Budget cuts, layoffs, tuition increases possible at Wayne State amid COVID-19

Wayne State University may have to cut its budget by $60 million, resort to layoffs and eliminate programs and services in the worst scenario outlined Wednesday by President M. Roy Wilson amid the COVID-19 pandemic.

Hints of a possible tuition increase was also in a letter Wilson sent to the WSU community.

 "We are currently analyzing an array of budget scenarios using various assumptions for revenue generation, primarily changes in enrollment and tuition rates," Wilson wrote. "Based on these models, our estimates range from a best-case scenario that would require a budget reduction of 5% and a worst-case scenario of 15% or more. Potential cuts in state funding could require additional budget reductions."

As budget uncertainties abound, Wilson said that he understood the concerns of students asking about tuition, and faculty and staff wanting to know about budget cuts and the potential for layoffs, pay cuts and furloughs.

Wilson said he wanted to be transparent and let the university community know that budget development for the 2020-21 fiscal year is underway but it is a complex undertaking with unknowns in student enrollment, state funding and other revenue.

The three potential budget scenarios the president outlined include 5,10 or 15 percent cuts to the university's $675 million budget, along with cuts that would be made immediately. 

The least Draconian cut would be 5 percent, or $20 million.The second scenario of a 10 percent cut, or $40 million, would include layoffs. And the third, a 15 percent cut or $60 million, would include eliminations of some programs and services along with layoffs.

"The above scenarios appear stark, but I am cautiously optimistic," Wilson wrote. "My personal opinion is that Wayne State is a very desirable university and that fall enrollment will be robust.

"Also, Wayne State is in a better financial position than many universities," Wilson wrote. "Our cash position is strong, and our credit agencies consider our liquidity position to be excellent. Nonetheless, this pandemic will financially impact all universities, including ours, and we need to be prepared for all possibilities."

In the short term, Wilson outlined several measures already being taken.

"I informed higher-paid, non-represented employees last week of the need to suspend their merit increases," he said. "This week, we are taking further action." 

Among them are spending limited to essential purchases and presidential approval of immediate hiring decisions and consultant and independent contractor contracts exceeding $50,000. A process is also being developed for enhanced review for longer-term hiring decisions.

"While our highest concern during this pandemic must remain the health and safety of our people, there are many other challenges we are addressing as we strive to serve our mission," Wilson wrote. "Important among these is stabilizing our finances." 

 Wilson joins the presidents of the state's three largest public universities in alerting the community about the financial torpedoes that loom for higher education in Michigan amid COVID-19 outbreaks.

Already, the highly contagious virus has forced universities to shut down campus housing and other buildings generating revenue, pivot to online learning that has required investments, and issued credits and refunds to students, some of whom are suing for more.

In recent days, University of Michigan President Mark Schlissel announced pay and other cuts as part of an anticipated budget shortfall of up to $1 billion. Michigan State University President Samuel Stanley also announced cuts, in addition to a tuition freeze for the 2020-21 school year. Central Michigan University President Robert Davies also announced a plan that includes a tuition freeze amid the looming financial uncertainties that colleges are facing ranging from decreased demands for classes, loss of international students who pay significantly more that instate students and potential decreases in state funding and federal research dollars.

Wilson, Schlissel and Stanley will talk about COVID-19 impact on Thursday during a virtual tele-town hall hosted by the Detroit Regional Chamber. Register here.

kkozlowski@detroitnews.com