“I am humbled by the sacrifices shared by so many of you in our community. I sincerely appreciate all that each of you do to help MSU continue to provide a world-class education, conduct high-caliber research, and offer impactful outreach and engagement locally and globally.” — President Samuel L. Stanley Jr., M.D.
Due to the COVID-19 pandemic, MSU and institutions across the nation are facing significant financial losses due to lost revenues and increased expenses. Many difficult budget and employment decisions have impacted the campus community, and we’ve shared several financial updates, all of which can be viewed on the president’s webpage.
Budget difficulties
First, the university experienced a decline in tuition revenue beginning in 2020, before the pandemic, due to substantial changes in the mix and number of students across international, out-of-state domestic and in-state students. Second, the university experienced increased costs related to COVID around testing, personal protective equipment and other health and safety measures. Third, the university continued to experience increased costs unrelated to COVID as a result of inflationary increases to the cost of health care, utilities, supplies and services.
This combination of declining revenue and increased expenses resulted in the university’s general fund facing a $108 million general fund budget deficit in fiscal year 2021 and an additional $169 million general fund budget challenge in fiscal year 2022.
Since spring 2020, through shared sacrifice, MSU has saved hundreds of millions of dollars due to:
Even with that sacrifice, there remains a financial challenge. We are grateful for several rounds of Higher Education Emergency Relief Funds (HEERF) from the federal government totaling $157.6 million, of which $70.9 million is in the form of emergency grants to students. The remaining funds were used as institutional relief funds.
Where we stand now
Looking forward
The university is now working through our next budget process, which started in spring 2022 and integrates priorities and principles from our strategic plan. These include improving our financial sustainability and dedicating resources to align with the plan. Further, our current planning includes a return to the regular cycle of merit increases in October 2022 for faculty and academic staff and the continuation of support staff increases in accordance with newly negotiated collective bargaining agreements.
Next year’s budget also does not contemplate further unit budget reductions. We expect the general fund budget to remain challenged over the next several years and to use one-time reserves to allow us to cover the anticipated annual shortfalls. While unsustainable for the long term, we plan to continue using one-time funds to balance the fiscal 2023 and fiscal 2024 budgets, as the impact of the pandemic will continue to be felt for the next few years.