t plan, we won’t have the time to make the necessary adjustments for the fall.”

“There are no simply no revenues coming in at this point,” said Dan Hurley, president of the Michigan Association of State Universities, which represents the state’s 15 public four-year universities.

The lack of revenues effects on smaller state colleges has forced them to take similar steps to their larger peers. Ferris State University put 280 staff members on temporary leave and Lake Superior State announced staff cuts with potentially more to come.

University of Michigan-Flint economics Professor Mark Perry said the situation remains fluid.

“The Flint campus is right now reporting an expected decline of 19.5% for Fall 2020 credit hours compared to the same time a year ago, according to the most recent enrollment report from the UM-Flint Registrar’s Office yesterday,” Perry said via email on Tuesday. “A year ago the expected credit hours for Fall 2019 were 42,491 and this year it’s down to 34,210. And the report from the previous week on 5/11 showed an expected 17.5% decline in Fall 2020 credit hours, so the expected outlook worsened slightly in the last week.”

Complicating matters further, “higher education funding is expected to nosedive in the state budget due to be completed by Sept. 30,” Bridge Michigan reports.

“School administrators are doing what they can to respond to the pandemic,” said James Hohman, director of fiscal policy at the Mackinac Center for Public Policy, in an email to The College Fix. “They do not know how this will affect enrollment and revenue. As with so many things in this pandemic, it will be easier for schools to bounce back if the pandemic is over quickly.”

Meanwhile, officials at Ferris State, Lake Superior State, Central Michigan, Michigan State, and the University of Michigan say they hope to hold in-person classes in the fall, but plans have not yet been finalized.

MORE: UW-Madison accepts nearly $10M in federal COVID aid — still enacts pay cuts, furloughs

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About the Author
Cooper Conway attends the Boise State University Honors College, where he is earning his Bachelor of Science in political science with an emphasis on American government and public policy. He has served as an intern for the Heritage Foundation in Washington, D.C. where he provided research for the Ed Meese Center for Legal and Judicial Studies. He has also served as a research associate for the Cascade Policy Institute in Portland, Oregon.

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