COVID-19’s financial toll on Kansas and Missouri colleges: ‘It will be significant’
At college campuses across Kansas and Missouri, moving classes online and sending students home may have been wise moves to protect public health as the coronavirus pandemic rages on.
But the decisions resulted in a financial body blow to universities that will cost them millions in the short term and deliver unknown consequences in the months and years ahead.
“What is clear, however, is that we will be losing tens of millions of dollars of revenue through the end of this semester and the summer,” said Erinn Barcomb-Peterson, a spokeswoman at the University of Kansas.
The University of Missouri System could lose as much as $180 million and plans to immediately cut administrators’ salaries by 10%, officials announced Tuesday. Missouri’s governor already announced $80 million in cuts to public universities and community colleges because of the COVID-19 pandemic.
As a result, area university officials say, faculty and staff may be trimmed, some building projects scrapped and some programs lost.
“We have not yet calculated the total of these impacts,” said John Martellaro, spokesman for University of Missouri-Kansas City, “but we know it will be significant.”
Many universities were already operating on tight budgets to account for recent enrollment declines and reductions in state funding.
Now they have spent the spring losing millions as they reimburse students for housing, food plans, parking and some activity fees and losing out on revenue generators such as events and research grants.
For the summer, most have already determined that classes also will be online only, which presents additional loss in revenues.
“Because summer semester courses will be online, we know that there won’t be summer housing and food revenue from students, or from those who would be attending camps and conferences,” said Joe Kleinsasser, spokesman for Wichita State University.
Then there’s this: There is no guarantee the situation won’t carry over to the fall semester.
“If we can’t go back to in-person classes in the fall we will not be able to generate revenue from residence halls and other areas, and that would be an enormous financial impact,” said Matt Wilson, president at Missouri Western State University in St. Joseph.
If that’s the case at UMKC, “a lot of students I talk to said that if this continues in the fall, they are thinking about not returning,” said Justice Horn, student body president.
“Generally speaking, the university is in a financial pickle,” said Gabrielle Stanley, a UMKC music education junior and one of three student finalists for a seat on the University of Missouri Board of Curators. “I try not to place blame where it doesn’t belong. This is not something the university could control.”
Like students in chemistry labs or ceramics studios, her music major doesn’t easily transfer to online work at home. The Conservatory student used to spend every day playing her clarinet with ensembles on campus and rehearsing with other students. She spent three or four hours a week assisting a music teacher at Pleasant Ridge Middle School in the Blue Valley School District. But not anymore.
Being relegated to getting all her classes online robbed her of a “huge chunk” of the education her close to $15,000-a-year tuition paid for. “This is definitely not what we signed up for.”
If the university could refund that money, Stanley said, “that would be great.” But she’s not expecting any reimbursement.
The funding picture
This month, Missouri Gov. Mike Parson announced he would reduce funding for public universities and community colleges by around $80 million because of the pandemic. The biggest cuts, around $61 million, hit Missouri’s four-year colleges. The University of Missouri alone lost $37 million, or 8% from its budget.
With fears of further drains on state coffers, “we just hope the state doesn’t turn again to higher education because that would be an enormous impact,” Wilson of Missouri Western said.
In Kansas, university officials said the newly passed state budget provides a small increase for higher education, but it is subject to revision if state revenues plummet during the pandemic. State funding to Kansas universities remains below its peak before the Great Recession.
Kansas Gov. Laura Kelly said higher education “really needs some attention” from Congress.
“I don’t think much attention was paid to higher education,” Kelly said. “We know they’re taking a huge hit with having to shut down campuses and they’ll be having to refund lots of tuition money, or lots of room and board money.”
While the nation’s colleges and universities will receive some help from the federal government as part of a $30 billion education stimulus package, the schools worry it may not make up for all the loss.
Missouri and Kansas colleges and universities are scrambling to adjust, instituting such saving measures as hiring freezes and restrictions on discretionary spending, including travel and nonessential purchases. Most have said they are committed to continue paying employees through the end of this semester.
The Chronicle of Education said a crowd-sourced list includes some 250 schools with hiring freezes in place. Forbes reported that 83% of the nation’s colleges and universities anticipate that they will freeze hiring, and more than 50% are considering furloughs and laying off staff.
Non-tenured faculty worry their jobs could be eliminated, and schools admit they may end up having to reduce staff numbers.
“We may have to consider that possibility as the overall financial picture becomes clearer,” Martellaro of UMKC said.
The University of Missouri System estimates that in a worst-case scenario “the deficit could be as much as $180 million,” including all four campuses in Columbia, Kansas City, St. Louis and Rolla, said Christian Basi, a system spokesman. “We want to adjust our plans so that we are planning for the worst, but hoping for the best.”
On Tuesday, UM System President Mun Choi announced that all vice presidents, chancellors and their cabinet members, and the deans at the four UM universities will take a 10% salary cut. Some other campus leaders and administrators will see a similar pay cut. And departments are planning for cuts to their budgets of up to 15%.
Cost to colleges so far
Wilson estimates Missouri Western, a small regional college about an hour north of Kansas City, has lost $1.5 million this spring reimbursing students 40% on housing and meal plans. If campus doesn’t open for the fall, he estimates the loss could be about $4.5 million.
A little further north, Northwest Missouri State is refunding student housing and meal plans on a pro-rated basis, costing the university more than $4 million. Nearly 2,000 students used housing on the Maryville campus, and more than 5,000 students used meal plans.
“Larger campuses with more beds will have an even bigger problem,” Wilson said.
At KU, partial refunds to students for housing and dining could run “as high as $15 million,” Barcomb-Peterson said. KU also gave partial reimbursements to students and faculty for parking.
In addition, “revenue from events, catering, sponsorships and research grant expenditures are lost with estimates between $20 million and $30 million for the Lawrence campus.”
Nearly every university department will feel a “significant short- and long-term financial impact,” Mike Rounds, provost for KU operations, told the campus community in an April 3 memo.
For instance, he said, the operating budget for KU Parking, which is supported through the sale of permits, fines and other fees, “is being impacted by the direct cost of providing refunds and indirect costs of lost revenue from parking meters and other fees,’’ Rounds said. As a result, the department is postponing some parking lot reconstruction.
“This is a challenge and a crisis for KU, but it is for everybody. Every institution in our country is dealing with this,” Chancellor Douglas A. Girod told the campus community during a town hall meeting last month. “We will be a different university on the other side of this, but we will be a stronger university on the other side of this.”
Kansas State University has “estimated a budget impact of $22 million due to loss of revenue and increased costs due to the shift to remote learning,” said Jeff Morris, a K-State spokesman.
MU has handed out 24,300 refunds, a total of $1.9 million to students who left the dorms early, and 700 refunds, a total of $500,000, on meal plans. Another $2.3 million is being credited toward meal plans for students planning to return to the Columbia campus in the fall.
Across the four-campus system, the university expects to pay out as much as $30 million in refunds.
The region’s schools expect the numbers to change as they learn more about the pandemic’s impact.
“As we think through the next fiscal year and beyond, we all have to realize that it will be difficult and not business as it was even six months ago,” said John Jasinski, president at Northwest Missouri State.
WSU has paid $2.7 million in refunds for rooms, meal plans and parking.
A hiring freeze has already been implemented, and restrictions have been imposed on discretionary spending, including travel and nonessential purchases.
“Our first concern is for the health and well-being of our students, faculty, staff and community,” Kleinsasser said. “We will take it one step at a time, one day at a time, until our educational programs and student experience are fully restored and functioning at a high level.”
Help for students
Meanwhile, students have had to rush to shore up their own finances.
Last month, Ximena Ibarra, a 19-year-old KU student, saw other colleges shut down across the U.S. as she prepared for her spring break.
At the time, most of the other students she knew all thought everything “would blow over in a few weeks,” she said. But a few days into break, KU announced it would extend break for another week, and then shift to online classes.
Unsure if she would return to the Lawrence campus for her freshman year at any point, she applied for a job at a smoothie place in her hometown of Pittsburg, Kansas.
Over the break, anticipating the disruption might last longer, Gage Burmaster, a KU freshman studying computer engineering, drove over to KU from his home in Salina to pick up some of his clothes and textbooks.
“I’m not going to sit here and act like I’m at the end of the world, just because I’m not,” Burmaster said. “But I know for certain, several people are worried about it just because of their on-campus jobs, and they have nowhere else to go at home.”
Neither student has received reimbursement from student housing yet.
The financial loss some students are feeling is immediate, especially those who have lost nearly a half a semester’s worth of income. University staff are being paid through the semester, but not students.
“Campus is shut down. There are no students on campus so we don’t need food service, workers in the residence halls and student union,“ said Wilson. But the campus also isn’t bringing in revenue in those areas either.
“Take the pool: We don’t need lifeguards. So we are not paying lifeguards, but we also are not getting revenues from the folks who use our pool.”
Students will be the first to benefit from emergency student financial aid in the federal stimulus package.
Inside Higher Education reported that about 90% of the stimulus will be distributed directly to public and private colleges and universities based primarily on their share of low-income Pell Grant recipients. Another 7.5% will go to historically black colleges and universities and other institutions primarily serving students of color. A remaining 2.5% will go to institutions that the U.S. secretary of education determines have been particularly harmed by the virus and economic downturn.
The education department last week announced Kansas and Missouri two and four-year colleges would receive $152 million in the first phase of COVID-19 emergency aid, earmarked for needy students to pay for expenses like course materials, technology, housing, food, health care and child care.
KU will receive $15 million, K-State will receive $13.3 million and Wichita State will get $9 million.
In Missouri, the MU will receive $16.3 million, UMKC will receive $7 million and Missouri State University will receive $13.8 million.
Under the circumstances, losing enrollment could devastate university revenues. That’s why most are reaching out to prospective students with virtual tours and keeping in touch with existing students to make sure they plan to return.
Horn, a business major and UMKC’s student body president, said he doesn’t think it’s such a bad idea to wait and come back next spring. He will be a senior in the fall, “but it doesn’t matter to me if I have to extend my education a bit longer. It’s worth it.“
Includes reporting by The Star’s Nicole Asbury.
This story was originally published April 15, 2020 at 5:00 AM with the headline "COVID-19’s financial toll on Kansas and Missouri colleges: ‘It will be significant’."
