The Michigan President sent out a letter to the university detailing voluntary furloughs, hiring and pay increase freezes, suspension of travel and construction, basically spending no new money. Chancellors of campuses are taking a 10% pay cut and the Athletic Director is taking a 5% pay cut.

He also responded to inquiries about spending down the Endowment, saying that generally wasn't possible as Endowment money is earmarked for certain projects not paying operational costs:

https://president.umich.edu/news-communi...schlissel/

(04-20-2020 02:32 PM)quo vadis Wrote:  The Michigan President sent out a letter to the university detailing voluntary furloughs, hiring and pay increase freezes, suspension of travel and construction, basically spending no new money. Chancellors of campuses are taking a 10% pay cut and the Athletic Director is taking a 5% pay cut.

He also responded to inquiries about spending down the Endowment, saying that generally wasn't possible as Endowment money is earmarked for certain projects not paying operational costs:

https://president.umich.edu/news-communi...schlissel/

This should scare the crap out of virtually everyone here that loves their own university.

Michigan is one of the wealthiest public universities that is least reliant on state funding and yet the potential losses that they're quoting here on the *low* end of $400 million are absolutely staggering.

So, if a financially strong university like Michigan is seeing this type of impact, I shudder to think what's happening at schools with a whole lot fewer resources and/or depend upon state funding much more by comparison.

They're projecting to lose at least $400 million -- presidents, chancellors, ADs, and everyone else making $200,000 or more should be taking pay cuts much deeper than 5 or 10 percent.

(04-20-2020 03:48 PM)Frank the Tank Wrote:  

(04-20-2020 02:32 PM)quo vadis Wrote:  The Michigan President sent out a letter to the university detailing voluntary furloughs, hiring and pay increase freezes, suspension of travel and construction, basically spending no new money. Chancellors of campuses are taking a 10% pay cut and the Athletic Director is taking a 5% pay cut.

He also responded to inquiries about spending down the Endowment, saying that generally wasn't possible as Endowment money is earmarked for certain projects not paying operational costs:

https://president.umich.edu/news-communi...schlissel/

This should scare the crap out of virtually everyone here that loves their own university.

Michigan is one of the wealthiest public universities that is least reliant on state funding and yet the potential losses that they're quoting here on the *low* end of $400 million are absolutely staggering.

So, if a financially strong university like Michigan is seeing this type of impact, I shudder to think what's happening at schools with a whole lot fewer resources and/or depend upon state funding much more by comparison.

Part of the crunch is from the UM hospital system--big COVID bills, reduced hospital revenue (elective and semi-elective surgeries) etc. Nearby Eastern Michigan probably doesn't have those problems.

(04-20-2020 03:48 PM)Frank the Tank Wrote:  

(04-20-2020 02:32 PM)quo vadis Wrote:  The Michigan President sent out a letter to the university detailing voluntary furloughs, hiring and pay increase freezes, suspension of travel and construction, basically spending no new money. Chancellors of campuses are taking a 10% pay cut and the Athletic Director is taking a 5% pay cut.

He also responded to inquiries about spending down the Endowment, saying that generally wasn't possible as Endowment money is earmarked for certain projects not paying operational costs:

https://president.umich.edu/news-communi...schlissel/

This should scare the crap out of virtually everyone here that loves their own university.

Michigan is one of the wealthiest public universities that is least reliant on state funding and yet the potential losses that they're quoting here on the *low* end of $400 million are absolutely staggering.

So, if a financially strong university like Michigan is seeing this type of impact, I shudder to think what's happening at schools with a whole lot fewer resources and/or depend upon state funding much more by comparison.

Yes, in the past few days we've seen Wisconsin and Michigan, two of the most prestigious and powerful state flagships, basically announce losses in the hundreds of millions.

Both of those schools make more in interest off their endowments each year than my tiny HBCU makes from all sources combined, so I'm just waiting for the shoe to drop. It's a miracle it hasn't happened yet.

It sounds like out of control expenses meets unexpected loss of revenue. I wonder if there will be more cost control when this is over, or will it be back to spending like you think revenue can only go up?

(04-20-2020 03:48 PM)Frank the Tank Wrote:  

(04-20-2020 02:32 PM)quo vadis Wrote:  The Michigan President sent out a letter to the university detailing voluntary furloughs, hiring and pay increase freezes, suspension of travel and construction, basically spending no new money. Chancellors of campuses are taking a 10% pay cut and the Athletic Director is taking a 5% pay cut.

He also responded to inquiries about spending down the Endowment, saying that generally wasn't possible as Endowment money is earmarked for certain projects not paying operational costs:

https://president.umich.edu/news-communi...schlissel/

This should scare the crap out of virtually everyone here that loves their own university.

Michigan is one of the wealthiest public universities that is least reliant on state funding and yet the potential losses that they're quoting here on the *low* end of $400 million are absolutely staggering.

So, if a financially strong university like Michigan is seeing this type of impact, I shudder to think what's happening at schools with a whole lot fewer resources and/or depend upon state funding much more by comparison.

Thats pretty chilling and likely explains why the G5 sent out that letter to the NCAA last week.

(04-20-2020 05:09 PM)Hokie Mark Wrote:  It sounds like out of control expenses meets unexpected loss of revenue. I wonder if there will be more cost control when this is over, or will it be back to spending like you think revenue can only go up?

It's not out of control expenses. Universities (like some other businesses getting squeezed) have a high-revenue-plus-high-overhead business model, and the problem is that they are looking at a lot less revenue coupled with not much less overhead.

The medical center revenue will return in the not-too-distant future. Tuition revenue will take longer to bounce back to pre-pandemic levels. Donation levels might take even longer to recover. For public universities, money from the state will come under significant pressure, because in 2020, each state is going to bring in many billions less in tax revenue than they did in 2019.

(04-20-2020 04:11 PM)Wedge Wrote:  They're projecting to lose at least $400 million -- presidents, chancellors, ADs, and everyone else making $200,000 or more should be taking pay cuts much deeper than 5 or 10 percent.

Priorities.

Michgan's reserves are a little deeper than most, but this is just a start. Presumably the endowment took a big hit so the reserves aren't going to save the day.

(04-20-2020 03:25 PM)domer1978 Wrote:  Ann Arbor better get on that street corner and make some money like she usually does.

I presume life is going well for you. Happy for you.

I wouldn't wish the same on ND. I know people who are employed by ND. Unfortunately, I'm afraid the worst is yet to come.

(04-20-2020 03:25 PM)domer1978 Wrote:  Ann Arbor better get on that street corner and make some money like she usually does.

Aw man, come on. Sheesh.

(04-20-2020 06:41 PM)Wedge Wrote:  

(04-20-2020 05:09 PM)Hokie Mark Wrote:  It sounds like out of control expenses meets unexpected loss of revenue. I wonder if there will be more cost control when this is over, or will it be back to spending like you think revenue can only go up?

It's not out of control expenses. Universities (like some other businesses getting squeezed) have a high-revenue-plus-high-overhead business model, and the problem is that they are looking at a lot less revenue coupled with not much less overhead.

In some cases, it is. Many schools have invested heavily in lavish athletic and entertainment facilities to lure students, and many rely heavily on foreign students, including China, to pay high fees and effectively subsidize in-state students.

Both leave a school out on a limb.

If you read the letter from the UM President, you'll eventually find:

Quote:The expenses include the pandemic response at our hospitals and clinics, coupled with the loss of revenue from non-urgent medical procedures and outpatient clinics.

Hospitals and clinics you say? How big an enterprise are the hospitals and clinics at UM? As a five minute google expert, I looked up https://en.wikipedia.org/wiki/Michigan_Medicine.

Quote:In June 2014, the University of Michigan Hospitals & Health Centers projected that it would end its 2014 fiscal year with an operating margin of 0.7 percent ($17 million) on revenues of $2.52 billion. In 2015, the Hospitals and Health Centers aimed to achieve an operating margin of 3 percent on revenues of about $2.66 billion. The results for 2016 and the projection for 2017 were even stronger.

I'm not minimizing the financial effect on UM as a whole. But you can't extrapolate this on a linear basis UM --> EMU --> Youngstown State --> Northern Kentucky --> Northeast South Dakota State.

It applies apples-to-apples to about 50 big schools with big university hospital complexes.

(04-21-2020 07:54 AM)johnbragg Wrote:  If you read the letter from the UM President, you'll eventually find:

Quote:The expenses include the pandemic response at our hospitals and clinics, coupled with the loss of revenue from non-urgent medical procedures and outpatient clinics.

Hospitals and clinics you say? How big an enterprise are the hospitals and clinics at UM? As a five minute google expert, I looked up https://en.wikipedia.org/wiki/Michigan_Medicine.

Quote:In June 2014, the University of Michigan Hospitals & Health Centers projected that it would end its 2014 fiscal year with an operating margin of 0.7 percent ($17 million) on revenues of $2.52 billion. In 2015, the Hospitals and Health Centers aimed to achieve an operating margin of 3 percent on revenues of about $2.66 billion. The results for 2016 and the projection for 2017 were even stronger.

I'm not minimizing the financial effect on UM as a whole. But you can't extrapolate this on a linear basis UM --> EMU --> Youngstown State --> Northern Kentucky --> Northeast South Dakota State.

It applies apples-to-apples to about 50 big schools with big university hospital complexes.

Good point johnbragg. They have a budget of 8.99 billion at Michigan so $400 million is not even 5%. Obviously the bigger schools have more to lose.

The longer structural problem is going to be the loss of international students. The B1G students can weather the storm by taking in more in-state kids. MAC schools will likely trim back enrollment.

A lot of the cuts are going to be to faculty without tenure at MAC and Horizon schools, especially in non-STEM fields which have no prospects in this economy.

God forbid that Harbaugh takes a cut.

Its huge. You'll get crushed by the trickle down. Some won't recover.

(04-21-2020 07:19 AM)SeaBlue Wrote:  

(04-20-2020 03:25 PM)domer1978 Wrote:  Ann Arbor better get on that street corner and make some money like she usually does.

I presume life is going well for you. Happy for you.

I wouldn't wish the same on ND. I know people who are employed by ND. Unfortunately, I'm afraid the worst is yet to come.

The worse is to come. But jokes are always on tap where I live. I refuse to panic over this because it is out of my control. I work in higher ed so I know the bell may toll for me.

(04-21-2020 07:54 AM)johnbragg Wrote:  I'm not minimizing the financial effect on UM as a whole. But you can't extrapolate this on a linear basis UM --> EMU --> Youngstown State --> Northern Kentucky --> Northeast South Dakota State.

It applies apples-to-apples to about 50 big schools with big university hospital complexes.

OK, let's say that 3/4 of the losses are in the hospital sector. Probably so, because the belt-tightening at UM isn't as severe as what Arizona and Wisconsin have announced.

That's still $100m to $250m loss for the educational system. That's an enormous loss for anyone.

(04-21-2020 07:24 AM)quo vadis Wrote:  

(04-20-2020 03:25 PM)domer1978 Wrote:  Ann Arbor better get on that street corner and make some money like she usually does.

Aw man, come on. Sheesh.

OK. I"m ashamed. I thought it was funny.