Financial Impact

There are many difficult budget and employment decisions that are impacting the campus community. Below are the steps the university is taking to address the current financial situation: 

• All MSU executive managers and deans are taking a 2% to 8% temporary pay cut based on salary levels. President Stanley will be taking a 10% pay reduction. Previously these cuts were for FY 2020 but now also will extend into FY 2021. Additionally, executive managers will not receive any pay raises in FY 2021.
• MSU is implementing a minimum 3% budget reduction to academic and administrative units. The Office of Planning and Budgets has started its communications to colleges and units about this process and continues to provide updates to leadership on the progress of identifying reductions. MSU will save about $20 million through this process.    
• MSU is implementing a wage reduction for non-union faculty and academic staff, at an average of a 2.3% salary reduction. The temporary wage reduction uses a graduated scale ranging from 0.5% for those with the lowest salaries to 7.5% for those with the highest salaries. All postdoctoral scholars (regardless of salary level) and any academic staff with salaries below $50,000 are exempt from the temporary pay reduction, which takes effect Sept. 1, 2020. Reductions will be in effect for at least one year but may be extended depending on the university’s financial situation. More details will be shared by Academic Human Resources.
• Effective July 1, 2020, MSU will reduce its matching contributions for some employees from 10% to 5% of compensation. This applies only to executive management and non-unionized faculty and academic staff, because MSU cannot unilaterally implement such a change for employees covered by collective bargaining agreements. The temporary retirement reduction will be in effect for at least one year and will be reevaluated as we learn more about the university’s long-term financial circumstances.
• Several MSU unions and the university have reached agreements on furloughs. Furlough notices have begun going to employees in different units across campus. As of Jan. 29, 2021, 847 employees were furloughed, including 310 that were voluntary. Of those furloughs, 822 have been recalled. In September 2020, Residential and Hospitality Services also had to make the difficult decision to furlough an additional 700 student employees.
• Due to the COVID-19 pandemic, MSU Athletics no longer will sponsor men's and women's swimming and diving as varsity sports following the conclusion of the 2020-21 season. Additionally, all varsity sports and departments have been asked to reduce their budgets by at least 25%. Also, all contract employees making $100,000 or greater are taking salary reductions on a sliding scale Sept. 1, 2020, to Aug. 31, 2021. In total, as of September 2020, 50 athletics employees have taken salary reductions, ranging from 15% to 1%. Another 31 employees saw their sports camp income decrease, with a range of between 23% and 1% of their income. A hiring freeze has been instituted as well, resulting in 11 unfilled positions. In September, it was announced many athletics staff members will undergo furloughs of at least one month before Dec. 31, 2020.
• A university-wide hiring chill is in effect, and the filling of vacancies will be limited. All hiring decisions must be approved by the relevant vice president or provost. 
• The university is continuing to examine all capital projects to determine which can be paused, briefly delayed or indefinitely postponed. A current list of deferred and proceeding projects can be found here. In total, this will save MSU nearly $77 million.
• MSU will reduce or eliminate consultants wherever possible. 
• Discretionary expenses, including travel (which already has been curtailed greatly), are being reduced to the greatest extent possible.

In addition to the above cost-reduction measures, MSU is using some of it's operating reserves to fill remaining budget holes. Reserves are intended to be leveraged in extraordinary but this is not an unlimited source.

In late September 2020, state appropriations were finalized that will keep higher education at the same level of state funding as the previous fiscal year. In December 2020, Congress passed and the president signed another COVID-19 relief package, with nearly $23 billion earmarked for higher education. Details on how much specific universities and colleges will receive have not been provided. 

Another factor directly impacting MSU's financial position is enrollment. Compared to the 2019-2020 academic year, MSU saw a decline in its total enrollment for the fall semester — 49,695 students enrolled, which is down by 866 students from this time last year. First-year student enrollment stands at 8,228, down 335 students from last year. Unfortunately — despite significant effort by many — this decline in enrollment has had an impact on MSU’s budget, attributing to a $54 million decline compared to last year’s revenue. The current tuition revenue reflects both a decline in total enrollment and an adverse change in student composition, specifically fewer international and out-of-state students. It also is essential to note, a smaller class will have at least a four-year impact on our budget as that class moves through each year toward graduation.