Because of COVID-19's projected impact on Northern Michigan University's financial outlook, President Fritz Erickson announced an immediate 10% salary reduction for Executive Council members and asked division leaders to begin developing contingency plans for reducing NMU's budget by $8 million.
The Executive Council includes the president, vice presidents, NMU Foundation CEO, dean of students, and assistant to the president. Their 10% salary reduction will continue through at least the remainder of the fiscal year, which ends June 30.
“This is an action we can implement quickly while other budget-reducing options are being worked on,” said NMU President Fritz Erickson in a Tuesday email to the campus community.
Erickson said NMU was asked to submit a document to state officials on Monday that included details on what projected enrollment losses would cost. NMU stated that a 10% decline in Fall 2020 could mean up to $8.7 million in lost revenue.
“The American Council on Education and other higher education associations are advising institutions to plan for a possible 15% drop in overall student enrollment for the upcoming academic year,” he added. “This reflects only revenue lost to enrollment decline and doesn't take into account a drop in state funding. With revenues so low in Michigan due to the state of emergency, it is very difficult to predict what state funding to Northern will be.”
To address a potential significant shortfall, Erickson initiated a request for division leaders to begin looking at ways to reduce Northern's budget. He will update the campus later this week on target dollar figures and provide a timeline for contingency planning. Erickson said the goal at this point is to put together options for addressing the budget shortfall, whatever it may be.
“We are not at the point of making decisions. However, it is important at this time that we have the tough conversations, develop and vet options, and have plans we can implement as needed. The list of options does not represent final decisions. There are still too many unknowns.The silver lining in Northern facing this financial situation caused by the COVID-19 crisis is that our university entered into the pandemic on solid financial ground compared with many other colleges and universities in our region and around the country.”
Erickson said it is imperative that NMU confront the challenge head-on with as much creativity, innovation and boldness as possible.