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Budget cuts, layoffs, furloughs — COVID-19’s effect on colleges will shape higher ed for decades

Emerson College's bottom line has been hit hard by the fallout from the pandemic.
Emerson College's bottom line has been hit hard by the fallout from the pandemic.Jessica Rinaldi/Globe Staff

In January Emerson College seemed poised for a great spring semester. The glass and concrete renovation of the Little Building dormitory, perched on the edge of Boston Common, was open after a multi-year renovation that breathed new life into the historic building. The school’s Los Angeles campus was financially solid, and enrollment was strong.

The school had taken on significant debt to finance the renovation, but administrators were confident that strong demand for their well-known arts and media programs would allow them to use 2020 to begin to recover from the expensive building project.

By March, with the coronavirus pandemic sweeping across the country, everything changed for Emerson — and virtually every other institution of higher education in the country.

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Local colleges and universities, including Emerson, Boston University, UMass Boston, and smaller schools, such as Springfield Technical Community College, have all imposed cuts with varying levels of severity, as they struggle to ready their institutions for an uncertain fall and beyond.

“It’s painful,” said Emerson president Lee Pelton in a phone interview. “But we are guided by the values, which are health and safety, and understanding that the people are our focus.”

Emerson has frozen staff and administrative salaries, suspended faculty and staff retirement contributions, cut department budgets, and slashed the pay of top administrators, including the president, to fill a budget gap of at least $33 million. Pelton said he is proud that Emerson has avoided layoffs and furloughs, but he warned faculty in a July 10 memo that more cuts could be necessary this fall, and the deficit could reach $76 million out of operating revenues of around $300 million.

Looming beyond the immediate crisis, as colleges and universities across the country scramble to make their campuses safe for students to return this fall, are the enormous financial repercussions of the pandemic that will likely reshape higher education for decades.

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Boston University plans to lay off or furlough about 250 employees as part of its plan to close a $96 million budget gap. Springfield Technical Community College plans to eliminate seven entire programs, including biomedical engineering technology. The University of Massachusetts Boston expects a 35 percent drop in foreign student enrollment, which would come at a loss of nearly $17 million.

Elsewhere in the country, ailing revenues are also forcing painful decisions. The University of Akron, a public research university in Ohio, plans to cut 10 percent of all staff, including 100 full-time faculty. The Chronicle of Higher Education so far has identified more than 50,000 higher education employees who have been laid off or furloughed in an industry long considered one of the most insulated from such measures.

“We’ve gone through fire,” said Kent Chabotar, a former college president and chief financial officer who now advises school leaders, referring to the 2008 recession, the last time the industry experienced major upheaval. “Prior eras of cutbacks ... but nothing like this.”

In the dead of summer, when college administrators normally take a vacation, they are working overtime, in most cases making choices with few good options.

Campuses can reopen and risk a COVID-19 outbreak or stay closed and risk not enrolling enough students to stay financially afloat. There were a record number of colleges with empty spots in their freshman and transfer classes this year.

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No matter what path a school chooses, it will likely confront difficult, possibly existential, questions that shape post-secondary education for years after the coronavirus is under control.

“It’s a bad situation either way,” Chabotar said. “There are no good choices.”

Many experts have compared this crisis to the 2008 economic crash, but it is different in one key way. This time, the institutions most damaged by the crisis will not be the elite schools whose endowments were decimated by that stock market crash but the more typical colleges that enroll the vast majority of students in this country.

This time around, wealthy schools like Williams College are able to discount tuition by reaching deeper into their endowments, a luxury that places like Emerson cannot afford.

Emerson depends almost entirely on tuition for its revenue because it has a small endowment and little fund-raising. Other revenue streams, such as its theaters, have also been hurt by the pandemic. Its Los Angeles campus is not allowed to reopen for now, although students plan to be enrolled in that program.

And like other schools, Emerson is planning to invest millions in measures to prevent the spread of COVID-19 on campus, including testing, additional housing to spread out students, and extra cleaning.

Despite the uncertainty, Emerson’s top finance official believes the school will weather the pandemic successfully because, he said, it entered the crisis from a position of strength. The school has already made up for a $7 million loss from the spring semester, said Paul Dworkis, vice president of administration and finance.

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“I see it that we are in a strong position. Yes, we are all going to be weakened by the effect of the pandemic. That is industry wide,” said Dworkis, who came to the college in December after serving as chief financial officer at the University of Maryland College Park.

Moody’s Investors Service issued a report on Emerson in February, just before the pandemic struck. Analysts pointed out that the school was deep in debt because of its borrowing, but said its enrollment, around 4,800 students, was strong and so it was on solid ground. The school had planned for deficits but remained break-even.

“To their credit, they have been able to deliver continued good operating performance under stressed circumstances. Now these are different stressed circumstances, and how their students react, I don’t think any of us are going to know,” said Susan Shaffer, vice president at Moody’s who authored the report.

Dworkis is focused on cuts that do the least damage to the school’s long-term financial stability and are least disruptive to learning.

A school spokeswoman said Emerson has a record number of first-year deposits and more returning students registered this fall than last. If trends go the other way, the school could adjust if 25 students decided not to return, Dworkis said. But if 100 or 200 do not return, he said, it would be more difficult.

The coronavirus pandemic has highlighted just how reliant many universities are on revenue from tuition, fees, and room and board.

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Tuition and fees make up more than half of Boston University’s more than $2 billion operating budget. Unlike wealthy universities such as Harvard, which can use its $41 billion endowment to cushion financial blows, BU’s $2.3 billion endowment supports only about 3 percent of its operating budget. At Harvard, about a third of its budget is covered by the endowment.

Enrollment uncertainty, especially among international students who make up about 10,600 of BU’s 34,700 students, prompted president Robert Brown’s announcement last month of layoffs and furloughs. The university declined to comment on which departments or positions were cut.

The University of Massachusetts Boston has informed as many as 325 lecturers that their contracts for the fall may not be renewed and furloughed about 50 staff and 30 administrators. Further cuts are likely as the campus expects a budget gap of between $35 million to $53 million, Katherine Newman, the UMass Boston outgoing interim chancellor, informed employees in a letter last week.

“The end result is staggering by any standard,” Newman said. “Regardless of the exact amount, the deficit will be significantly larger than any previous economic downturns.”

The university is expecting to get 10 percent, or about $13 million, less in state funding for this fiscal year, Newman said.

The entire UMass system, in a budget approved Monday, estimated a $264 million financial gap this year. The system will close more than 60 percent of that shortfall through personnel-related reductions, including the layoff of more than 530 employees, furloughs, and shrinking the number of student and temporary workers. UMass has also decided to freeze tuition for in-state undergraduates and graduates to ease the financial burdens of the pandemic on them..

Declining enrollment and fears of state budget cuts have also forced Springfield Technical to eliminate seven programs, including automotive technology, cosmetology, and landscape design, and cut 21 positions. The cuts are expected to save the college $1.1 million and targeted lower-enrollment programs, college officials have told Springfield-based newspaper, The Republican.

Springfield Technical declined to make any administrators available for an interview.

Heather May, chairwoman of the Emerson Faculty Assembly, said professors there are worried faculty could lose their jobs if more cuts become necessary.

May said she is grateful the administration so far has worked to avoid faculty cuts. She said professors hope that if more cuts come, the school takes care to examine the cost of its highest-paid administrators.

“You’re asking us to be your front-line workers for less compensation,” she said. “Faculty is willing to make sacrifices but it has to feel both financially and morally fair.”

Correction: An earlier version of this story incorrectly described cuts at Springfield Technical Community College. Of the 21 positions cut, 11 are faculty; the rest represent all areas of staff.


Laura Krantz can be reached at laura.krantz@globe.com. Follow her on Twitter @laurakrantz. Deirdre Fernandes can be reached at deirdre.fernandes@globe.com. Follow her on Twitter @fernandesglobe.