(Daily file photo by Daniel Tian)
Northwestern University has lost many sources of revenue due to the coronavirus outbreak, University President Morton Schapiro said Thursday in a community letter, but will continue to provide aid to students with need while also implementing hiring and pay freezes to address budget shortfalls — though the University will not be relying on its $10 billion endowment to alleviate budget concerns.
Schapiro addressed the financial implications of coronavirus on the University, noting dramatic declines in financial markets have decreased the value of the University’s endowment. Additionally, the reduction of over $25 million in revenues from refunded room and board and student fees, as well as the cancellation of many on-campus courses, sporting events and programs have significantly impacted University funding, Schapiro said.
The endowment, he said, was not established to fix budget shortfalls or manage crises, but “to provide key resources needed to preserve our mission of academic excellence and research eminence far into the future.”
“Questions may arise as to whether Northwestern’s endowment might help us bridge any financial gap caused by the pandemic,” Schapiro said in the email. “These endowed funds tend to be restricted for specific purposes and a portion of them are allocated to illiquid investments that are not easy to unwind to support current spending needs.”
More than $1.5 million has also been provided thus far for students’ travel and technology needs brought on by remote learning, Schapiro noted, with the University commiting to honor all student financial aid commitments. The University will provide increased financial aid support to undergraduate students with demonstrated need, Schapiro added.
Through the CARES Act, the University has also been awarded over $8.5 million as part of the initial U.S. Department of Education funding rollout of stimulus cash distributed to colleges, half of which must be allocated for emergency financial aid grants to students.
Many reports this week have shed light on conversations happening at other universities, with the status of in-class courses for the fall 2020 term uncertain. Northwestern’s return to on-campus instruction in the summer or fall quarters is also not guaranteed, Schapiro said in the email.
The University is taking additional measures to stabilize the University’s financial standing and control fixed costs amid the crisis. All facilities projects are being paused, except those related to the safety of the campus and those in the final stages or permitting and close-out.
Schapiro noted several changes being made to hiring and salaries. Academic hirings and retention are being slowed, and new staff hirings have been paused until further notice, save for hiring supported by external grant funding or critical to the core mission of the University. Faculty and staff salaries for fiscal year 2021 will remain at their current levels, except for contractually required salary adjustments, or those associated with promotion and tenure decisions.
Schapiro closed the letter by thanking the University community for the work necessary to implement these steps, sharing his pride for the community’s “resilience and determination” in adjusting to the new educational realities imposed by the pandemic.
“I have a profound sense of optimism in the skill of our scientists, the resolve of our medical professionals and the wisdom and ingenuity of scholars in every discipline, who all are contributing to defeating this pandemic and bringing forth a better world,” Schapiro said in the email. “I know a solution will be found, but I also know we must plan in the meantime with prudence.”
Email: [email protected]
Clarification: A previous version of this story said Northwestern will receive over $8.5 million in federal funding from the CARES Act. The language has been changed to say Northwestern was awarded the funds to reflect that University administrators are currently evaluating the certification form and terms associated with the grant.