As Cal Poly faces a significant budget deficit from COVID-19-related losses and expenses, budget cuts will be made, according to an email sent to all Cal Poly faculty and staff.
“These new financial realities will force us to make very difficult budget cuts to some areas of the university,” President Jeffrey Armstrong wrote.
The university projects a budget deficit of $35 million due to the reduction in state funding, increase in mandatory costs and current structural deficit, according to the email.
Approximately 40 percent of the university’s budget comes from state funding, according to the email. Cal Poly’s total operating budget, including state funds, tuition and fees, will be permanently reduced by 5.7 percent, which is the equivalent of about $21 million.
If the federal government provides California with additional COVID-19 relief funding on October 15, the state may be able to provide more funding to the California State University (CSU), according to an email sent to all CSU faculty and staff.
“At this point, the possibility of this additional funding is nothing more than speculation, although we have our team in Washington, D.C. advocating strongly to make it happen,” the email from CSU Chancellor White read.
These resources would be a one-time allocation to use while planning and transitioning to a permanent budget reduction, White wrote in the email.
During the 2019-2020 fiscal year, the CSU received increased state funding, developed financial reserves and received substantial resources from the March 2020 CARES Act. Due to these resources, the CSU began the 2020-2021 fiscal year “reasonably prepared,” according to the email sent to all CSU faculty and staff.
“However, all credible financial forecasts indicate that this pandemic will create, at a minimum, a three-year financial and operational challenge to the state and to the CSU,” the email read. “If our finances deteriorate in the coming months and years beyond is known and forecast today, we will need to quickly re-evaluate this plan and revisit every option available to us to live within our means.”
To partially offset this reduction, Cal Poly will draw upon its limited financial reserves to help cover campus expenses and minimize layoffs, according to the email sent to Cal Poly faculty and staff. The university anticipates using these reserves for the next two to three years.
The university does not want to spend all of their reserves this year, as the university predicts money will be needed for the next few years to further address COVID-19, according to the email. There is not enough money in the reserves to cover university expenses for multiple years if the campus continues to experience budget cuts and lose revenue, according to the university’s email sent to faculty and staff.
A furlough program is not available at this time, according to the CSU email. The CSU predicts a furlough program will be necessary in the 2020-2021 fiscal year.
Cal Poly will also be assessed $4.5 million of health insurance, retirement and insurance increases, according to the university’s email. These increases are both unfunded and recurring.
The university continues to experience one-time cuts and expenditures related to the pandemic, including housing, parking and dining. Enrollment numbers for the 2020-2021 academic year remain strong, according to the email sent by Cal Poly.
COVID-19 related expenses include personal protective equipment, sanitation, facility modifications for physical distancing, IT equipment, software and other services, according to the email sent to all CSU faculty and staff.
Cal Poly has planned for budget cuts by limiting travel and hiring, centralizing shared operations and working to reduce administration, according to Cal Poly’s email.
Guided by the university’s strategic plan, the university will prioritize the wellbeing of students, staff and faculty, preserving class offerings essential to progress toward degree, increasing graduation rates and eliminating opportunity gaps in graduation rates, supporting students and maintaining a focus on diversity, equity and inclusion, according to Cal Poly’s email.
The university will share governance with the campus community while developing its plan, according to Cal Poly’s email to faculty and staff. Meetings to evaluate options and solutions to reduce the budget cuts’ impact will be scheduled with the President’s Cabinet, deans, President’s Leadership Council, department chairs, Campus Advisory Council, Associated Students, Inc. (ASI) and Academic Senate and other campus entities.