Business direction during COVID-19

[Agriculture, Life and Veterinary Sciences, and Cooperative Extension Weekly Bulletin]

Dear Colleagues,

The University's unprecedented response to COVID-19 will have a significant impact to division and unit finances.  This is not business as usual.  To paraphrase Laura Scaramella, "this is business as unusual," and we need to adjust our mindset to flexibly respond for years to come.

Fortunately, the direction that ALVSCE began prior to the pandemic is still the right solution.  Invest in ourselves and invest in instructional mission delivery in non-RCM areas: online, distance, global.

CFO Rulney and Provost Folks expect something I'm calling a "flight to safety" by non-resident and foreign students.  Students are expected to seek higher education close to home.  These students represent 39% of the undergraduate student body.  Yet, their financial impact is disproportionately higher, generating about 50% of the total net tuition revenue.  Tuition revenue generates over $650 million annually of our $2.1 billion university budget.

Perhaps the flight to safety will work in the inverse and Arizona students who were enrolled out of state will turn to the University of Arizona for their education.  We simply won't know until we see who enrolls this fall.  Regardless what happens at the Tucson campus, online, distance, and global allow us to meet student needs where they are.

What to expect in FY20 - Current Fiscal Year
Expect additional budget cuts on top of the RCM tax increases and budget reallocations we knew about at the beginning of this month.  I have no idea how much more or when we will know.

What to expect in FY21
The revenue losses coupled with increased costs from COVID-19 will be significant.  Expect deep budget cuts.  The structure of support functions at the University will likely change to extract savings and remove duplications.

Tax revenues to the state will decline due to the closure of restaurants, bars, and other businesses.  My concern is that the state may enact budget rescissions to cope with the lost tax revenue.  I will continue to watch tax revenues closely.  My concern aside, there could be a financial stimulus package from the federal or state governments that offsets declining revenues.  Again, I don't know.

What units must do
Units must aggressively invest all resources in our people immediately to advance critical mission growth, especially in distance, online, and global, and position our research to roar back as this crisis abates.  Spending must be focused to achieve this, which includes hiring.  If reductions in force become necessary, and a unit leader hires faculty, these people would NOT be the first to be laid off, so unit leaders who hire are implicitly choosing to lay off faculty or staff currently employed.

Unit business offices must track all expenses incurred due to COVID-19, including unexpected financial impacts like lost revenues, all cost-shares/matches, and lost efficiencies and effectiveness.


[image0]
Jeffrey M Ratje
Associate Vice President, Finance Admin Operations
Division of Agriculture, Life and Vet Sciences & Cooperative Extension
THE UNIVERSITY OF ARIZONA

Forbes, 314c
PO Box 210036 | Tucson, AZ 85721
Office: 520-621-1468 |
jmratje at email.arizona.edu<mailto:jmratje at email.arizona.edu>
www.compass.arizona.edu<https://www.compass.arizona.edu>


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