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College Revenues Shrinking During Coronavirus Pandemic

FLE- A University of Connecticut student waits for the traffic light to change outside a dormitory building on the campus in Storrs, Conn., Sept. 18, 2015.

U.S. colleges and universities are bearing a greater financial impact from the coronavirus pandemic than anticipated, education officials say.

And they are asking for help.

The schools received $2.9 billion in federal support through the Coronavirus Aid, Relief and Economic Security (CARES) Act in March, and another $2.9 trillion in assistance is proposed through the Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act.

But aid for the educational institutions was already lagging from reduced funding since the 1980s, accounting for tuition and fees tripling in the past four decades. Universities responded by increasing their costs.

“Over the past several decades, there has been a substantial shift in the overall funding of higher education from state assistance, in the forms of grants and subsidies, to increased tuition borne by students,” the U.S. Treasury Department reported in 2012.

When the pandemic hit -- sending students online, shutting down campuses and diminishing enrollments -- university coffers lost more than $120 billion, “especially in areas such as testing, contact tracing, quarantine, treatment and learning technology,” wrote Ted Mitchell, president of the American Council of Education, to the U.S. House of Representatives on Sept. 25.

UConn request

The University of Connecticut (UConn) has used up $35 million it moved from the budgets of its Storrs and regional campuses, according to the school. It is asking for a state allocation of $28 million that, added to $13 million from its current fiscal year, would make up for shortfalls in funding.

“We know that we have already cut substantially over the past several years, and this $28 million additional round of cuts will cause pain at the university,” Scott Jordan, UConn’s chief financial officer and executive vice president for administration, said in a statement published by the university.

FILE - A building at the University of Maryland's Baltimore campus is seen after sunset, Aug. 19, 2019, in Baltimore.
FILE - A building at the University of Maryland's Baltimore campus is seen after sunset, Aug. 19, 2019, in Baltimore.

The University of Maryland (UMD) has also taken a hard hit as it faces a $292 million budget cut in the next fiscal year. Some employees will see a salary cut, but those who earn less than $150,000 annually will not face reductions, according to The Diamondback, the student newspaper.

School President Darryll Pines described the coronavirus’s impact on UMD’s budget as “by far the largest financial crisis in the history of the university” in a virtual town hall meeting to explain budget shortfalls.

UMD will also face 5% cuts for each academic department, and facility improvement projects will be postponed, Pines wrote in a campuswide email to students and staff. The welfare of the school community, he wrote, matters more than the budget cuts.

“Please know that you have leaders in this institution thinking about members of our entire community who may be the most impacted by even a small change in their paychecks,” he said.

Weighing costs, benefits

Dennis Scanlon, a professor of health policy and administration at Pennsylvania State University, analyzed how universities are handling the pandemic according to several factors: “mortality, morbidity, disruption to operations, and then reputational impact.”

“How severe and serious is it? What are the treatment needs? So, making sure that if you're going to potentially increase the risk in a population of disease spread, which certainly would happen from going from everybody staying kind of sheltered in place to opening up to some degree,” he said in an interview with The American Journal of Managed Care.

FILE - A view of buildings on the campus of Pennsylvania State University in State College, Pa., July 11, 2012.
FILE - A view of buildings on the campus of Pennsylvania State University in State College, Pa., July 11, 2012.

Scanlon said that while he believes the health of the university community is important, so is weighing costs and benefits.

“No matter how you slice it, there's uncertainty, and there are costs and benefit trade-offs. That sounds perhaps to some a little bit crass, but really trying to weigh the risk, what level of risk may be worth taking, and what are the costs to mitigate that risk,” he said.

Scanlon told AJMC that universities and colleges are awaiting more support.

“I think a great disappointment from my perspective is sort of the lack of speed of having more guidance, quite frankly, from federal and state level health officials about what to be done, and more specific guidance,” he said.

ACE’s Mitchell said he hopes higher education will receive needed funding to support education for jobs that could help a faster recovery from the pandemic.

“Our schools train the doctors, nurses and other front-line workers needed to address this unprecedented health crisis and perform the research necessary to produce the urgently needed vaccines and treatments. Finally, our schools educate 26 million students, preparing them to compete and succeed in an increasingly difficult economy, and fueling the path towards a recovery,” Mitchell said in a letter to Congress.