Temple's financial outlook

To the Temple University community:

While all of you are dealing with unprecedented challenges on a personal level, you are also keeping Temple University strong. Your commitment to our mission made it possible for our students to continue their education when COVID-19 stay-at-home orders began in March. At the same time, many of you are fighting the pandemic on the front lines, caring for patients, developing essential protective materials and racing to find diagnostic tools and treatments. We are deeply grateful for your fortitude and so proud of the entire Temple community.

With this same resolve, we’ve had to take a hard look at the university’s budget and finances, announcing a hiring freeze, reduced spending, a 5 percent budget cut for the coming fiscal year and salary cuts for nonrepresented employees. We must continue this careful scrutiny to preserve Temple’s mission of providing the best education possible.

To prepare in the face of this uncertainty, we have brought together administrative and faculty leaders from across the university to examine and plan for the many potential scenarios we might face in the fall and beyond. We are ever more optimistic as we see faculty and staff meeting challenges with innovation and ingenuity, but we must also be realistic and prepared. We will have more to share about our process in the coming weeks.

We want to take a few moments and walk you through the major factors that are affecting our planning and fiscal decisions.

One action we are not taking
Let me just say something on one action we will not be taking at this time: furloughs.

After deep discussion, we have decided against furloughing employees at this time. Our reasoning is simple: We understand the painful impact furloughs would have on our staff, some of whom are the sole wage-earners in their families. The cost of taking such an action at this time is simply too high.

Another compelling reason to avoid furloughs was to not add hundreds of individuals to the area’s unemployment rolls, at a time when the Commonwealth and the federal government have so many others to support.

The bottom line is this: Temple employees work hard and are deeply committed to the university and its students. We respect that commitment and want to honor it. While the future remains uncertain, it is our intention to hold the line as long as possible in taking job actions.

Temple’s revenue sources
Temple receives more than 80 percent of its operating budget from tuition revenue, and we are taking steps to ensure that we enroll and retain students: freezing tuition for the fall, enhancing online learning, offering new options to apply, register and take classes, and creating virtual experiences for prospective students to visit campus and for current students to stay engaged with the community. So far, while interest in Temple remains strong, the broader signals are mixed. For example, some national higher education experts believe institutions should prepare for a 10 percent to 15 percent drop in their student population.

Temple’s other major revenue source is support from the Commonwealth of Pennsylvania in the form of our annual appropriation. While our elected representatives continue to be highly supportive of Temple, it is clear that state tax revenues will not meet expectations. We continue to work with our elected representatives in Harrisburg and to make a strong case for sustained university support, but likely will not know what our appropriation will be until later this summer.

There are multiple other factors that have an impact on our budget, including spring room and board refunds; lost revenues from our many health clinics; canceled sporting and cultural events and conferences that were to be held on campus; the extraordinary costs of cleaning, maintenance and police coverage; plus the increased and expensive technology demands of online education that come with providing students, faculty and staff with remote access capabilities.

Temple’s financial outlook
What does all this mean for Temple University’s finances? Early on, we estimated that COVID-19 would have a negative impact on our budget of between $45 million and $60 million. With the measures taken so far, we now believe that impact will be at the lower end of that range, closer to $45 million. While federal CARES Act funding will provide about $28 million to Temple University, half of that is earmarked for students. The remaining funds will not cover the residual costs caused by the pandemic.

Budget actions
We have taken several steps so far in light of these facts. As mentioned above, to help control personnel costs, in late March we enacted an administrative hiring freeze, which remains in effect. We also called on each and every unit at the university to reduce all spending, as much and as quickly as possible, without affecting the quality of services we provide to our students. That has been done, with some budget savings as a result. We are so grateful to all of you for your assistance in keeping spending down.

Each unit of the university is also developing plans for a 5 percent budget reduction for the new fiscal year, beginning July 1.

In addition, we have imposed a 10 percent salary cut for officers, deans and advisors to the president beginning in May. Compensation of non-bargaining unit employees earning more than $100,000 will also be reduced by 5 percent in May. While intended to be temporary, these reductions will continue until further notice. And, in an effort to do my part, I have taken a 20 percent cut to my salary.

In conclusion
These past six weeks have seen unparalleled upheaval and simultaneously revealed the amazing ability of the Temple community to adapt and overcome. Temple has weathered many crises in its long history, owing in large part to the commitment of you, its dedicated faculty and staff. We have no doubt Temple will continue its mission of providing the finest quality education in the months and years ahead.


Richard M. Englert