For Faculty and Staff: Budget Response to COVID-19 Financial Impact 

May 20, 2020 @ 10:00 a.m.

Dear CU Denver Faculty and Staff:

Beyond COVID-19’s tremendous human and economic toll, it has significantly disrupted our campus operations and financial situation. We wrote to you previously about the expected financial impact and initial steps to sustain our financial health, including implementing a hiring chill, a pause in merit increases, and a pause on travel. We also outlined a set of principles that reflect our core values and guide our budget reduction response. Today, we’re writing to provide updated financial news and outline the further steps we are taking to reduce expenses, including employee furloughs.

New Information About Our Financial Picture

Over the past month, we’ve held a series of campus town halls on how this crisis has profoundly impacted our finances. We noted that to address the many unknowns affecting our financial picture, we’ve been scenario planning for FY 2020-21 (which begins on July 1), for general fund reductions of between 10% ($22 million) and 20% ($44 million). Our general fund revenue comes primarily from tuition and fees and state funding. We’re also planning for reductions in auxiliary operations which are supported by restricted revenue collected specifically for those operations. 

Last week the state announced that its revenues for next year are estimated to come in $3.2 billion lower than predicted—an unprecedented shortfall. Earlier this week Governor Polis announced $450 million in CARES Act funds for higher education in Colorado. CU will receive $127.7 million and soon we will know the amount for CU Denver, along with any changes in state funding. In addition, the Board of Regents voted yesterday on three important aspects of our budget for next year: a 0% increase in tuition, a small increase in student fees (less than 1%) and a 0% salary increase for employees.

This news provides some—but not all—of the information needed to calculate the precise amount of reductions that will be required in our budget. There will be uncertainty about enrollment, particularly among out-of-state and international students, until we get to fall semester census. Using the information we do have has led to a conservative estimate that our shortfall is likely to land between our two planning scenarios, requiring a 15% reduction of $33 million.

Decisions About the Coming Fiscal Year

We believe it is prudent for the campus and helpful to our faculty and staff to make decisions now about how to manage that reduction. This gives employees time to plan and provides our schools, colleges, and central support units more opportunity to thoughtfully consider their budget reductions. Should circumstances improve significantly during the fiscal year, adjustments can be made.  

Our expense budget consists of three main “buckets” that must be tapped to achieve this reduction: 1) campus reserves; 2) operating expenses; and 3) compensation. We have made the decision to distribute approximately one-third of the shortfall from each. We will reduce available campus reserves by one-half.  Operating expense reductions will be handled at the local level (within schools, colleges and central support units) to ensure the best decisions with the least impact on students and mission-critical work. Our deans and vice chancellors have already begun to work with faculty and staff on ideas for these reductions. 

Our people are our most important asset and our highest investment, and salaries represent approximately 70% of our expenses. We must take steps that, unfortunately, will have a direct impact on most of our employees. We will be asking for a shared sacrifice among faculty, staff, and administration, with the largest contributions from our leadership and highest earners, while exempting those with annual salaries less than $60,000.

Graduated Furlough Plan

For CU Denver employees, we will institute a tiered, progressive program of unpaid, temporary furloughs beginning July 1, 2020 and potentially running through June 30, 2021. (A furlough is mandated unpaid leave and is not a layoff or non-renewal and cannot be replaced with accrued “paid” leave.) The table below shows the number of furlough days per year for each salary band at CU Denver and the resulting percentage salary reduction.

The furlough plan will apply to most CU Denver employees: schools, colleges, academic and student affairs (ASA) staff, and CU Denver administration. Graduate assistant, postdoctoral, temporary, student employees, and non-FTE appointments are not subject to furloughs. Classified employees and university staff who are part of Central Services and Administration (CS&A) units that support both CU Denver and CU Anschutz are not currently subject to this plan. These employees may be subject to furlough plans or other reductions made and implemented by the state/governor/legislature (classified employees) and CU Anschutz (CS&A units supporting both campuses). All CU Denver cabinet, deans, and other officers will be furloughed at the highest level (tier 6).

We understand that you may have questions about how the furloughs will be implemented. You can find FAQs on the Human Resources webpage (under the COVID-19 Resources header, “Human Resources Processes and Policies” tab). Further updates will be provided directly from the deans, vice chancellors, and HR Business Partner for your school, college, consolidated unit or department. Questions may be directed to your supervisor or HR Business Partner or emailed to Human.Resources@ucdenver.edu.

We will be hosting another virtual town hall tomorrow, Thursday, May 21, from 2-3 p.m. Use this Zoom link or call in at 1-346-248-7799 and enter the Zoom ID (94410119603). If you can’t watch it live, the town hall will be will be recorded and posted to CU Denver's YouTube the following day, Friday, May 22.

Other Factors Influencing Our Budget

There are still many unknown aspects of our budget, including reductions in state support, the amount of federal stimulus (CARES Act) funding we will receive, the impact of any Board of Regent and CU System budget reduction decisions, and Auraria Campus budget reductions. Our campus budget will not be final until the state finalizes its budget in June. The Board of Regents will vote on our FY 20-21 budget on June 18. Any updated information (including fall enrollment) will be included in a revised budget presented at the September Board of Regents meeting.

As you know, enrollment has the greatest impact on our budget. We’d like to take this moment to acknowledge the excellent work done by the summer enrollment planning team. Their efforts and those of others are resulting in summer enrollment exceeding budget expectations at this time.

Now, we must focus our energy on providing high-quality teaching and learning experiences and increasing recruitment of new students and retention of current students for the fall semester. While at this point we can’t know for certain what form our fall semester will take, work is progressing on our planning for a safe return to campus. We expect updated information on our fall semester plans in early June.

Meanwhile, we acknowledge how hard everyone is working, and we express our heartfelt gratitude for all you are doing for our students, each other, and the community. We know the information in this email is difficult to receive. Your willingness to absorb these temporary furloughs represents a shared sacrifice that will enable CU Denver to continue to operate at full strength this coming year. By working together, demonstrating resilience and resolve, and embracing innovation and creativity, we will emerge even stronger from these difficult times.

With appreciation for all that you do,

Dorothy Horrell, Chancellor

Roderick Nairn, Provost and Executive Vice Chancellor, Academic and Student Affairs

Jennifer Sobanet, CU Denver CFO and Senior Vice Chancellor, Administration and Finance