Dear Colleagues:
In June I shared with you a summary of discussion with the Board of Trustees regarding Winthrop’s financial outlook moving into the 2020-21 fiscal year. Today I write you with important information to share on what we have accomplished and additional steps we must take to ensure Winthrop can deliver to students the exemplary educational experience they and their families have come to expect.
A Brief Look Back
To understand where we are now, let’s look back several months. Our efforts during the latter part of the spring semester preserved approximately $1.5 million in operating expenses. This amount came mainly from restrictions on expenditures, travel, and hiring. This savings would not have been possible without the sacrifices of many of you across campus. I appreciate your support of these initiatives to contain costs. On a brighter note, we had positive enrollment in Summer Session, likely fueled by our decision to reduce tuition, that helped us some as the budget year ended.
Our internal budget cuts, plus CARES Act funds we tapped, placed us in the position to request a transfer of only $1,282,487 from the unrestricted net position which was authorized by the board and enabled us to balance the budget despite the severe revenue shortfall as a result of sending the vast majority of our students home in March.
I want to mention here a bit of a misnomer. When we talk about “unrestricted net position” we actually need to clarify that this institutional reserve is NOT unrestricted. Of the anticipated $24 million in the unrestricted reserve as of June 30, 2020, approximately 75 percent has stipulations for use, leaving only about $6 million available for institutional needs like those we are experiencing now. The board’s action to help us balance the 2019-20 budget resulted in even less available in the reserve that we can tap moving forward.
Our Realities
Comparing last year’s operating budget to this year’s budget, we have already cut 10 percent. We are continuing our hiring freeze with a few exceptions. We also are dealing with several continuing unknowns. Our auxiliary revenues will be down as a result of more students choosing online learning and not living on campus. Our decision to delay in-person instruction just two weeks cost us $1.4 million in revenue. Our final enrollment will not be known for another few weeks. The extra measures we are taking to keep everyone safe have led to increased costs as well. We are anticipating funds from accelerateSC and FEMA but have not yet received confirmation of total amounts, and our institutional state allocation remains unclear.
Furlough Plan
These realities prompted me to authorize our Human Resources office to prepare a furlough plan for our campus and to work with the state Division of Human Resources for approval. Our plan has been approved, and you will receive more information about it tomorrow following a 1 p.m. Board of Trustees vote on implementation. I fully expect the board to vote in the affirmative for the plan.
I want you to be aware that the plan was scaled as much as possible by salary level at the very lowest levels. However, to generate the $3 million that is the plan’s aim, a majority of our workforce must take a significant number of furlough days. The plan will impact the vast majority of Winthrop employees (there are a few types of workers who will be exempt) and will run Sept. 1, 2020, through June 30, 2021.
The state limit on the number of days we may employ in a furlough is 20. The least number of days anyone will be furloughed will be 2. Employees will be able to choose their days in consultation with their supervisor. Those days may be spread throughout the annual work period. For example, 12-month employees may use days between Sept. 1, 2020, through June 30, 2021, and 9-month employees may use days from September 1, 2020, through May 15, 2021. The provost, deans, and department chairs will assist faculty in determining which days they can use as furloughs—days they would not normally be teaching.
Pay deductions will be equally spread in each paycheck from September through the end of the fiscal year or an individual’s last paycheck of this fiscal year (for those on contract). There will be an option to take a lump-sum deduction and the total days all at once.
Later today, I will meet with two groups of faculty and staff and share the approved plan to gather feedback and questions that will be used in a list of Frequently Asked Questions, which will accompany release of the plan. The plan itself will be uploaded to the HR website tomorrow after the vote. It is important for me to note that we will not be adjusting the plan in any way since it has been vetted and approved by the state HR office.
This is another COVID-19-related decision that we made with the utmost seriousness and gravity that is required since we are impacting individuals’ livelihoods. I know this is news no member of our community wants to hear. However, to keep the institution in the position to continue to provide the exemplary Winthrop experience for which we are known, sacrifice is required. I know some of you might say, “Why can’t we just take the $3 million from the unrestricted net position to avoid this action?” The truth is, we can’t afford to do that. As mentioned above, we have a very limited amount of reserves we can tap, and it would not be prudent or possible to deplete those.
Thank you for reading this far to get a better understanding of where we are from a financial standpoint and the inevitability of implementing a broad-based furlough plan. I appreciate your patience as we have worked to create a plan that will keep the workforce intact while generating crucial funds needed during this difficult and unsettled time.
More details to come tomorrow.
Sincerely,
George
George W. Hynd
Interim President
