Clarke University Financial Response to COVID-19
Dear Members of the Clarke University Community,
I hope this message finds you well and in the company of family and friends who together are caring for each other and making the best of COVID-19’s unexpected and radical changes to our work and play. Hopefully, by now, you have had a chance to read my June 24 message on Clarke University’s plans for reopening this fall and are encouraged and perhaps even comforted by the steps we are taking toward continuing to deliver a transformational educational experience as a community of learners. I want to share further with you the considerations and plans that have emerged from our ongoing financial analysis of the pandemic’s impact on Clarke in the short and long term. I think it is important that you know what we are facing now and anticipating later on so that you can make personal and professional decisions alike.
While we faced many unexpected expenses in the spring, including prorated refunds to residential students who left campus, we also received federal funding and access to the Paycheck Protection Program (PPP) Loan through the CARES Act to help offset some of those expenses and keep our budget and our employees whole. From the onset of the pandemic the decision-making of the Board of Trustees and Cabinet has been to put Clarke’s people first—your safety, security, and—to every extent possible—your employment at the university. That approach is unchanged today as we monitor daily the key elements that determine our financial capacity and strength: new student enrollment and retention of current students; institutional endowment performance; and philanthropy. All of these have already been impacted. What will happen next is not entirely clear.
Recognizing this uncertainty and the need to prepare Clarke for the coming year, I want to share some steps that we will take to strengthen our position to respond. These will become more specific and firm once fall semester enrollment is settled in mid-August. You can expect me to share new information with you as our situation becomes clearer.
First, as we currently anticipate overall undergraduate and graduate enrollment will likely be short of our original projections set in January, we expect a shortfall in revenue generated by tuition, room and board, and investment returns on the endowment, which we will address in several ways to distribute the impact:
- reducing new capital expenditures (e.g. holding off on some renovations and upgrades that can be deferred to another year);
- reducing and restricting professional development and travel. We are in some ways fortunate to have institutional and program-level memberships that provide significant access to professional development without the added expense of traveling to site-based learning. Other travel may be transformed into virtual experiences for those with whom we normally meet face-to-face (e.g. alumni, donors, prospective students) and have experienced success on new platforms; and
- right-sizing supplies, materials, and grocery budgets to reflect spending trends of prior years and any enrollment shortfall.
These actions may seem fairly commonplace and the most likely that any university would take, and that is true, but as a small institution, I recognize the effect at Clarke can feel more significant to individuals and workgroups alike and do not make or take such decisions lightly.
As we monitor our fall numbers we will continue to do everything we can not to affect our employees’ livelihoods by cutting current salaries or positions. To date, Clarke has been a relatively rare exception to that nationwide trend; however, if our people-first approach to planning should require a personnel impact, we will continue to do whatever we can to keep our workforce whole and again distribute the impact. At this stage we expect that we will have to implement on August 1:
- freezing the hiring of open positions subject to Cabinet review on a case-by-case basis;
- freezing all employees’ wages and salaries at current rates and not initiating the 2% salary increase originally planned for December 1, 2020; and
- suspending indefinitely some or all of the university contributions to employee retirement plans.
We will inform you in advance of taking any of these measures and include a resource of answers to frequently asked questions.
If we should find ourselves in a stronger financial position during the year, we will revisit this decision and communicate accordingly. Only if our position is worse than expected would we resort, for example, to cutting all professional development and travel, reducing wages and salaries, implementing furloughs and/or required unpaid leave, or doing a reduction in force. If like me you have seen announcements like these by other higher education institutions in our area, I hope that you too will keep your focus firmly on our work at Clarke and not assume that what happens nearby—for better or worse—is exactly what will happen here. If ever there was a time when no two colleges are alike, it is now.
With the goal of putting us in the strongest possible position to protect our mission and the people of our Clarke community, we will continue to review, assess, and communicate the actions we believe we must take now, in August, and thereafter. I expect you will have reactions to this, questions and ideas about how we proceed in the short and long term, and concerns about how your work may be impacted. I welcome all of these and will make every effort to respond.
As we move forward, three priorities must guide our Clarke community: protecting the health of our students and employees, ensuring the continuity of our academic mission and student experience, and sustaining the livelihoods of our workforce. I am grateful that I get to work with you as One Clarke, One Community in seeing us through these priorities and the hard work ahead.
Thom D. Chesney, Ph.D.