Email from President Robert J. Zimmer (Apr. 7, 2020)
From: Robert J. Zimmer
Subject: Financial Implications of COVID-19
During recent months, the University of Chicago and our faculty, students, and staff have been focused on the health impacts of COVID-19. We have taken significant steps to protect the health and safety of our University community. We have worked to act responsibly in this global pandemic towards the larger communities of which we are a part and to which we have a responsibility, and through several initiatives to offer support to and partnership with our South Side communities.
While the health issues continue, the global, national, and local economic impact of the pandemic is already profound, and for some time likely to become only more so. This will have severe consequences on the finances of the University. The expected financial impact on the University and its duration is likely to be as great as or even greater than in the financial crisis of 2008-09. It will be complicated by the uncertainties of the trajectory of the ongoing global pandemic. These financial challenges for the University will be similar to those faced by universities and colleges around the country.
Some salient aspects of financial challenges include:
- Increased national economic stress, resulting in economic challenges for many families and requiring increased financial support for a number of our students, which we are committed to providing.
- With the dramatic decreases in equity and other financial markets, a corresponding decrease in the value of our endowment and hence in the annual payout from the endowment to support the University’s work.
- For similar reasons, a decrease in the expected philanthropic contributions to the University from our alumni and friends.
- Significant decrease in net revenue in the Medical Center due to the extensive work connected to COVID-19, with a corresponding decrease in available Medical Center support for academic work.
- Increased costs associated in programs dealing with COVID-19 health matters.
- Uncertainties in the credit markets that are important for new capital projects.
- Uncertainties in private and federal research funding opportunities following the COVID-19 crisis.
As a result, the University will be asking every academic and administrative unit to make significant adjustments in expenditures, both immediately and in the next academic year. It may be necessary to continue some of these adjustments into the future as we gain clarity about the trajectory of the pandemic and the resulting national global economic dislocations. Certain underlying principles will guide these adjustments.
- All student financial support commitments will be fully honored and increased financial support will be provided to those College students with increased demonstrated need.
- The University is deeply committed to maintaining the most intellectually free and challenging environment and in doing so to provide the most empowering education for students and foster the most original and impactful research of our faculty.
The provost will be working with the deans, vice presidents, and other leaders to articulate and implement financial adjustments. Every unit of the University will be called upon to participate. Among high level steps we will be taking as a University and that will apply broadly include:
- All individual faculty, staff, and administrative salaries for the academic year 2020-21 will remain at current levels (except when contractually required).
- New staff hiring will be strictly limited to those fully supported by external grant funding or critical to the core mission of the University.
- Academic hiring will be slowed.
- Discretionary spending will be suspended.
- Non-personnel expenditure reductions will be implemented. The details of implementation will be directed by the provost through the work with deans, vice presidents, and other leaders.
The University’s financial support for students is dependent upon the philanthropic contributions of our alumni, friends, and parents. The Odyssey program began with a $100 million anonymous gift in 2007. We have made it a priority to systematically expand this program, which has been enabled by thousands of individuals – including trustees, alumni, friends, parents, faculty, and staff – providing further philanthropic support for the Odyssey program. Given the increased demand for financial support, we will be prioritizing this direction for philanthropy in the coming year. As a start, every officer of the University (president, provost, and vice presidents) will make a significant new personal financial commitment to the Odyssey program, and we encourage those in our community who are in a position to make such a commitment to seriously consider doing so in this time of increased financial challenge for many of our students. To make a contribution, please click here.
The financial actions we will be taking are necessary to protect the University’s ability over time to support students and their education, faculty and their research and teaching, and the impact that we can have on the betterment of the quality of human life. These will be difficult actions for all of us. I thank all of you for the hard work that implementing these steps will entail, and for your commitment to the mission of the University.