Roth ’78, Tanaka ’00 Outline Pandemic’s Financial Impact on Wesleyan

In an April 16 campus email, Wesleyan President Michael Roth ’78 outlined the cost of the current COVID-19 pandemic to the University to be between $11-12 million for the current fiscal year. On April 21, Roth and Senior Vice President, Chief Administrative Officer, and Treasurer Andy Tanaka ’00 held a virtual All-Staff Community Forum to further discuss the pandemic’s impact on Wesleyan’s finances and take questions from the community.

In his initial message, Roth wrote that the estimated loss is driven by “the cost of important measures like reimbursing students for prorated portions of their residential and comprehensive fees, emergency support for student travel to and from campus, funding lost wages for work study, and necessary investments in creating the best distance learning environment possible—all vital to the health and safety of our educational community.” He noted, “It does not account for the negative effects on other areas of the budget like fundraising, endowment returns and recruitment and yield.”

Due to past fiscal prudence and the generosity of parents, alumni, and friends of the University, Wesleyan is well-positioned to “weather the pandemic’s initial impact,” Roth wrote. “But because we don’t know how long it will last, we need now to prepare for the longer term by finding ways to offset lower revenue expectations without sacrificing the quality of the education.”

Roth described steps the administration is taking to mitigate the financial impact, explaining that he has asked all members of the President’s Cabinet to reduce expenditures in their areas by at least 10 percent for fiscal year 2021. In addition, Wesleyan will freeze compensation and non-faculty hiring, and will halt non-essential facilities projects. This includes pausing the start of construction on the Public Affairs Center (PAC) for a few months, which had been planned to start this summer.

Roth will reduce his own salary by 25 percent, while Senior Vice Presidents Nicole Stanton and Andy Tanaka and Chief Investment Officer Anne Martin will all take meaningful salary reductions. Other members of the Cabinet have volunteered to contribute to the University’s Emergency Fund during this challenging time.

On the Zoom community forum, Tanaka explained that the University’s reserves, which have accumulated as a result of careful budgeting, will be used to cover any shortfall this fiscal year between the impact of cost-saving measures and the deficits incurred. His team is now planning ahead for next fiscal year’s budget in consultation with the Budget Priorities Committee (BPC), which includes faculty, staff, and student representation. He also invited all members of the community to contact him or his team to share input on budget planning.

“In this environment with so much uncertainty out there, budgeting is a challenge,” Tanaka said, noting that the finance office is closely monitoring enrollment, fundraising, and the endowment, along with the overall state of the pandemic, and planning for a range of possible scenarios for the fall semester. “We’re going to have to be agile at some level.”

Also on the virtual forum, Roth explained why taking funds from Wesleyan’s endowment is not an ideal way to make up financial losses. Not only are many of the funds restricted (for purposes such as financial aid or endowed professorships), but losses will be compounded by selling stocks at a time when the investment portfolio has declined.

“We look at the endowment as a really important resource,” he said. “We want to be very prudent about taxing the endowment at the worst time because that will compromise the ability of people running this university in the future to support the students, staff, and faculty.”

Tanaka also said the University is slated to receive approximately $2.2 million via the federal CARES (Coronavirus Aid, Relief, and Economic Security) Act, but it’s not yet clear exactly how those funds can be distributed. Roth added, ““We want to use the federal funds to support the most vulnerable members of our community.”

In the campus message, Roth expressed “deep pride and gratitude” for the work of faculty, staff and students during the past several weeks. He promised to report back in May with a more thorough financial update once the administration has a better sense of the financial picture for the next fiscal year and how the Admission cohort is coming together.

“Together, we will rise to this challenge,” he wrote, “and emerge stronger from it.”