The predicted economic fallout to higher education from the coronavirus pandemic is being felt in Georgia, where Emory University just announced several cost-cutting measures. Those include a hiring freeze and suspension of merit raises through August 2021, along with delays in some capital projects.
Emory is one of the state’s largest employers with more than 31,000 full-time employees in the 20-county metro Atlanta region.
In a letter to the community, Emory CFO Christopher L. Augostini, interim Provost Jan Love and Emory Healthcare President and CEO Jonathan S. Lewin wrote: “The COVID-19 pandemic has disrupted so much of our lives, including three of the university’s core activities — teaching, research and healthcare — and with that has come a significant impact on our financial foundation as a university and academic medical center. … Emory has lost revenue related to the suspension of mission-related activities, incurred costs related to supporting students’ financial needs, and faculty and staff salary continuation. The economic recession resulting from the pandemic will be felt for many months and will require significant adjustments for all of us.”
While Emory has not fired anyone or slashed salaries, the trio cautioned, “Depending on the duration of the COVID-19 disruption and the depth of the economic recession, we must acknowledge that Emory may not be exempt from very difficult choices.”
Nationally, campuses are bracing for what economists and higher education analysts warn could be a repeat of the devastating 2008 recession.
Public campuses are already affected. During a conference call meeting of the Board of Regents Tuesday, University System of Georgia Chancellor Steve Wrigley said losses through the summer from closed campuses that would normally be abuzz with camps, education programs and other events, along with $200 million in reimbursement of room and board fees to students sent home in March, will set back the system about $350 million.
Worse news is likely ahead for public colleges that rely on tax revenues, which will decline as more Georgians lose their jobs. More than half a million laid-off Georgia workers filed unemployment claims in the previous two weeks, and that did not count the many Georgians unable to access overloaded systems or who postponed filing.
Even with their endowments, private campuses will not be immune to the pandemic’s economic wreckage. Emory’s endowment was $7.87 billion in the 2019 fiscal year.
“While Emory does have a large endowment, these resources do not serve as a reserve fund and, therefore, cannot be used to replace lost revenue. … The economic recession, triggered by COVID-19, has negatively impacted the global financial markets. As a result, we expect our endowment’s overall market value to decline, reducing the annual payout that supports Emory operations. The cost reduction measures are designed to help offset this impact so scholarships, professorships and other activities funded by the endowment can be maintained, even if the endowment provides less financial support,” said the three Emory leaders in their community letter.
The cost-cutting plan applies to Emory University, not Emory Healthcare.
Emory University is also imposing zero-based budgeting, limiting discretionary spending and eliminating activities and expenses not critical to the core missions of education and research, said the community letter.
Emory just named a new president, Gregory L. Fenves, who is now president of the University of Texas at Austin; he takes over in August.
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