6.1.20: University Actions in Response to COVID-19

A University financial update sent to faculty and staff.

Story by

Carina Sitkus

Dear Faculty and Staff Colleagues, 

The Lehigh community has responded admirably to the challenges of the COVID-19 pandemic. Together we have kept our mission and our students foremost in our minds and have faced personal and professional challenges with resilience and support for one another. 

Planning for the fall semester is moving forward. This is being done during a time of great uncertainty as we learn more about the COVID-19 virus and address the challenges of reopening safely. Pennsylvania Governor Tom Wolf recently announced that as part of a phased reopening for the Commonwealth, Northampton County is anticipated to move to a “yellow” designation on June 5, lessening some restrictions from the original stay-at-home order but maintaining measures necessary for health and safety; these would preclude us from holding in-person classes. 

We look forward to when the spread of the virus continues to decline and Northampton County can safely move to a “green” designation so that, if we meet prerequisites, we can welcome undergraduate students back to campus and resume in-person activity. A plan is also in progress for the more immediate, phased opening of labs and mission-critical research activity; remote work for most is still in effect until communicated otherwise.  

As we look to the fall, we face significant financial challenges for our University. We are preparing for a $40-million budget shortfall for the coming fiscal year, beginning July 1. This estimate factors in our current enrollment projections, the anticipated loss from impacted revenue streams, and the necessary costs associated with making our campus safe and enhancing our capability to deliver quality education in a hybrid format. We also recognize the economic impact of the pandemic will result in greater financial need for some students. 

The actions we have taken so far—a hiring freeze, suspension of position reevaluations, reductions in travel—have enabled us to weather this semester with a relatively modest financial loss and to avoid layoffs or furloughs. We also eliminated merit increases for the next fiscal year, in anticipation of our budget shortfall. Unfortunately, the steps taken to date are not sufficient to offset the projected revenue shortfall. 

As a result, we are taking additional measures to address the ongoing financial challenges associated with COVID-19 and to meet the needs of the shortfall estimated for the coming fiscal year. These are difficult decisions; we need to match our spending to our expected revenues while maintaining our ability to provide first-rate teaching and to conduct research that is of benefit to society. Finally, we must ensure the long-term financial health of the university. 

The actions outlined below will take effect July 1 and will be reevaluated through the 2020-21 Fiscal Year:

  • All university retirement contributions to active employees will be temporarily suspended
  • President Simon’s salary will be reduced by 20 percent and the senior leadership and college deans’ salaries will be reduced by 10 percent
  • Vice presidents and deans have been asked to identify expense reductions of 10 percent of their current year budgets for evaluation  
  • Most reluctantly, we are identifying employees whose job duties are not able to be performed remotely, whom we will place on temporary furlough 

Retirement Contributions

The University will temporarily suspend both the automatic and matching University contributions to the University’s retirement plan. Faculty and staff may still continue their individual contributions. While we don’t make this decision lightly, the impact on our operating budget is substantial, and this action obviates the necessity for other significant reductions elsewhere. This benefit is one of several factors that helps us reward, support and retain the talent that is integral to our mission, and it is a priority to reinstate this benefit as soon as the financial situation allows.

Reducing Expenses

We are asking leaders to submit plans for a 10 percent reduction in budgets for both academic and non-academic areas. We recognize budgets are already lean and that a 10 percent reduction would be difficult and have implications for both short-term and longer-term operations. We ask that everyone work collaboratively and creatively to achieve this necessary result. As we gain a clearer picture of the fall, we will evaluate how this will be strategically implemented and work with faculty and staff leadership on how we can best move this plan forward. These budget reductions, if and when implemented, may not be uniform given operational needs, such as additional health and safety resources. 

Temporary Furloughs

We committed to not implement furloughs or layoffs during the current fiscal year and will have kept all Lehigh faculty and staff fully employed through June 30, 2020. Unfortunately, that is no longer possible. We have begun to identify positions for which work cannot be done remotely, and will implement a limited number of furloughs beginning July 1. Those identified can request to start sooner in order to take advantage of the $600/week additional federal stimulus payments available to eligible individuals. We will continue health care benefits for anyone furloughed, and the University will cover the employee premium expenses. We expect any employees in furlough status will be eligible for unemployment benefits, and our intent is to restore them to their current status as soon as possible. 

While these actions are difficult, and we remain committed to supporting our faculty and staff who are so critical to our mission, we believe these measures are imperative and responsible in light of continued economic uncertainty. 

Endowment 

We have received questions regarding the use of the University’s endowment to fund any operating budget shortfalls. We are committed to exploring all options to respond to the financial challenges we will face in the next fiscal year. Our endowment currently provides slightly more than 9 percent of our annual operating budget, and supports student financial aid and a number of academic positions and programs. The endowment is not a “rainy day fund.” It is a collection of about 3,000 accounts, created through the support of generous donors since Lehigh’s founding. Most of the endowment is restricted by the gift agreements with those donors. We have the responsibility to steward these resources, assure they support the intended efforts today, and continue to be a source for that support in the future. 

Looking Ahead

We believe the actions we are now taking are necessary and prudent given the current outlook and the uncertainties of the future. We recognize they require sacrifice by members of our community, and even a substantive change in the way some of us operate. While painful, they are needed to allow us the flexibility to respond and adapt. 

We are working with our Board of Trustees, vice presidents, deans and numerous members of our community on how we move forward. Our task forces are working towards welcoming faculty, staff and students back to campus, and we thank you for your input into those preparation and planning efforts. 

Lehigh’s grit, determination and can-do spirit have never been more evident than in the past several months. In the weeks and months ahead, we are confident our community will continue to respond with resourcefulness and creativity to fulfill our educational, research and service mission while always supporting our students and each other. Through this difficult time, we will find strength in our University community’s collective efforts and shared commitment. 

Sincerely, 

John D. Simon ’19P, President

Pat Farrell, Provost and Vice President for Academic Affairs

Pat Johnson, Vice President for Finance and Administration

Story by

Carina Sitkus