Dear East Georgia State College Faculty and Staff,
Impact of COVID-19 on Budget
As I write this letter, I know that a discussion of the budget tends to cause eyeballs to roll. However, I also know that we cannot accomplish our mission unless all of us understand our budget. So, please hang in there with me for a few moments as I describe next year’s budget and how we got there.
The COVID-19 pandemic has had a major impact on East Georgia State College’s budget for the coming fiscal year (July 1, 2020 to June 30, 2021). The extent of that impact became even more clear during the last week.
In order to clearly describe to you the budget developments of the last week, we have to look back to what took place earlier this spring.
As tax revenues in Georgia dropped precipitously this spring due to the pandemic, the University System of Georgia (USG) directed all USG institutions to submit detailed plans for a possible reduction in state allocations of 14% for the year. All plans were required to include a furlough plan for all employees. Lower compensated employees were allocated a smaller number of furlough days than higher compensated employees.
Subsequently, the Governor of Georgia made the Georgia Legislature aware of his analysis of the impact of COVID-19 on state revenue during the coming fiscal year. He asked the legislature to adopt a budget based upon an 11% decline. It is, of course, hard to think about a 11% decline being good news. That was, however, excellent news.
The legislature then reconvened in June and began to work on the final state budget. As the House and Senate performed this tedious and difficult process of making tough choices in the face of limited funds, the Governor announced that an approximate 10% decline in revenue should guide the legislature in forming a budget. That was, of course, even better news. Ultimately, a budget was adopted and approved by the Governor based on this new estimate of state revenues.
This state budget, of course, required all state agencies including the USG, to adopt a budget reflecting the reduced budget and the revenue declines anticipated during the coming fiscal year. The Board of Regents met last Friday and adopted a budget based on a state funds operating budget for the USG of $2.29 billion, a decrease of 10.8% from FY 2020.
In addition to this overall reduction, a key component of the USG’s FY 2020-2021 budget is the legislature’s decision not to include furloughs for employees in the public education sector as part of the budget. This, of course, has two primary effects on the EGSC budget. First, our faculty and staff will not suffer the loss of income from furlough days. Second, the college will not have the budget savings which come from furlough days and it will be necessary to identify other means of cutting costs.
If we put all of this together, what does it mean for FY 2020-2021 for EGSC. EGSC’s base budget (state allocation) was $10,125,579 for FY 2019-2020. It will be $8,936,643 this year. This includes the overall reduction in the USG budget, increased expenses such as retirement benefits and a reduction of approximately $140,000 due to FY 2019 enrollment (“formula funding”).
As we think about what this budget reduction means for the EGSC community during the coming year, we all need to consider the following:
- We, obviously, need to be very frugal during the coming year. First, we have about $1,200,000 less of state allocated funds to cover our expenses. Second, we all know that the pandemic is not over and that we do not know whether the estimate of a 10% reduction in state revenues will prove to be accurate. We must proceed based on our budget with the clear understanding that a mid-year budget reduction could become necessary if the pandemic hits us harder than expected.
- Our state allocation is one of two major components of our budget. The other is tuition and fee revenue. We must remain laser-focused on maintaining our enrollment to assure that this other element of our budget remains stable. This means communicating with prospective new students and returning students regularly from now until the start of Fall semester about the importance of their college degree. It then means working with these students diligently during Fall semester to assure that they return for Spring semester despite the challenges created by the pandemic.
As I reflect on this budget situation, I think it is important that all of us let our state legislators know that we appreciate the work they have done in crafting a state budget during this challenging time. Our state budget must by law be balanced so they had very difficult choices to make. The budget they adopted will enable higher education to continue to thrive and survive even though we must all be frugal. Also, if enrollment remains stable in the coming year, it is likely that EGSC will be able to manage these cuts without the need to terminate existing employees. This is not an accident. Our financial leaders began to plan for the possibility of these cuts very early and it is that proactive planning which makes this possible. We should let them know that this vision and hard work is appreciated.
Bottom line: It is going to be tight this year. Also, we have an unusually busy year facing us due to factors such as our upcoming SACSCOC reaffirmation process (which I described to you in last week’s letter). Yet, we are going to get through this together and emerge even stronger.
Stay healthy and stay safe.
East Georgia State College